DTC Advertising

McCaskill Proposal to End Tax Deduction for DTC Marketing Re-emerges

March 1, 2018 – After filing an amendment to the tax bill last year to eliminate the tax deduction for drug marketing expenses — which did not move forward — Sen. Claire McCaskill (D-Mo.) today announced a bill that would amend the tax code to “deny the deduction for advertising and promotional expenses for prescription drugs.”

“The Coalition, the 4A’s and our advertising allies will be taking this bill seriously, but it is unlikely that it will be enacted in this session of Congress,” said Coalition for Healthcare Communication Executive Director John Kamp. “While the provision is likely to garner some Democratic and even a bit of bipartisan support, the Republican-controlled Senate is not expected to hold hearings or set the provision for a vote,” he said.

The bill, entitled “End Taxpayer Subsidies for Drug Ads Act,” would disallow the deduction of expenses related to direct-to-consumer [DTC] advertising of prescription drugs for any taxable year.” The bill defines DTC advertising as any dissemination of an ad which:

  • Is in regard to a prescription drug product, and
  • Is primarily targeted to the general public through publication in journals, magazines, other periodicals, and newspapers; broadcast through radio, television, telephone communications, direct mail and billboards; and placed on the Internet or through digital platforms, including social media, mobile media, web applications, and electronic applications.

“The Coalition has long opposed such a change in the tax law. Proposing a ban or tax penalty on prescription drug advertising suggests that consumer ignorance should be preferred to consumer information and involvement in healthcare decision making,” according to Kamp.