Advertising Tax Deduction “at Risk,” Davidson Says

Dec. 12, 2012 – An ongoing push to eliminate the tax deduction for prescription drug advertising may actually move forward for a number of reasons, according to Jim Davidson, Executive Director, The Advertising Coalition, who spoke at a recent Medivo BTP “Leadership Series” meeting held at The New York Times.

“Jim Davidson”s update on Capitol Hill’s approach to medical marketing policy helps underscore the importance of vigilance and good representation in Washington,” said Coalition for Healthcare Communication John Kamp. “If the medical marketing tax issue raises its ugly head again, Coalition members will be called upon to do their part in educating Members of Congress about the importance of medical marketing to patients and the U.S. economy,” he said.

The full Beyond the Pill article covering Davidson’s presentation is listed below:

Tax Reform Efforts Put DTC Advertising ‘Deduction’ at Risk

By · December 11, 2012

It seems like an old story, or now one that comes up about every year at budget time: some legislators on Capitol Hill want to eliminate the tax deduction permitted for prescription drug advertising.

This time around, direct-to-consumer (DTC) advertising finds itself as a chip in the ongoing discussions about tax reform.

This was one of the messages that Washington policy expert Jim Davidson delivered during his presentation at a recent Medivo BTP “Leadership Series” breakfast at The New York Times. Marketing and policy executives from several NYC-area companies attended the breakfast, along with executives of The New York Times and advertising agencies with New York-area offices.

“For the first time, advertising is really seriously at risk in the tax code because people see a huge pot of gold,” Davidson said. “Why is it at risk? Because you can easily alter the deduction as a business expense and make a lot of money. And it is not a rate increase, which meets the Republican objective.”

In addition, in the current negotiations on tax reform, Davidson said the discussion about eliminating the cost of advertising as a business expense has been extended to include “all advertising” and not just ads for prescription drugs.

The idea of taking away the tax deduction allowed to companies for advertising expense, specifically as it relates to DTC, has been around for several years. Indeed, there are some estimates that this move would raise about $37 billion over a 10-year period for the federal government.

“Even in Washington today, that’s a lot of money,” Davidson noted. “So it’s a very serious risk and it’s one that will continue to dog us.” He noted that the concept of wiping out the tax deduction for pharmaceutical advertising — and this would include both consumer and professional ads — has come up in every two-year session of Congress for the past decade. Nonetheless, he noted that advocates for pharmaceutical marketing are taking the threat “seriously.”