Legislation Would Factor Advertising Costs to Federal Prescription Drug Prices

Sens. John Sununu (R-N.H.) and Ron Wyden (D-Ore.) on Thursday introduced a bill that would require pharmaceutical companies to eliminate advertising expenses from the calculation of drug costs for federal programs such as Medicaid, the Washington Times reports. The proposal also would require HHS Secretary Mike Leavitt and Department of Veterans Affairs Secretary Jim Nicholson to negotiate reduced prices on drugs that are advertised directly to consumers in other programs. The bill does not affect the 2003 Medicare law, which forbids price controls on drugs.

However, the bill does mandate that HHS develop a report on how the government could reduce advertising-related costs for medications covered under the new Medicare drug benefit. Sununu said the bill's purpose is to eliminate advertising costs that are passed on to taxpayers. Wyden said that because all U.S. businesses receive tax deductions for their advertising costs, "[t]axpayers shouldn't have to further subsidize the drug companies' marketing efforts through Medicare and Medicaid."

Pharmaceutical Research and Manufacturers of America spokesperson Jeff Trewhitt said, "The legislation is simply misguided," adding that drug companies spend 10 times more on research and development than they spend on advertising (Higgins, Washington Times, 5/27).