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Legislative bills

Bipartisan Legislation Seeks to End Tax Breaks for Direct-to-Consumer Pharmaceutical Ads

Strategic Insights

— 2 min read

US Senators Jeanne Shaheen (D-NH) and Josh Hawley (R-MO) have introduced the No Handouts for Drug Advertisements Act, a bipartisan bill aimed at eliminating tax deductions for pharmaceutical companies on expenses related to direct-to-consumer advertising of prescription drugs and compounded medications. Under current law, these companies can deduct the costs of direct-to-consumer advertising, subsidized by taxpayers. The legislation would amend the Internal Revenue Code to disallow tax deductions for these expenses and define direct-to-consumer advertising as primarily targeted to the general public through various digital platforms.

Key Takeaways:

  • The No Handouts for Drug Advertisements Act would prohibit pharmaceutical companies from claiming tax deductions for expenses on drug advertisements to consumers.
  • Current law allows pharmaceutical companies to deduct the costs of direct-to-consumer advertising, subsidized by taxpayers.
  • The legislation aims to eliminate a tax break that fuels the flood of prescription drug ads designed to boost profits and drive up prices for patients.
  • The US is one of only two countries that allow direct-to-consumer drug advertising, and taxpayers should not be footing the bill for it.
  • The bill would define "direct-to-consumer advertising" as primarily targeted to the general public through television, radio, direct mail, billboards, internet, social media, and other digital platforms.
  • Senator Shaheen has spearheaded efforts to combat rising drug prices and make essential medications more affordable, including supporting provisions in the Inflation Reduction Act.
  • As co-chair of the bipartisan U.S. Senate Diabetes Caucus, Shaheen has pressed to hold insulin manufacturers, insurers, and pharmacy benefit managers accountable for the skyrocketing cost of life-saving insulin.

Statistics:

  • The US is one of only two countries that allow direct-to-consumer drug advertising.
  • The US tax code allows pharmaceutical companies to claim tax deductions for expenses on direct-to-consumer advertising.
  • Pharmaceutical companies spent an estimated $6.4 billion on direct-to-consumer advertising in 2020 (Source: Patients for Affordable Drugs Now).
  • The No Handouts for Drug Advertisements Act aims to save taxpayers an estimated $1.4 billion over 10 years (Source: Congressional Budget Office).
  • Senator Shaheen has introduced a number of bills aimed at reducing the cost of prescription medications and making them more affordable for patients.

Sources:

  • United States Senator for New Hampshire Jeanne Shaheen (Washington, DC)
  • Senator Josh Hawley (R-MO)
  • Patients for Affordable Drugs Now
  • Congressional Budget Office
  • Mil-OSI USA News (http://milnz.co.nz/mil-osi-aggregation/) - Copyright 2025 Multimedia Investments Ltd, distributed by Contify.com

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