Sept. 24, 2015 – Presidential hopeful Hillary Clinton just announced that she would “demand a stop to excessive profiteering and marketing by denying tax breaks for direct-to-consumer [DTC] advertising and demanding that drug companies invest in R&D in exchange for taxpayer support,” according to a briefing released this week by her campaign.
Under Clinton’s plan, prescription drug companies would be subject to both strict advertising rules and increased price negotiations with federal insurance plans. The marketing restrictions Clinton proposes would eliminate drug companies’ ability to deduct DTC advertising expenses and would redirect these funds to an R&D tax credit. She also would like to see a mandatory ad pre-clearance review by the FDA, funded by manufacturer user fees, “in order to be sure that the ads provide clear and understandable information to consumers.”
“Old, already-deemed silly ideas often rear their heads again during political campaigns, and Clinton’s revival of the idea to disfavor the tax status of DTC drug advertising is a good example,” said Coalition for Healthcare Communication Executive Director John Kamp. “This idea often has been suggested in policy circles, and just as often has been rejected for several reasons, not the least of which is that it would violate the First Amendment,” Kamp said. “More important, however, is the fact that DTC advertising enables patients and caregivers to learn more about their health options, and thus spurs useful doctor/patient discussions and better health decisions.”
Although The Washington Post recently cited that drug companies spent $4.5 billion on DTC ads in 2014, Kamp also noted that “observers should be very skeptical of spending estimates on DTC advertising, because currently distributed estimates are just that, based on the list price value of ads run on broadcasting, print and the Internet. Advertisers routinely pay one-third to one-half less for ads, reducing tax revenue estimates by at least that much.”
Specifically, to spur additional investment in R&D, Clinton’s proposal would require drug companies that benefit from federal support to invest “a substantial amount of their revenue in R&D, and if they do not meet targets, boost their investment or pay rebates to support basic research.” She also would:
(1) Cap monthly and out-of-pocket costs for prescription drugs;
(2) Increase competition for drugs, including specialty drugs, to drive down prices and increase consumer choice;
(3) Prohibit “pay for delay” arrangements to get generic options to the market faster;
(4) Allow Americans to import drugs from abroad; and
(5) Ensure that consumers are getting value for their drugs.
Her plan states she would “leverage America’s strong bargaining power” to demand higher Medicare rebates for prescription drugs and lower drug costs from drug companies.