Pharmaceutical Advertising Tax Deductibility

Issue

Believing the cost of pharmaceuticals to be too high, some groups have proposed reducing or eliminating the business tax deduction for direct-to-consumer advertising of prescription drugs.

AAF Position

The AAF opposes any efforts to limit the advertising tax deducibility of pharmaceuticals. Reducing the deductibility of advertising expenses artificially increases the cost of advertising. This is an unfair attack on the pharmaceutical industry. We contend that advertisers have a First Amendment right to provide information on their products and, in the case of the pharmaceutical industry, a responsibility to inform the public about the availability of helpful products.

Opposition

Supporters of bills aimed at ending the advertising tax deductibility say that the cost of advertising raises the cost of drugs without any benefit to consumers. Some use the tax deductibility issue as a way to try to curb all direct-to-consumer advertising of pharmaceuticals, because they believe advertising results in overmedication, despite several studies to the contrary.


Last Updated: August 2007