S. 1785: No Handouts for Drug Advertisements Act

This bill, titled the No Handouts for Drug Advertisements Act, aims to change the way certain drug advertising expenses are treated for tax purposes. Specifically, it intends to prohibit companies from deducting expenses related to direct-to-consumer advertising of certain prescription drugs from their taxable income. Here is a summary of the bill's main components:

Key Provisions

• Disallowance of Deductions: The bill amends the Internal Revenue Code to state that expenses associated with direct-to-consumer advertising of "covered drugs" cannot be deducted by companies for tax purposes.
• Definition of Direct-to-Consumer Advertising: This type of advertising is defined as any advertisement directed towards the general public that promotes a covered drug. It can occur through various media channels, including:
  • Broadcast media (e.g., radio, television)
  • Direct mail and billboards
  • Internet and digital platforms (e.g., social media, mobile applications)
• Exceptions: The bill specifies that advertisements made through publications in journals and other periodicals are not included in the definition of direct-to-consumer advertising and thus can still be deducted.
• Definitions of Key Terms:
  • Covered Entity: Refers to a sponsor of a prescription drug product or a person owning an outsourcing facility.
  • Covered Drug: Includes prescription drugs or drugs compounded according to specific regulations.
• Effective Date: The provisions of this bill would take effect for amounts paid or incurred after the bill is enacted, affecting taxable years that end after that date.

Overall Impact

The primary aim of this bill is to reduce the tax benefits that pharmaceutical companies might receive from their advertising expenditures aimed at consumers. By making these expenses non-deductible, the bill seeks to potentially influence how these companies allocate their resources towards advertising their products directly to consumers.

Relevant Companies

• PFE - Pfizer Inc.: A major pharmaceutical company that markets various prescription drugs directly to consumers.
• JNJ - Johnson & Johnson: Another large pharmaceutical company known for direct-to-consumer advertising of its medications.
• ABT - Abbott Laboratories: Engages in direct advertising of its prescription drugs to the public and may be affected by this bill.
• AMGN - Amgen Inc.: A biotechnology company involved in direct drug marketing that could see financial implications from the disallowance of ad expense deductions.