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Prescription Drug Advertising

August 30, 2009
Posted by Susan Weissman

There’s an interesting rumor going around — may be more than a rumor. Here it is: the drug industry is in negotiations with the Obama administration regarding whether or not to reduce the deductibility of either research and development or consumer advertising. Here’s the back story. The Obama administration has to find ways to raise dollars to deal with the ever growing deficit. If advertising became 80% deductible rather than the 100% it is today, that would yield $250 billion over the next 10 years. Of course it will increase the essential cost of the advertising which will result in decreased advertising and job loss in our industry. And there is another economic component: consumer advertising results in requests for branded drugs, doctors write more prescriptions for those drugs (and less for generics) which hits medicare. So there are several economic benefits to consider. But beyond the economic issue, there is a moral one. This move would discourage direct consumer advertising considerably. Complicated stuff, no doubt, but one that effects our access to consumer health information, too. A very delicate balancing act here. Stay tuned.

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