A bipartisan group of congressional lawmakers introduced a bill Monday to eliminate a tax deduction pharmaceutical companies receive for direct to consumer (DTC) advertising.
The No Handouts for Drug Advertisements Act would remove a tax benefit that currently allows the pharmaceutical industry to write off advertising expenses related to advertising on television, radio, social media and other platforms, according to Republican North Carolina Rep. Greg Murphy’s press release.
A group of four bipartisan lawmakers introduced the bill: Murphy, Republican Alaska Rep. Nick Begich, Democratic Minnesota Rep. Angie Craig and Democratic Michigan Rep. Hillary Scholten.
“America is one of only two nations in the world that allows pharmaceuticals to be marketed directly to consumers. Patients should trust their doctor for medical guidance, not 30-second TV ads,” Murphy said in a statement.
The only other country that allows pharmaceutical companies to advertise prescription drugs directly to consumers is New Zealand, according to the University of Southern California.
The lawmakers have added their voices to a campaign against pharmaceutical advertising which has been waged by Health and Human Services (HHS) Secretary Robert F. Kennedy Jr.
Before he ended his independent presidential bid to support President Donald Trump, Kennedy Jr. said “on my first day in office I’m going to issue an executive order banning pharmaceutical advertising on television” in a video he posted to X.
We are one of only two countries in the world that allow pharmaceutical companies to advertise directly to consumers on television. Not surprisingly, Americans consume more pharmaceutical products than anyone else on the planet.
As I told @JoePolish, on my first day in office I… pic.twitter.com/jsvDhzq7yA
— Robert F. Kennedy Jr (@RobertKennedyJr) May 22, 2024
While Kennedy had been mostly quiet on the issue since ascending into his HHS role, he broke that silence Monday night in a television appearance with Dr. Phil. The video can be viewed here. (RELATED: ‘The Evidence Is Overwhelming’: RFK Jr. Calls On CDC To Stop Recommending Fluoride)
Kennedy told the audience that he’s working with Trump and the White House to find a way to challenge a “very bad” Supreme Court decision which upheld the pharmaceutical industry’s First Amendment right to advertise directly to consumers.
“We think we have other arguments,” he said.
Unlike tobacco or alcohol advertisements, Kennedy argued, pharmaceutical ads are different because more often than not it’s the government who are paying for the drugs.
“Pharmaceutical ads are different from any other ads. Number one, they are advertising a product that the taxpayer is going to have to pay for. If you advertise cigarettes or beer, you’re buying it yourself and you’re making that choice. But when you buy a pharmaceutical drug, my agency, in most cases, is going to have to pay for it,” he said.
Kennedy also criticized the industry’s ability to write off the advertising costs.
“We’re looking at this now with the White House, the ways we can get by that Supreme Court decision,” he told the audience.
The loophole allowing Big Pharma to write off advertising expenses costs Americans over $1 billion per year in tax money, a study the Campaign for Sustainable RX Pricing (CSRxP) published in March found.
“I’m committed to rooting out waste and abuse in our budget at every turn, and this is a big one,” Rep. Scholten told the Caller.
“This bill alone would cut our federal deficit by more than a billion dollars annually. Families in West Michigan and across the country are feeling the pinch of rising health care and prescription drug costs, and every dollar spent on TV ads is a dollar not going to lowering drug prices or funding life-saving research,” she continued.
Scholten also noted she was committed to working with anyone on legislation like this bill.
“The No Handouts for Drug Advertisements Act is a smart, bipartisan step to lower health care costs and rein in waste in our budget,” she concluded.
Pharmaceutical advertisement expenditures are also linked to rises in consumer spending on prescription drugs.
For every 10 percent increase in advertising spend, prescription drug spending rises between 1 and 2.3 percent, according to an estimate from the Congressional Budget Office (CBO). The CBO also found that eliminating pharmaceutical DTC advertising would lead to small drop — from 0.1 to 1 percent — in drug prices due to reduced consumer demand weakening manufacturers’ leverage over insurers when negotiating prices.
The National Bureau of Economic Research (NBER) also found that an 10 percent increase in marketing exposure led to a “5.4 percent increase in total prescriptions filled for advertised chronic drugs.”
First permitted by the Food and Drug Administration (FDA) in 1997, DTC advertising money has skyrocketed. Between 1997 and 2016, DTC advertising went from $2.1 billion to $9.6 billion, according to the CSRxP.
“For decades, Big Pharma has prioritized direct-to-consumer (DTC) advertising to boost sales and profits while collecting tax breaks for these often misleading ads that market high-cost drugs to Americans,” former Republican Arizona Rep. J.D. Hayworth said in a statement provided to the Daily Caller.
“This is another step in finally holding Big Pharma accountable, and we look forward to seeing where the conversation on DTC goes,” Hayworth concluded.
Kennedy and HHS are “exploring all available options to better regulate direct-to-consumer advertising and protect patients’ health from deceptive or incomplete pharma ads, and taxpayer dollars from unnecessary treatments” an HHS spokesperson told the Caller.
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