Congressman Charles Rangel (D-NY), Chairman of the Powerful House Ways and Means Committee announced that he too is working on a healthcare reform plan.
He is promoting the idea in the press that part of the way to pay for it is taxing marketing on pharmaceutical products in general and direct to consumer advertising in particular. His estimate is that he will raise $37 billion (over ten years) though these efforts to help pay for healthcare reform.
He emphasized to Bloomberg that “one thing that’s not off the table is you can pick up $37 billion knocking out the deduction for advertising” for prescription drugs.
Rangel said he and other lawmakers believe it is wrong to let drug companies deduct their advertising costs for prescription drugs. “The whole thing is messy, but you can raise $37 billion,” Rangel said. “Which means you’re taxing somebody $37 billion, and they don’t like that.”
The other lawmakers are Pete Stark D-CA who has introduced legislation to end the tax deductibility of prescription drug marketing for the last four congresses.
The talk on the street this week was that the bill only covered Direct to Consumer Advertising (DTC), but with DTC costing only $4 billion the numbers don’t add up. (40 Billion in DCT x 33% (Corporate Tax Rate) = $10 Billion. He is must be working on taxing all marketing costs (Journal Articles, Dinner Meetings, DTC, Professional Advertising, Exhibit Booths at Medical Meetings……..)
This is a very dangerous proposal that could be applied to automobile, financial, and farming other sectors where the government purchases products, provides subsidies or has interests in the future.
The problem with this line of reasoning is that if companies cannot market their products without a huge tax penalty the incentive to create new and improved versions or breakthrough drugs are greatly diminished.
In the end, I am not sure that taking on the newspapers and televisions stations that are desperate for advertising revenue will actually go anywhere.
Congressman Rangel also announced that his healthcare reform plan will be public today (June 19th). This makes for at least five healthcare reform plans, Kennedy, Baucus, Waxman, Obama, and now Rangel. Next Wednesday, June 24 Congressman Rangel will be holding a hearing Health Reform in the 21st Century: Proposals to Reform the Health System
Until this week Congressman Rangel has been quite on healthcare reform, one way to stay in the game in Washington is to propose something radical that will picked up by the press.
As more and more plans are added there will be considerable push back and competition to get “their” package approved.
It is going to be an interesting summer!!!
Bloomberg: House Considering $37 Billion Drug Tax, Rangel Says