Slotkin Introduces Bill to Close Tax Loophole for Big Drug Companies

Statement

U.S. Rep. Elissa Slotkin (MI-08) today unveiled the No Tax Breaks for Drug Ads Act, a bill that would eliminate tax deductions given to drug manufacturers for advertising directly to consumers. U.S. Reps. Cindy Axne (IA-03) and David Trone (MD-06) are original co-sponsors of the bill.

The tax system currently allows drug manufacturers to deduct the cost of advertising expenses from their federal taxes, allowing the companies to put huge sums of money back into their own pockets.

"For years, American taxpayers have been subsidizing the horrible ads that drug companies run on TV to promote their own products to the tune of billions of dollars. It's time for those subsidies to stop," said Slotkin. "Most Michiganders can barely turn on their TV without seeing one of these ads, which usually promote the most expensive name-brand drugs. Taxpayers shouldn't be the ones footing the bill on behalf of the biggest pharmaceutical companies in the world, especially when many of these companies are paying more for TV ads than on research for new drugs. Lowering the cost of prescription drugs has long been important to me, and closing this tax loophole is an important part of getting the job done."

Pharmaceutical companies spend exorbitant amounts of money on direct-to-consumer-advertising (DCTA) to promote their own products. Advertising expenses by pharmaceutical drug manufacturers have more than quadrupled over the past two decades, rising from $1.3 billion annually in 1997 to $6 billion annually in 2016. In that same time period, advertising from drug companies has increased from 79,000 ads to 4.6 million ads, including 663,000 TV commercials.

Meanwhile, a recent report conducted by the Government Accountability Office (GAO) found that big pharma spent $17.8 billion on direct-to-consumer advertising (DTCA) for 553 drugs from 2016 through 2018.

"Iowans are paying more than ever for their prescription drugs while giant pharmaceutical companies make record profits in part because they are exploiting our tax code to flood our airwaves with TV ads subsidized by Iowa tax dollars. This is insulting to the Iowa taxpayers who come up to me at every one of my town halls and write to me personally to share the incredible lengths they are going to just to afford their medications. Iowans who are selling their family heirlooms to buy life-saving medications shouldn't have their tax dollars funding the ads for those drugs," said Rep. Axne. "I'm proud to join Congresswoman Slotkin and Congressman Trone to introduce legislation that will cut off these tax breaks for drug companies and stop my constituent's tax dollars from funding the never-ending carousel of prescription ads on their televisions."

"While millions of Americans struggle to pay for life-saving medications, pharmaceutical companies are using a loophole to avoid paying billions of dollars in taxes. Rewarding companies with tax breaks when they continually increase their prices for consumers is just bad business," said Congressman Trone. "It's about time these companies pay their fair share. The No Tax Breaks for Drug Ads Act will do just that."

"Drug corporations that continue to inflate profits in the middle of a global health pandemic while tens of millions suffer here at home and around the globe should not be rewarded with subsidies for their advertising expenses that cost taxpayers even more money," said Margarida Jorge, Campaign Director for Lower Drug Prices Now. "This is corporate welfare of the worst kind. We applaud Congresswoman Slotkin for introducing this vital piece of legislation and hope Congress will swiftly pass it."

Slotkin has been a longtime advocate for drug pricing reforms, including letting Medicare negotiate for lower drug prices. She also successfully led the Real Time Benefits Act, a bill signed into law by President Donald Trump that will increase transparency around the cost of prescriptions, help seniors save money on medications and drive down the cost of prescriptions.

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