April 9, 2004

Legislative Activity

Date:April 9, 2004

To: AAF Members

From: Jeff Perlman, EVP-government affairs
Clark Rector , SVP-state government affairs
Jennifer Akridge, manager-government affairs

Re:Senator Grassley Proposes Limitation on Advertising Deductibility

Senator Charles Grassley (R-IA) yesterday introduced legislation (S. 2307) that would take away the deduction for advertising costs for any pharmaceutical company that attempts to limit the importation of its prescription drugs into the United States. This threat is particularly serious because Senator Grassley is chairman of the powerful Senate Finance Committee.

It is vitally important that AAF members contact their senators and urge them to oppose the Grassley bill — especially if one of them sits on either the Finance or Health, Education, Labor and Pensions Committees (members are listed below) which will be the first to consider the bill.

S. 2307 should be opposed because:

  • There is no relationship between the reimportation of drugs and advertising deductibility. Threatening advertising should not be used as a weapon to further unrelated public policy goals.
  • Limiting advertising deductibility violates the First Amendment guarantees of commercial free speech. The Supreme Court established in the Central Hudson case the principal that restrictions on commercial speech must directly advance a substantial public interest. Since there is no relationship between advertising and reimportation, the Grassley bill fails this test.
  • Reducing pharmaceutical advertising by limiting deductibility would harm consumers. The U.S. Food and Drug Administration has concluded that pharmaceutical advertising benefits consumers by providing a valuable source of information and encouraging visits to physicians.

Please do not hesitate to contact us at (202) 898-0089 if you have any questions or comments.

The following contact information is for the two committees that will consider the Grassley bill first. Please keep in mind that you should only contact the senators from your state as mail from other states is simply re-routed. If your senator does not have an e-mail listed, please use the Web site listed to send an e-mail to that senator through the senate's Web mail. If you do not have HTML e-mail capability or have any trouble using the following links, please contact the AAF to have an Excel list e-mailed to you or visit the Senate Web site at www.senate.gov.

Please click here for a list of Senate Finance Committee Members.
Please click here for a list of Senate HELP Committee Members.