Brown Introduces Legislation to Close Big Pharma Advertising Tax Loophole

Bill would Eliminate Tax Deductions for Prescription Drug Advertising Subsidized by American Taxpayers

WASHINGTON, DC — U.S. Senator Sherrod Brown (D-OH) recently introduced the End Taxpayer Subsidies for Drug Ads Act, legislation that would prohibit pharmaceutical drug manufacturers from claiming tax deductions for consumer advertising expenses. Advertising expenses by pharmaceutical drug manufacturers have more than quadrupled over the past two decades, rising from $1.3 billion in 1997 to $6 billion in 2016. In that same time period, advertising from drug companies has increased from 79,000 ads to 4.6 million ads, including 663,000 TV commercials. Economists have estimated that nearly one third of the growth in drug companies’ spending can be attributed to the increase in advertising for prescription drugs.

Under current law, drug manufacturers are allowed to deduct the cost of advertising expenses from federal taxes. The End Taxpayer Subsidies for Drug Ads Act would eliminate this tax deduction for drug advertising costs, ensuring that taxpayer dollars are not used to subsidize drug advertisements.

“The purpose of medicine is to help people, not to line the pockets of Big Pharma executives. It’s time to stop using taxpayer dollars to give tax breaks to Big Pharma, especially at a time when too many hardworking Americans are struggling to afford the medicine they need and the culprit is often price gouging by pharmaceutical corporations,” said Brown.

This legislation was introduced by Senator Jeanne Shaheen (D-NH). The bill original cosponsors include Senators Brown, Maggie Hassan (D-NH), Angus King (I-ME), Sheldon Whitehouse (D-RI), Tammy Baldwin (D-WI), Kirsten Gillibrand (D-NY), Chris Van Hollen (D-MD), Bernie Sanders (I-VT), Jack Reed (D-RI), Amy Klobuchar (D-MN), Richard Blumenthal (D-CT), Elizabeth Warren (D-MA), Mazie Hirono (D-HI), Brian Schatz (D-HI) and Dick Durbin (D-IL).

Brown recently announced two legislative proposals to bring down the cost of prescription drugs in the US:

  • He introduced the Medicare Negotiation and Competitive Licensing Act with Congressman Doggett (D-TX). This legislation would authorize the Secretary of Health and Human Services (HHS) to negotiate drug prices and, if drug companies refuse to negotiate in good faith, it would enable the Secretary to issue a competitive, compulsory license to another company that is willing and able to produce the medication as a generic. 
  • Brown also introduced the Stop Price Gouging Act with Senator Gillibrand. This bill would penalize pharmaceutical companies that engage in price gouging without cause, leading to price spikes for patients who rely on medication to treat

Full text of the bill is available here.

 

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