Lawmaker seeks to end tax breaks for consumer drug ads
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A congressional lawmaker introduced legislation that would end the tax break that drug makers can take for advertising medicines to consumers. Called the Protecting Americans from Drug Marketing Act, the bill is designed to encourage companies to focus on developing new medicines, instead of “marketing schemes,” according to US Senator Al Franken (D-Minn.) who introduced the legislation on Thursday.

The legislation, which would amend the Internal Revenue Code, is part of a growing trend to minimize the prevalence of direct-to-consumer drug advertising. Two weeks ago, Representative Rosa DeLauro (D-Conn.) introduced a bill calling for a three-year moratorium on advertising newly approved prescription drugs to consumers. In November, the American Medical Association called for an outright ban on this form of promotion.

Like the AMA, Franken argued that increased spending on advertising contributes to higher drug costs, since many ads feature newer and pricier medicines. Drug makers, he said in his statement, are “trying to encourage Americans to buy the most expensive drugs, even when cheaper, equally effective drugs are on the market … This is just a common sense measure to help cut down health care costs.”

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Overall, the pharmaceutical industry spent about $3.6 billion on direct-to-consumer advertising during the first half of last year, up from $3.2 billion, or 12.5 percent, during the comparable period in 2014, according to Kantar Media, a market research firm. These were the most recent figures available.

The move is not surprising. For years, consumer groups and physicians have argued that ever since the Food and Drug Administration revised guidelines in 1997 to permit drug makers to use broadcast advertising, some ads too often encourage patients to seek medicines unnecessarily.

And as we have noted previously, the cost of pharmaceuticals is a hot-button issue that has jolted the American public and, consequently, figured prominently into the presidential race. Over the past several months, various congressional lawmakers have held hearings on the topic.

A spokeswoman for the Pharmaceutical Research and Manufacturers of America wrote us that “proposals to eliminate the tax deductibility of DTC advertising ignore the value of informing patients about their health care and treatment options … An unintended consequence of eliminating” the tax deduction “may be fewer patients seeking medical care for chronic conditions that could be managed earlier and more cost effectively.”

In response to criticism of consumer ads, the trade group has previously cited a 2012 survey of patients by Prevention magazine that found 71 percent of people agreed that DTC ads “allow people to be more involved with their health care” and 75 percent believed DTC ads are useful because they “tell people about new treatments.”

The trade group has also pointed us to a statement made in 2004 by the FDA, after the agency conducted several surveys. “By and large, DTC advertising seems to increase awareness of conditions and treatments, motivate questions for the healthcare provider, and help patients ask better questions,” the agency concluded.

Another trade group, meanwhile, suggested the legislation may run into difficulty if it is perceived as trying to throttle industry free-speech rights.

“We have seen versions of this legislation before and it’s not surprising that it rears its ugly head again in this campaign season,” said John Kamp of the Coalition for Healthcare Communication, which represents ad agencies and medical publishers. “But the premise and the public policy are just plain wrong … Laws that ban truthful messages are a violation of the First Amendment.”

Indeed, one industry watcher believes the bill is unlikely to gain traction.

“This is not a new idea,” said Ira Loss of Washington Analysis, who tracks the intersection between drug makers and policy makers. “Liberals feel the drug industry spends too much money on promoting drugs, particularly the high-priced ones, and by eliminating the tax deductibility, the advertising would be greatly reduced or stop. I doubt there are the votes to pass this.”

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