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Drug Ad Tax Deductions Saved After Rangel Committee Does U-Turn

By Jim Edwards

Updated on: July 16, 2009 / 11:36 AM EDT / MoneyWatch

House Ways and Means Committee chairman Charles Rangel's insistence that tax deductibility on drug advertising be ended turned out to be more bluster than principle. Ad Age reports that the draft for health-care reform outlined by Rangel's committee keeps the federal tax break for prescription-drug advertising:

In lieu of eliminating the deduction to raise funds, the committee proposed a surtax on high-income Americans -- individuals earning at least $280,000 in adjusted gross income and couples earning more than $350,000.

BNET readers know that this is a dramatic U-turn from Rangel's position in June, when he said he wanted to end tax deductions on DTC. He told Bloomberg:

One thing that's not off the table is you can pick up $37 billion knocking out the deduction for advertising.

And the Democrat from New York told CQ Politics:

-- because, Rangel said, the commercials' rapid-fire "mumble" about potential side effects is "wrong."
"I go to the doctor and say, 'Did you ever think about ordering this for me?' If he says no, I don't like him, because they promised me on TV that I [would] have no problems at all," Rangel said of televised drug commercials.
He added, "Why didn't you yell loud that [the drug] . . . could kill me as a side effect?"

So, barring a miracle, that's that. The drug industry gets to keep one of the most controversial, least-useful aspects of its business. But then we knew that Big Pharma was playing to win didn't we?

Image from New York Post gallery of Rangel's beach villa in the Dominican Republic.