Rocky Political Road Ahead for Pharma Industry

Nov. 16, 2015 – From tax inversions to the proposal to reduce ad tax deductions for marketing to being named an “enemy” by Hillary Clinton, it is clear that as the march toward the 2016 presidential election continues, the potential changes ahead for pharmaceutical companies could be substantial, according to two industry experts speaking at last month’s Coalition for Healthcare Communication meeting held in Washington, D.C.

“After the 2014 election, with Republicans controlling both the House and the Senate, it was supposedly going to be easier for those bodies to work together, but that hasn’t really been so,” said Dick O’Brien, executive vice president, Government Relations, for the American Association of Advertising Agencies (4A’s). As the industry looks ahead to the 2016 election, it will have to contend with whether the federal government will attempt to prevent pharma company tax inversions and whether a tax reform proposal, which has the elimination of advertising tax deductions in its sights, will prevail, O’Brien told attendees.

Hillary Clinton has added fuel to the fire by stating that as president, she would end tax breaks for televised drug ads. “There is great political capital to be had in going after drug companies, and this could be a big issue in her campaign if she is nominated,” according to O’Brien. “We could very well be in for a serious fight.”

Coalition for Healthcare Communication Executive Director John Kamp concurred, saying that “if Clinton becomes president she will almost be required to act on drug companies,” and noting that whichever way the election goes, there could be turmoil ahead. “If the Democrats sweep, we may see the end of pricing flexibility, and if the Republicans sweep, we may see the reform or repeal of the Affordable Care Act.” Any shakeup could alter the course of Congressional tax reform, Kamp told meeting attendees.

O’Brien explained that the current ad tax proposal, which would reduce the advertising tax deduction to 50 percent and then amortize the remaining 50 percent over five to 10 years, could result in an estimated savings to the federal government of $169 billion over 10 years. This significant dollar value “is being baked into all discussions about tax reform and is a number that makes it harder for us – but not impossible,” he said.

O’Brien also remarked that there are champions of the industry – and the roughly 400,000 jobs it creates in the U.S. economy – in Congress, such as Sen. Chuck Schumer (D-N.Y.), who has said that the current proposal would go through only “over my dead body.”

He noted that Rep. Paul Ryan (R-Wisc.), former Chairman of the House Ways and Means Committee and now Speaker of the House, had said previously that if “we can’t move a bill by summer, we’ll wait until after the election,” which suggests that there may not be much movement on this issue until after 2016. O’Brien also rightly predicted on Oct. 21 that Rep. Kevin Brady (R-Texas) would be named the new chairman of the Ways and Means Committee.

On a more positive note, Kamp applauded the House efforts to move the 21st Century Cures bill forward. That bill includes provisions: to exempt textbooks, reprints and continuing medical education from Sunshine Act reporting; to allow pharma companies to communicate health care economic information with payers (which would fully realize FDAMA Section 114); and to provide an FDA deadline for developing guidance that would allow truthful and nonmisleading off-label communications.  A Senate version of the bill was due around Thanksgiving, Kamp said Oct. 21, adding that “the longer it takes to get out, the less likely it would be to pass this year.”

A Senate Health Education, Labor and Pensions nomination hearing for Dr. Robert Califf, who was nominated by the White House to become the new Commissioner of Food and Drugs, is slated to begin tomorrow at 10 a.m. (for a live feed of these hearings, go to: Under new leadership, it is possible that the FDA’s Office of Prescription Drug Promotion may take a more forward-thinking position on social media and other issues, Kamp indicated, saying that in the recent past, the industry has seen “several new guidances with very little new guidance.”

With all of these changes afoot, Kamp informed attendees that the Coalition is likely to issue a “call to action” in the future, asking its members to reach out to members of Congress to help spread the message about the value of pharmaceutical marketing. “We are the broader voice of the marketing industry for pharma,” Kamp concluded.

Dick O’Brien’s full meeting slides: O’Brien- Coalition for Healthcare Meeting

John Kamp’s full meeting slides: CHC Member Mtg Oct. 21 ’15