Lobbyists argue DTC ad tax deduction may be a casualty of reform


Rep. Evan Jenkins (R-W.Va.) was the keynote speaker at the Coalition for Healthcare Communications Rising Leaders Conference on Wednesday.

Limiting direct-to-consumer advertising, outright banning it, or eliminating its deduction as a business expense are not new ideas. However, a potential end to the business advertising tax deduction for DTC is more real than ever, Jim Davidson, chair of the the Advertising Tax Coalition, cautioned marketing executives.

“The more things change, the more things stay the same,” he said Wednesday during a conference in Washington.

Drugmakers can currently write off money they spend on advertising and marketing as a tax deduction. In March, Sen. Al Franken (D-MN) proposed a bill, which is called the “Protecting Americans from Drug Marketing Act,” that would end the tax deduction.

“The tax [deduction] will be one of the hardest things to defend,” Davidson told attendees at the Coalition for Healthcare Communication's Rising Leaders Conference on Healthcare Policy. He noted that tax reform will likely be a focus for the next president's agenda — a process that could begin as soon as 2017 — and added that the DTC advertising tax deduction could be seen as a major revenue offset in negotiations. Democratic candidate Hillary Clinton has said she would end tax breaks for DTC. Donald Trump has also generally expressed support for tax reform.

“Tax reform will likely come forward in the next administration,” he explained. “This will be a major opportunity to remove the tax insert on DTC advertising.”

Davidson also noted that pharma companies could ultimately be in support of ending the tax deduction, too, using it as a bargaining chip to lower the corporate tax rate or for measures related to repatriated profits. Eli Lilly, Pfizer, and Johnson & Johnson are all part of the Alliance for Competitive Taxation, a group that supports comprehensive tax reform.

He urged agency executives to express their concerns to lawmakers about the issue. “If we don't get folks throughout the country to [voice their opinion] on this, we're going to be outnumbered,” he said.

Rep. Evan Jenkins (R-W.Va.), the conference's keynote speaker, told the audience that “it is very important that we do not put unreasonable hurdles to communicating with physicians and patients.”

Nick Colucci, president of Publicis Healthcare Communications Group, said during a panel discussion that the onus is on young agency executives to get involved in the political process this year. “Politics is great theater,” he said. “But democracy is not a spectator sport.”

Colucci quipped that the pharmaceutical industry “has as much right to advertise as alcohol [companies] and McDonald's. I just want to be treated with the same respect as a damn cheeseburger.”


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