DTC Drug Ad Tax Deductibility Proposal Supported By Finance Committee Member
This article was originally published in The Pink Sheet Daily
Executive Summary
Key Finance Committee member Nelson will offer amendment that would deny tax deduction for DTC drug ads.
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Eliminating tax deductibility for pharma direct-to-consumer advertising appears to be back on the table as a piece of the industry's contribution to funding health care reform. Sen. Bill Nelson, D-Fla., plans to offer an amendment that would deny a tax deduction for DTC advertising either in the Senate Finance Committee chairman's mark or during the Senate Finance Committee markup. The chairman's mark is expected to be issued on Sept. 16, and markup of legislation is scheduled to begin the week of Sept. 21. "By eliminating the tax break drug makers get for TV and other advertising, we would gain $37 billion over the coming years to help pay for health care reforms," said Nelson. The White House, specifically Chief of Staff Rahm Emanuel, has been an advocate for eliminating the deduction for DTC ads. The health care reform legislative framework released over Labor Day by Senate Finance committee chairman Max Baucus, D-Mont., includes a new proposal to raise revenue from the pharmaceutical industry - a $2.3 billion annual fee based on market share that would add up to $23 billion over 10 years to help pay for health care reform (Also see "Baucus Reform Framework Not So Taxing On Industry; $23 Bil. Is Fee-Based" - Pink Sheet, 14 Sep, 2009.). The revenues collected through the fee structure are included as part of The Pharmaceutical Research and Manufacturers of America's $80 billion commitment to reducing health care costs over 10 years (Also see "Dollars For Donuts: PhRMA's $80 Bil. Coup In Health Care Reform" - Pink Sheet, 29 Jun, 2009.). Medicare Part D amendment Nelson intends to offer several additional amendments to the Finance bill, including one that would require drug makers to provide rebates to Medicare - the same way they do to Medicaid - as an additional cost-saving strategy for the federal program. That provision, strongly opposed by the pharmaceutical industry, is not in the current Senate Finance Committee framework. It is, however, being considered in the House. In H.R. 3200, "America's Affordable Health Choices Act," pharmaceutical companies are being asked to help offset the costs of expanded health care coverage through a rebate on drugs used by Medicare Part D beneficiaries who are also eligible for Medicaid ("dual eligibles"), a 50 percent discount on drugs used by beneficiaries in the Part D coverage gap, and new rebate requirements for Medicaid drugs (Also see "House Bill Would Expand Rx Market, But Negatives Draw PhRMA's Protest" - Pink Sheet, 20 Jul, 2009.). Nelson's additional concerns Some of Nelson's other concerns with Baucus' bill, he said, include ensuring insurance available in the exchange is affordable; addressing health care costs of retirees not yet eligible for Medicare; and focusing on how small businesses would be treated under the bill. "One issue that has troubled me is the potential for rapid cost increases to certain beneficiaries under Medicare Advantage," Nelson added. "And while I don't dispute that the high subsidies to Medicare Advantage insurers need to end, I find it difficult to ask current beneficiaries to bear the burden of this important change." As a compromise he will offer an amendment that would shield them from benefit cuts. -Lauren Smith ([email protected]) |