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Advertising Tax Breaks In Jeopardy
Three U.S. senators have introduced legislation that would eliminate the federal tax deduction on advertising for prescription drug medications. If passed, the bill would significantly increase the cost of advertising for pharmaceutical companies, possibly leading to smaller marketing budgets. "Health care spending is out of control," said Sen. Al Franken, one of the sponsors of the legislation along with Sens. Sherrod Brown and Sheldon Whitehouse. "This bill represents a small but significant step towards reining in unnecessary health care costs."

The bill, called the "Protecting Americans from Drug Marketing Act," may be attached to the much-debated and sweeping health care reform legislation, although it may also be proposed as an amendment to be reviewed by the entire U.S. Senate. Franken estimates that eliminating the tax breaks would bring close to $3.5 billion a year in revenue to the federal government. However, the American Advertising Federation (AAF) estimates that disallowing the deduction would raise the marketing costs of drug companies by up to 35%. According to AAF, the advertising industry provides $6 trillion in annual sales in the U.S. and 21 million jobs.

The introduction of the legislation will likely complicate the already $829 billion health care reform bill, creating friction between legislative committees and pharmaceutical companies which continue to lobby for reduced government restrictions. If the bill passes, it would alter the Internal Revenue Code of 1986, which has been the subject of lengthy recent discussions on Capitol Hill. In fact, earlier this week, leaders of several marketing and ad specialty companies spoke to legislators to ask for even further tax exemptions tied to the 1986 code. That lobbying effort is being driven by The Incentive Federation, which is hoping Congress will include wellness award tax exemptions within the health care reform bills
 
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