As expected, Sen. Debbie Stabenow (D-Mich.) introduced a bill Tuesday that would
require pharmaceutical companies to pay taxes on all money spent on advertising
and marketing of drugs beyond what the companies spend on research and
That would mean, for example, that if a company spent $100 million
researching and developing a drug and $110 million advertising and marketing
it, then it would not be able to deduct the additional $10 million.
"Prescription-drug bills for the average senior skyrocketed an astounding 116
percent from 1992 through 2000 and are expected to continue their steep climb over
the coming years," Stabenow said. "While pharmaceutical companies claim that these
rising costs are due to increased research and development, the real truth is
all too clear. There is strong evidence that dramatic increases in advertising
and marketing are a major reason for the continued escalation in prescription-drug prices."
Any tax savings this bill may provide would go to the Medicare Trust Fund,
Congress is working on Medicare reform, and prescription-drug costs are a
piece of that legislation.