TV Networks Lobby Against End of Tax Deductions for Drug Ads - May Raise $37Bil in 10Yr for HealthCa

[Shallah Kali]

One reason why the 9/12ers got so much air time and the MSM gives any credibility to the teabaggery in general?

July 10, 2009, 12:21 PM ET

TV Networks Go to Bat for Drug Makers (and Themselves)

http://blogs.wsj.com/health/2009/07/10/tv-networks-go-to-bat-for-drug-makers-and-themselves

Charles Rangel, the House Ways and Means Committee chairman, is considering a plan to drop the drug-advertising deduction to raise as much as $37 billion over 10 years toward overhauling the health-care system. Rangel has said his committee needs to come up with $600 billion from new taxes over the decade to help finance planned changes.

Yesterday, the four big television networks — Walt Disney’s ABC, CBS, News Corp.’s Fox and General Electric’s NBC — and the Chamber of Commerce wrote Rangel urging him to drop the idea of ending the tax deduction on drug ads because U.S. advertising supports more than 21 million jobs, including 1.3 million in New York. News Corp. also owns Dow Jones & Co., publisher of Dow Jones Newswires and the Health Blog.

In addition, the Advertising Coalition, which also includes other media companies, sent a separate letter to President Obama asking him to oppose the proposal. (Read the letters to Rangel here and here, and to Obama here.)

“Elimination of pharmaceutical advertising as a business expense would make
it more expensive and inevitably would reduce the amount of this advertising,” wrote the networks in the letter to Rangel. Because the tax deduction currently applies to all businesses, ending it for pharma “would send a discordant note to other businesses in America if we begin using the Tax Code to favor or disfavor one form of advertising over another.”

It’s not the first time that advertisers and media have gotten involved in supporting Big Pharma. In 2007, their lobbying efforts helped water down provisions to restrict drug-ad marketing in an FDA bill.

[me b zola]

WTH?

I don't believe that pharma should be allowed to advertise prescription drugs at all. But they've been getting a tax break for their ad dollars? Oh yeah, this goes a long way in understanding the medias coverage of the health care debate.

:grr:

[Raine]

2. I didn't know that either

it really pisses me off!!!! :mad:

[me b zola]

1. Self delete

Sorry, posting problem.

[ejpoeta]

3. What!! They get to deduct advertising!!! Oh come on!! wtf!! well, if they try to do that

then the networks are going to fight it! pharma companies most likely won't advertise as much as they do if they can't deduct it from their taxes!! I wish they couldn't advertise in the first place. I am so sick of commercials about erectile dysfunction....

[HamdenRice]

5. Advertising has always been deductible as a cost of sales

Traditionally, it's in the same category of cost as, for example, the salaries of salesmen and sales clerks.

All companies that advertise are able to deduct advertising as a cost.

Businesses are taxed on profits, not on revenue. You deduct costs from revenue to get profit. So car companies deduct the cost of steel, plastic and glass to get the profits on their cars.

Similarly, all companies that have to sell stuff to the public get to deduct the cost of selling, including advertising, from revenue to determine profit (I assume cigarettes are an exception).

Rangel is therefore making a very bold proposal of essentially specially penalizing pharma companies for advertising, I suppose because it's unnecessary (they are generally prescribed by doctors not chosen by patients) and to keep drug costs down.

My concern is that he won't raise much revenue. Once an expense becomes undeductible, companies just stop doing it. I'm fine with that -- ie they won't advertise. I suppose if they stop advertising, profits will be higher and hence taxes, but it would be better to make drug costs lower. But I don't expect them to raise much revenue.

[ixion]

4. holy crap... they get a special discount for advertising?

:wtf:

And who says our Congress isn't in the pocket of Big Pharma.

[mopinko]

9. no, they get the same discount that any other company gets.

see reply #5.

[jtrockville]

6. Makes you wonder what other giveaways we're not aware of.

[eShirl]

7. "ould make it more expensive and inevitably would reduce the amount of this advertising"

GOOD!!!!!!!!!!!!!!

[Catshrink]

8. I'd love to see those creepy Cialis ads go away...

"What happens after they get out of those tubs" is the latest.