Funding Reform: Drug Ads Deductions No More?

Ways and Means Cmte. Chair Charles Rangel has announced that the House is considering eliminating the advertisement tax break that Pharma gets, in order to pay for health reform. This idea has been around since before BO took office, when Rahm Emmanuel warned industry leaders.

"Rangel said he and other lawmakers believe it is wrong to let drug companies
deduct their advertising costs for prescription drugs. ... Rangel said it’s
inappropriate for taxpayers to subsidize ads for pharmaceuticals because they
encourage viewers to ask for drugs they may not need."

It never occurred to me that there is a tax break for advertising. It's a a business deduction as it is an "ordinary and necessary expense paid or incurred during the taxable year in carrying on any trade or business." Huh. Makes me wish I had taken more tax classes.



Now, while I'm certainly no advocate for BigPharma, I will say the Representative's argument has me thinking about a variety of issues:



Almost all ads are for things we don't need. The others are for things we need that we can get from a variety of sources in various permutations (that are probably unnecessary or undesirable alterations anyway). In this sense it's not a very strong argument.



What pharmaceutical drugs are needed anyway? What OTC drugs are needed? What drugs of any kind are needed?



Who should decide what's needed?



The Rep's problem isn't with consumerism, i'm sure. In fact, that is supposed to be ENCOURAGED in our society (hence a crux of the health care "debate"). The problem is who pays for this consumerism. Unless, of course, the Representative is concerned with the large amounts of side effects & subsequent treatments or deaths associated with prescription drugs. While this is a more humanitarian perspective, it is still a monetary problem as well. I wonder if Rangel was concerned about the taxpayer subsidization of these ads before he started pondering the costs of health care reform? He could have been. I don't know. I'll get back to you on that one.



Also, the Representative says ads encourage patients to ASK for drugs they may not need. What's the problem with that, Mr. Thought Police? People ask for things they don't need all the time. In fairness, it could be a problem if not only are the drugs not needed, but they're dangerous, or the ads are misleading or straight up lying (which does happen). That kind of speech is not protected. Otherwise, if the ads pass First Amendment commercial speech regulation tests, the problem would lie in the granting of an unreasonable request, which really would fall to the doctors, wouldn't it. Is this a veiled jab at health care providers, and by extension, the AMA, who vehemently deny their prescribing habits are tainted by the ad efforts of BigPharma? (BTW, BigPharma spends 3-4 times as much on ads & swag for drs than it does on direct to consumer ads. i'm sure that's because they find advertising to consumers more profitable & therefore a less worthy investment.)



Rep. Rangel's argument that ads make people want to buy things they don't need could just as easily be applied to a commercial for Taco Bell. ...except his argument points to a key issue (IMO) that doesn't get as much attention as I think it should--Health issues are not standard free market issues. Rangel says people purchase DRUGS they do not need. What makes Rx drugs different from a Fiesta Burrito? I'll leave that one to you.



So there's a little rant on tax breaks for drug ads. Take it all with a grain of salt, or whatever your drug of choosing, while you still can make the choice. Believe it or not after reading this post, I'd be in favor of such a measure, if it could be implemented in a logical & justified way, rather than simply a lame attack on a very profitable industry.