Finkenauer Aims to Close Tax Loophole for Big Pharma and Crack Down on Drug Ads

Press Release

WASHINGTON, DC -- Congresswoman Abby Finkenauer (IA-01) introduced the End Taxpayer Subsidies for Drug Ads Act on Friday to stop pharmaceutical companies from getting a tax break to advertise prescription drugs.

Over the last twenty years, pharmaceutical companies' spending on advertising and marketing prescription drugs has skyrocketed. In 2016, these companies spent $6 billion on direct-to-consumer marketing, including 663,000 television commercials. While patients should always have access to the information they need about the most appropriate medications from their doctors, these ads push what are often expensive, brand-name drugs that may not be the most effective treatment, and drive up health care spending.

Finkenauer's legislation would ensure that pharmaceutical companies can no longer claim a tax write off for these direct-to-consumer drug advertising expenses.

"Not only are Americans paying sky-high prices for our prescription drugs, we're also subsidizing Big Pharma with enormous tax write-offs for ads that push patients to seek out needlessly expensive drugs," Congresswoman Abby Finkenauer said. "We should rely on doctors for drug recommendations -- not 30-second TV spots or glossy full-page magazine ads. Resources should go to research and the development of new treatments and cures, not Big Pharma's advertising budget."

"I'm proud to introduce the End Taxpayer Subsidies for Drug Ads Act because we need more innovation, lower prescription drug prices, and fewer commercials from Big Pharma," Finkenauer said.

The United States is one of just two countries that even permits direct-to-consumer advertising of prescription drugs. Prescription drug products are unique because they are sold to consumers based on medical need and the advice of medical professionals.

While Finkenauer's bill would not prohibit the advertising or marketing of prescription medications, the End Taxpayer Subsidies for Drug Ads Act would change the Internal Revenue Code to prevent pharmaceutical companies from taking a tax deduction for the expenses they incur in direct-to-consumer advertising of prescription drugs. This would apply to prescription drug advertisements in all formats, including print, radio, television, and digital. The legislation would not prohibit other industries from claiming the tax deduction.

"As patients suffer from skyrocketing prescription drug prices, manufacturers take advantage of a rigged system that gives drug corporations billions of dollars in tax breaks on direct-to-consumer ads," said Sarah Kaminer Bourland, legislative director for Patients for Affordable Drugs Now. "This legislation from Rep. Finkenauer will eliminate Big Pharma's tax loophole and end the practice of patients and taxpayers subsidizing the marketing budgets of drug corporations."

Rep. Elissa Slotkin joined Finkenauer as an original cosponsor of this legislation.

Finkenauer has made it a top priority to drive down the cost of prescription drug prices. She voted to help pass H.R. 3, which lowers the cost of prescription drugs by allowing Medicare to negotiate drug prices directly with pharmaceutical companies for the benefit of both people with Medicare and with private insurance. She also passed a bipartisan transparency amendment to H.R. 3 requiring TV advertisements for prescription drugs to include how much a 30-day supply or typical course of treatment would cost.

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