Deductibility of Prescription Drug Ads May Be Under Threat

WASHINGTON, June 18, 2009--Congress has begun serious consideration of new health care legislation.

The advertising industry had been warned earlier by a number of Congressional leaders that the reform legislation could contain threats to the deductibility of prescription drug ads as a "necessary business expense."

Rep. Charles Rangel (D-NY), the very powerful Chairman of the House Ways & Means Committee, recently made the first public comments about abolishing the deduction. Chairman Rangel told reporters that House tax writers are considering a $37 billion proposal that would prohibit companies from taking deductions on advertising for prescription drugs, saying that the tendency to "mumble" about side effects is "wrong."

"We are looking at big things that look like it presents a smaller target for people to be attacking us," Rangel said.

While Rep. Rangel admitted that the pharmaceutical advertising provision would only pay for a tiny piece of a bill that is expected to cost $1.2 trillion over 10 years, he emphasized that a number of new tax provisions may be needed to ensure the bill’s effectiveness.

The 4A’s Washington office, along with other advertising, media and marketing groups, is intensifying grassroots efforts to defeat such a proposal.

As the need and timing become more targeted, the 4A’s will contact its members to ask for help in reaching out to key Congressman or Senator. In the meantime, contact Dick O'Brien (rfobrien@aaaa.org) in the 4A's Washington office if you have questions or information to share.

American Association of Advertising Agencies
1203 19th Street NW, Fourth Floor
Washington, DC 20036
Phone: 202-331-7345
Fax: 202-857-3675

Posted: June 2009


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