WASHINGTON, DC – U.S. Senators Jack Reed (D-RI) and Sheldon Whitehouse (D-RI) say taxpayers should not have to subsidize drug makers’ escalating advertising campaigns even as Big Pharma raises their prices and profits. 

To prioritize patient well-being and promote professional health guidance over commercial interests, Senators Reed and Whitehouse are teaming up with Senator Jeanne Shaheen (D-NH) and colleagues in offering the No Tax Breaks for Drug Ads Act (S.4691).  This legislation would close special interest tax loopholes and prohibit pharmaceutical drug manufacturers from claiming tax deductions for expenses on advertising directly to consumers.

Under current law, drug manufacturers are allowed to deduct the cost of advertising expenses from federal taxes, meaning taxpayers pay more of their hard-earned money for life-saving drugs while drug manufacturers get a tax break.

“Drug makers unhealthy addiction to direct-to-consumer advertising that bypasses doctors is costing taxpayers a fortune and contributing to higher health costs.  Consumers are sick of paying more because Big Pharma is trying to push the most expensive branded prescription drugs.  The No Tax Breaks for Drug Ads Act would stop drug companies from deducting their ad expenses from their federal taxes,” said Senator Reed.  “It’s past time Congress pass this commonsense legislation and eliminate subsidies for prescription drug ads that drive up prices for consumers.”

“Rhode Islanders paying for life-saving medication should not have to subsidize Big Pharma’s direct-to-consumer advertising costs,” said Senator Whitehouse.  “Our legislation is another step Democrats are taking to break the grip of Big Pharma and support hardworking families across the Ocean State.”

“Big Pharma should not receive tax breaks that allow them to raise prices on life-saving medications for consumers and families,” said Senator Shaheen. “It’s well past time for Congress to step in to end these tax breaks and lower costs for everyday Americans. High drug prices are one of the most pressing concerns I hear from Granite Staters, and I’ll continue working to lower drug prices and hold pharmaceutical companies accountable.”

Currently, the only two countries that allow direct-to-consumer advertising for prescription drugs are the United States (since 1997) and New Zealand.

According to the Government Accountability Office (GAO), U.S. pharmaceutical companies spent $17.8 billion on direct-to-consumer advertising for 553 drugs from 2016 through 2018, nearly all focused on brand-name drugs.  During this same time period, Medicare and its beneficiaries spent $560 billion on drugs--more than half on drugs that were advertised.

In addition to Shaheen, Reed, and Whitehouse, the No Tax Breaks for Drug Ads Act is cosponsored by U.S. Senators Tammy Baldwin (D-WI), Richard Blumenthal (D-CT), Sherrod Brown (D-OH), Tammy Duckworth (D-IL), Dick Durbin (D-IL), Mazie Hirono (D-HI), Tim Kaine (D-VA), Angus King (I-ME), Amy Klobuchar (D-MN), Joe Manchin (I-WV), Chris Murphy (D-CT), Bernie Sanders (I-VT), Elizabeth Warren (D-MA), Peter Welch (D-VT), and Chris Van Hollen (D-MD).

Companion legislation has been introduced in the U.S. House of Representatives by Congresswoman Elissa Slotkin (MI-07).