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Bill Aims to Curb Drug Ads

May 08, 2002|From Bloomberg News

Four Senate Democrats who hope to lower prescription-drug costs introduced legislation that would limit what drug makers spend on advertising by cutting their tax breaks for marketing costs.

Firms are allowed to deduct advertising expenses and research and development costs from their taxable income. The Senate bill would limit the amount drug makers can deduct for advertising to what they spend on research.

U.S. prescription-drug spending rose 17% to $121.8 billion in 2000, fed by a boom in direct-to-consumer ads, a study says. Sen. Debbie Stabenow, the bill's chief sponsor, said lawmakers shouldn't expand Medicare's coverage of prescription drugs without controlling the cost of medicines first.

"This is no small issue," said Stabenow, a Michigan Democrat. "Companies are on such shaky ground in terms of ... spending 2.5 times their research and development expenses on advertising, that we have to press forward."

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