Push To End Pharma Tax Break On Advertising Grows In Congress.

Efforts to discourage drug companies from buying ads on radio, television, and other media are expanding in Congress. There is now a bipartisan bill that, if passed, will end the tax deduction for expenses related to direct-to-consumer advertising of prescription drugs. Supporters see that as a loophole in tax law that forces taxpayers to subsidize ads for the pharmaceutical companies, which in turn, pass on higher costs to their customers.

“It’s flat-out wrong that drug companies receive huge tax breaks for running ads directly to consumers, especially as taxpayers in my state pay more and more for life-saving drugs,” said Sen. Jeanne Shaheen (D-NH). “It’s well past time for Congress to step in to end these tax breaks, lower costs for everyday Americans and hold pharmaceutical companies accountable.”

The No Handouts for Drug Advertisements Act would amend the Internal Revenue Code to disallow tax deductions for expenses related to direct-to-consumer advertising of both prescription drugs and compounded medications. It would also define “direct-to-consumer advertising” as advertisements primarily targeted to the general public through radio, television, direct mail, billboards, internet, social media, and other digital platforms.

Shaheen has co-sponsored the bill with Sen. Josh Hawley (R-MO). It is a companion to a similar bill introduced in the House earlier this month.

“For too long, Big Pharma has used our tax dollars to fund ads that push their products directly on patients. That needs to end,” Hawley said in a statement. “Making America Healthy Again starts by ending handouts to these corporations and empowering consumers to make the health decision that is truly in their best interest.” He points out that Health Secretary Robert F. Kennedy Jr. has also made it clear that he wants to ban prescription drug commercials.

The congressional effort comes as new data shows pharmaceutical spending continues to climb. U.S. prescription drug expenditures rose to $805.9 billion in 2024, an increase of 10.2% over the previous year, fueled in large part by soaring demand for weight-loss drugs. The American Society of Health-System Pharmacists says in a just-released report that those weight-loss drugs known as GLP-1s are increasingly prescribed for both diabetes and obesity and have become the top drug category by total spending and the fastest-growing segment in the market.

Separately, a 2021 analysis by the U.S. Government Accountability Office found that nearly all DTC spending was on brand-name drugs, with about two-thirds concentrated on 39 drugs.

Advocates of curbing the spending also point to Congressional Budget Office estimates that found a 10% increase in DTC advertising is associated with a 1% to 2.3% increase in drug spending. The October 2024 analysis also said that the estimate may understate how a larger change — for example, eliminating all DTC advertisements — would affect drug spending.