Health Care Bill Won't End Tax Deductions For Prescription Drug Ads

Major networks, ad associations and NCTA were against the possible provision

Broadcasters, cable operators and the ad community were breathing a little easier Monday when the health care bill was introduced without a proposal to end the tax deduction for prescription drug ads, though the battle may not be over.

"We live to fight another day," said an ad agency source closely tracking the bill.

The major networks, ad associations, and others including the National Cable & Telecommunications Association, joined in a full-court press in the past few weeks against the provision, sending Ways and Means Chairman Charlie Rangel (D-VA) in particular, and his colleagues, a number of letters detailing the impact on their business of eliminating the deduction on the multi-billion ad category.

The plan had been to eliminate the deduction to help foot the bill for broader healthcare reform.

The industry countered that doing so by removing the deduction on what they said was a legitimate business expense, and a short-term revenue raiser, is a long-term adverse precedent for equal treatment and an economic hit at a time when the ad dollars in TV are already getting fewer and farther between.

In either the long or short term, they said, it would be an unconstitutional restriction of speech.

The industry remains concerned that the deduction could be introduced as an amendment to the bill down the line.

"The Ways and Means Committee is scheduled to mark up the revenue provision of the bill on Thursday," said Adonis Hoffman, senior VP and counsel for the American Association of Advertising Agencies. "As everyone in Washington knows, anything can happen in a committee mark-up."

That is where amendments can be added to the base bill. "We remain hopeful, however, that the message has resonated with members that denying tax deductibility of a single advertising category would not achieve their revenue-raising goals, and on the contrary would mean the loss of jobs and revenue to newspapers, magazines, local media and other industries."