Comments on: Another Shot At Big Pharma: Taking Away Their Tax Deduction For Marketing?

By: ralphbon

ralphbon — Fri, 23 Oct 2009 15:36:31 +0000

See Blub’s comment. Advertising is not a deduction; it’s an operating expense. Changing that status for one industry only would never hold up in court. You’re right that there’s plenty else that Congress and/or the FDA can do to regulate or modify the industry’s marketing activities; I mentioned banning DTC drug ads. But changing advertising’s status as a before-tax operating expense won’t hold up. That’s why the House has dropped the idea. And there are better ways to inflict pain on Big Pharma, as I note.

By: marcos

marcos — Fri, 23 Oct 2009 14:57:40 +0000

vedwards: As pertains to corporate personhood, apparently corporations get to write off all manner of cost of business, all while they enjoy the constitutional rights that flesh and blood persons do, while we bags of water are only allowed to write off a token of our cost of living, either through the standard deduction or through those limited expenses which can be itemized, if you qualify to do that.

ralphbon: Congress regulates all manner of advertising as pertains to products, such as alcohol, tobacco and such. Used to be cig and booze ads on television. A bill of attainder would be if Congress mandated that only McKesson lose its tax exemption, not if Congress eliminates the tax deductability of all pharma companies’ advertising.

By: vedwards

vedwards — Fri, 23 Oct 2009 12:54:25 +0000

Marcos, I love it. I have been saying the same things for years now, not understanding how corporations can get tax write-offs for such things as advertising, lobbyist salaries, and the like. Just like with organized crime, sometimes the way to get change is through the tax code. Let’s get cracking with this reform. Franken gets my vote for one of the best to have come into the Senate in the last 20 years.

By: ralphbon

ralphbon — Fri, 23 Oct 2009 10:32:17 +0000

Blub is right.

I caught wind of Franken’s move last week through a mention in the trade press. I initially thought it was a cool idea and considered doing a diary on it. But after digging for half an hour, it was clear to me that there’s nothing to see here.

This idea has been put forward in the House several times. It falls apart not so much because of industry influence but straightforwardly on the merits. If you remove marketing as an untaxed business expense for the pharmaceutical industry, what’s the legal justification for not doing it across the board, eg, for tobacco, which kills people when used as intended, or alcohol, which kills when used as culturally customary?

I’m not a lawyer, but singling out pharmaceutical companies in this way could even constitute, based on my education c/o Alan Grayson, a bill of attainder.

Alternatively, legislators could move to ban direct-to-consumer pharma advertising. That would feel good and probably be the right thing to do, but it would hurt advertising agencies and media conglomerates far more than Big Pharma itself. Pharma companies would just shift the dollars to marketing for physicians, or save the dollars as profit.

If you’re serious about hurting Big Pharma, there’s one key strategy: lower the bar for speedier introduction of generic substitutes. Start by rescinding the abominable 12-year marketing exclusivity for biologic drugs that the Senate HELP Committee dropped into its health care reform bill. Continue with legislative and regulatory actions, perhaps modifications to the Hatch-Waxman Act of 1984, to reduce hurdles to introducing generics for standard (ie, nonbiologic) brand-name drugs.

The Franken bill is a distraction that collapses on a moment’s inspection. Greasing the skids to generic competition is the sure way to inflict real punishment on Big Pharma.

By: shekissesfrogs

shekissesfrogs — Fri, 23 Oct 2009 03:44:53 +0000

Well, before you start thinking he walks on water and all that, he was a compliant puppy on the on Patriot Reauthorization bill.

By: Larue

Larue — Fri, 23 Oct 2009 02:50:42 +0000

“For a commercial vehicle lasting longer than 4 hours, please pay your taxes.”

*G*

By: marcos

marcos — Fri, 23 Oct 2009 02:24:59 +0000

For a commercial lasting longer than 4 hours, please pay your taxes.

By: Larue

Larue — Fri, 23 Oct 2009 02:15:20 +0000

With a stiff suspension?

By: Twain

Twain — Fri, 23 Oct 2009 01:55:47 +0000

It also is driving doctors crazy. They have to deal with patients who are demanding drugs they don’t need or are not compatible with the other drugs they are taking.

By: Becca

Becca — Fri, 23 Oct 2009 01:53:08 +0000

As I noted a couple months ago, my wife and I were watching the NBC evening news one night. During the last set of commercial breaks, I counted the commercials. Of these, 7 of 8 were for pharmaceuticals.

And after the break, the NBC “feel good” segment was sponsored by Glaxo SmithKlein.

This is insane. All these “ask your doctor” ads are overtly encouraging people — medically untrained people — to practice medicine-by-advertisement on themselves. And obviously it’s helping to drive drug costs through the stratosphere.

I have a new term for our economic system: Ruthlessly sociopathic capitalism.