01.11.19

U.S. Senator Tammy Baldwin Cosponsors Legislation to Close Big Pharma Advertising Tax Loophole

Legislation would eliminate tax deductions for prescription drug advertising paid for by American taxpayers

WASHINGTON, D.C. - Today, U.S. Senator Tammy Baldwin, a member of the Senate Health, Education, Labor and Pensions (HELP) Committee, joined legislation led by Senator Jeanne Shaheen (D-NH) that would prohibit pharmaceutical drug manufacturers from claiming tax deductions for consumer advertising expenses.

Under current law, drug manufacturers are allowed to deduct the cost of advertising expenses from federal taxes. Drug companies have spent billions of dollars on consumer advertisements, including print ads and TV commercials. This aggressive advertising often increases demand and allows drug companies to increase prices. 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.

“We should not reward big pharmaceutical corporations with tax breaks for their advertising expenses when they are increasing company profits instead of bringing down the costs of prescription drugs for patients and families,” said Senator Baldwin. “Wisconsinites want Washington to find solutions that will lower drug costs, not subsidize Big Pharma’s massive advertising spending. This legislation will ensure that taxpayer dollars are not used to drive up the costs of lifesaving treatments that millions of patients rely on.”

“A major side effect of Big Pharma's enormous ad spending is that it drives up prescription drug costs and rips off taxpayers in the process. Drug companies continue to increase advertising spending year after year, inundating the airwaves with billions of dollars of commercials, all the while continuing to increase the price of medications that patients need,” said Senator Shaheen. “The American public shouldn't be subsidizing Big Pharma's ads which is why my legislation would close this egregious loophole.” 

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.

The End Taxpayer Subsidies for Drug Ads Act is also cosponsored by U.S. Senators Richard Blumenthal (D-CT), Sherrod Brown (D-OH), Dick Durbin (D-IL), Kirsten Gillibrand (D-NY), Maggie Hassan (D-NH), Mazie Hirono (D-HI), Angus King (I-ME), Amy Klobuchar (D-MN), Jack Reed (D-RI), Bernie Sanders (I-VT), Brian Schatz (D-HI), Chris Van Hollen (D-MD), Elizabeth Warren (D-MA) and Sheldon Whitehouse (D-RI).

Full text of the bill is available here.