American taxpayers lose over one billion dollars annually to Big Pharma thanks to a law that allows them to write off their marketing spend, according to an analysis The Campaign for Sustainable RX Pricing (CSRxP) published Tuesday.
CSRxP found that 10 companies in the pharmaceutical industry spent nearly $14 billion on direct-to-consumer (DTC) advertising in 2023.
The IRS allows companies to deduct those marketing costs from their taxes, an allowance which CSRxP claims deprives the taxpayer between $1.5 and $1.7 billion annually just from the ten companies included in the study.
Those ten companies include: AbbVie, Amgen, Biogen, Bristol Myers Squibb (BMS), Eli Lilly, Gilead Sciences, GlaxoSmithKline (GSK), Johnson & Johnson (J&J), Merck and Pfizer.
Pfizer spent the most on advertising with a whopping $3.7 billion in 2023, according to the study. The company also, according to the study, received a tax benefit of over $1 million.
Pharmaceutical spending on advertising has rocketed up since the Food and Drug Administration (FDA) first permitted pharmaceutical DTC advertising in 1997.
Between that time and 2016, annual spending on medical marketing increased from $17.7 billion to $29.9 billion. DTC advertising went from $2.1 billion to $9.6 billion in the same timeframe, according to the study.
The study also cited a Congressional Budget Office (CBO) report that found there is a direct correlation between a rise in pharmaceutical advertising spending and a rise in the cost of their drugs.
CBO estimated that a 10 percent increase in DTC advertising leads to a 1 to 2.3 percent rise in drug spending. Another study from the National Bureau of Economic Research (NBER) found the drug spending increase could be as high as 5.4 percent.
Newly minted Health and Human Services (HHS) Secretary Robert F. Kennedy Jr. has previously railed against the practice of pharmaceutical advertising on television, a practice that is allowed in only two countries globally: the U.S. and New Zealand.
Besides increasing drug prices, pharmaceutical advertising on cable news also serves to influence the message that news anchors are delivering nightly, Kennedy Jr. argued. (RELATED: Lobbyists Descend On Red State Capital To Protest MAHA-Inspired Food Dye Ban)
“You look at somebody like Anderson Cooper, I think Anderson Cooper makes about $20 million, give or take,” Kennedy told marketing professional Joe Polish in 2024. “If you say he’s at a $20 million salary and 75 percent of that or 80 percent of that is coming from the pharmaceutical companies, that’s who his real boss is.”
Kennedy has previously signaled that he will advise Trump to ban pharmaceutical advertising.
100% true. The main purpose of pharma advertising to consumers is to buy off the news media so they rarely criticize pharma. And since news media ad budgets have shrunk to a trickle thanks to @google and @meta, conventional news sources will stay bought.https://t.co/URCQzqfKN4
— Jay Bhattacharya (@DrJBhattacharya) February 3, 2024
Other Kennedy allies slated to be in Trump’s cabinet, like his NIH Director appointee Jay Bhattacharya, have also expressed support for a ban.