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Pharma Battle at Standstill, but War Is Far From Over

Reform of Corporate Tax Code Likely to Play Big Part in Conflict

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"All's quiet on the Western front, but we're still in the war."

That's how John Kamp, executive director of the Coalition for Healthcare Communication, summed up the pharmaceutical industry's regulatory issues.

Big Pharma's annual tussles with the Food and Drug Administration, not to mention Congress, seem to be at a standstill thanks to the coming presidential election. But both sides are gearing up for what could be an eventful winter.

"The big thing that we all worry about is whether the tax deduction for advertising goes away," Mr. Kamp said. "Advertising spending would go down, business would be lessened at ad agencies and you would see just a general decline in advertising." That could be an unwelcome prospect, given that measured-media spending in pharma has steadily declined from its $5.4 billion peak in 2006, according to Kantar Media.

Reform of the corporate tax code is high on the agenda of both President Barack Obama and likely challenger Mitt Romney. Congress tried to eliminate the deductibility of pharma advertising during health-care reform debates two years ago, when Rep. Charles Rangel, D-N.Y., proposed denying companies from taking tax deductions on direct-to-consumer advertising of prescription drugs. That would save $37 billion over 10 years, he said at the time.

But heavy lobbying, including by the American Association of Advertising Agencies and the American Advertising Federation, helped stop the initiative.

Clark Rector, exec VP-government relations for the AAF, and Dick O'Brien, exec VP-director of government relations for the 4A's, both say it is only a matter of time before Congress tries to enact such a provision again.

This probably won't be an issue until after the election. However, there is a lame-duck session of Congress between the Nov. 6 general election and the end of 2011, so "it's possible pharma ads will bear the brunt of the attack again," said Mr. O'Brien."But it's more likely the debate will involve all advertising."

Also on Big Pharma's regulatory radar is the Prescription Drug User Fee Act, scheduled to be renewed this year, as it is every five years. The act was passed by Congress in 1992 and allows the FDA to collect fees from drug manufacturers to financially support the drug-approval process. One of the proposed provisions in the 2007 renewal was a two-year moratorium on marketing DTC prescription drugs.

The industry is against such a long moratorium, "and we will be watching that very carefully," Mr. Kamp said.

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