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Marketing Tax Provision Escapes Senate Vote

Jan. 13, 2017 – An amendment introduced by Sen. Al Franken (D-Minn.) to eliminate the tax deduction for drug marketing costs was not included in this week’s Senate voting on the repeal of the Affordable Care Act, thanks to immediate action by The Advertising Coalition (TAC), which focused on messages to all Senate offices that the provision violated good public policy and the First Amendment.

As a result of TAC’s efforts, “the provision was stricken from the agenda even before the full Senate vote,” according to Coalition for Healthcare Communication Executive Director John Kamp.

Franken’s provision had the purpose of establishing “a deficit-neutral reserve fund relating to unfair tax breaks to drug companies” and called for “disallowing the deduction for direct-to-consumer advertising of prescription drugs” and promotional expenses for prescription drugs.

TAC talking points on the Franken amendment asserted the following:

  • The First Amendment protects the right of pharmaceutical companies to advertise to consumers; Congress and the FDA have established procedures to assure this speech is truthful and balanced.
  • The purpose of DTC advertising is to provide patients with information regarding potential medical conditions or beneficial therapies.
  • The Franken proposal potentially infringes on a company’s right to advertise under the First Amendment.
  • Advertising has been recognized as essential to business and treated as an ordinary and necessary business expense since the Tac Code was adopted.
  • Advertising created millions of jobs and adds trillion of dollars to U.S. economic activity and benefits all levels of our economy. In 2014, advertising supported 20 million U.S. jobs and $5.8 trillion in U.S. sales.

On Jan. 12, Jim Davidson, head of TAC, thanked media and advertising members, saying that the organization is pleased that the amendment was not included in the Senate vote. “We are grateful to our friends who worked to keep it from being added to the list,” Davidson said.