S1785TaxationSenate

No Handouts for Drug Advertisements Act

Introduced May 15, 20252 cosponsorsCongress.gov

Sponsor

Josh Hawley

Republican · MO

Latest Action · May 15, 2025

Read twice and referred to the Committee on Finance.

Bill Progress

IntroducedMay 15

Committee

Pass Senate

Pass House

Signed

Law

Senate Targets Tax Breaks For Drug Ads

Why it matters

The bill reframes pharma’s glossy TV ads as a taxpayer subsidy, challenging a core cost of doing business for Big Pharma.

How it works: S1785 would amend the Internal Revenue Code to add a new section 280I, flatly stating that no deduction is allowed for expenses related to direct-to-consumer advertising of "covered drugs." That’s a narrow strike: The bill targets advertising that’s about a covered drug and is primarily aimed at the general public — explicitly including radio and TV spots, telemarketing, direct mail and similar mass-media pushes. In everyday tax practice, ad costs are usually deductible as ordinary business expenses; this bill carves out a special, tougher rule just for drug ads aimed at consumers.

The big picture: The legislation reframes drug marketing as a public handout, not just a line item in a pharma budget. Lawmakers behind the bill are signaling that taxpayer support should tilt toward care and innovation, not prime-time commercials. The industry, by contrast, is likely to lean on the argument that direct-to-consumer ads help patients recognize symptoms, ask informed questions and shop among competing products — all traditional justifications for treating advertising as a legitimate cost of doing business. That clash sets up a broader fight over where Congress draws the boundary between acceptable tax deductions and targeted crackdowns on politically sensitive industries.

Between the lines: Because the bill zeroes in on "direct-to-consumer" advertising, it implicitly leaves other marketing avenues — like communications that aren’t primarily aimed at the general public — under the usual tax rules. That design choice narrows the attack to the most visible, and most controversial, parts of pharma’s ad machine. It also concentrates the financial pain on companies with heavy spending on consumer-facing campaigns for covered drugs, rather than across the entire sector.

Visual Summary

S1785 at a Glance

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What This Bill Does

Stops drug companies from writing off certain ads on their taxes

Drug companies will no longer be allowed to treat some advertising costs as a normal business expense that lowers their taxes. In practice, this makes certain types of drug ads more expensive for them because they can’t use those ad costs to reduce how much income tax they owe.

Targets ads that go straight to regular people

The rule applies to ads aimed mainly at the general public, not at doctors or hospitals. This includes the kinds of drug ads you see or hear directly as a consumer, rather than professional medical marketing.

Covers TV, radio, billboards, mail, and online drug ads

Ads on TV, radio, phone systems, billboards, direct mail, the internet, social media, apps, and other digital platforms count as “direct-to-consumer” advertising under this bill. Money spent on these types of ads for covered drugs cannot be deducted on the company’s taxes.

Exempts ads in journals and similar publications

Ads that appear in journals and other periodicals are not treated as direct-to-consumer ads under this bill. That means companies can still deduct the cost of these more traditional, often professional-focused print ads from their taxes.

Applies to makers and sponsors of prescription and compounded drugs

The bill applies to companies that sponsor prescription drug products and to owners of certain drug compounding facilities. It covers both regular prescription drugs and drugs that are specially mixed or compounded under existing federal drug laws.

Who Benefits

Federal government tax revenues

Because drug companies can no longer deduct these advertising costs, they will likely pay more in federal income taxes. This increases the amount of money the federal government takes in, which could be used for other purposes (though this bill doesn’t say how).

Competitors who rely less on consumer advertising

Drug makers that already spend little on TV, internet, and billboard ads to consumers won’t be hit as hard by the loss of the deduction. They may be at a relative advantage compared to companies that rely heavily on splashy consumer ads to sell their products.

Critics of heavy drug advertising to the public

People and groups who think there are too many prescription drug commercials gain a tool that makes that kind of advertising more expensive. The bill is designed in a way that could discourage some of the most visible direct-to-consumer drug ads.

Who's Affected

Pharmaceutical companies that advertise directly to consumers

Drug makers that run TV, radio, billboard, mail, and online ads aimed at the general public will lose the tax break for those costs. They will have to rethink how much they spend on these ads, since every advertising dollar now fully counts against their profits when taxes are calculated.

Owners of drug compounding facilities that promote their products to the public

Businesses that compound drugs and then advertise them straight to consumers through the covered channels will also lose deductions for those ad expenses. Their tax bills may go up if they keep advertising in the same way.

Marketing and advertising firms working with drug companies

Agencies that specialize in consumer drug advertising could see clients cut back on big ad campaigns because they’re no longer tax-favored. This might shift budgets away from TV and digital consumer ads and toward other kinds of promotion, like journal or periodical ads that still remain deductible.

Consumers who see drug ads

While the bill doesn’t directly regulate what consumers can do, it could indirectly reduce the number or intensity of drug ads on TV, radio, and online if companies respond to the higher after-tax cost by advertising less. What you see during commercial breaks or in your social media feed could change over time.

Cosponsors (2)

Jeanne Shaheen

Democrat · NH

Elissa Slotkin

Democrat · MI

Recent Actions

May 15, 2025

Read twice and referred to the Committee on Finance.

May 15, 2025

Introduced in Senate

What Changes in the Law

3 key amendments · 3 total changes

Full Text

Internal Revenue Code of 1986, Subtitle A, Chapter 1, Subchapter B, Part IX

‘‘SEC. 280I. DISALLOWANCE OF DEDUCTION FOR DIRECT-TO-CONSUMER ADVERTISING OF CERTAIN DRUGS.
‘‘(a) IN GENERAL.—No deduction shall be allowed under this chapter for expenses relating to direct-to-consumer advertising of covered drugs for any taxable year.’’

What this means: Creates a new tax rule that prohibits businesses from deducting expenses for direct-to-consumer advertising of certain drugs when calculating their taxable income.

Internal Revenue Code of 1986, Subtitle A, Chapter 1, Subchapter B, Part IX, new §280I(b)(1)–(2)

‘‘(b) DIRECT-TO-CONSUMER ADVERTISING.—For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘direct-to-consumer advertising’ means any dissemination, by or on behalf of a covered entity, of an advertisement which—
‘‘(A) is in regard to a covered drug, and
‘‘(B) primarily targeted to the general public, including through—
‘‘(i) broadcasting through media such as radio, television, and telephone communication systems, direct mail, and billboards, and
‘‘(ii) dissemination on the Internet or through digital platforms (including social media, mobile media, web applications, digital applications, mobile applications, and electronic applications).
‘‘(2) EXCEPTION.—Such term shall not include an advertisement made through publication in journals and other periodicals.’’

What this means: Defines what counts as non-deductible direct-to-consumer drug advertising (broadcast, online, and similar public-facing media) and carves out an exception so that drug ads in journals and other periodicals remain deductible.

Internal Revenue Code of 1986, Subtitle A, Chapter 1, Subchapter B, Part IX, new §280I(b)(3)

‘‘(3) OTHER TERMS.—For purposes of this subsection—
‘‘(A) COVERED ENTITY.—The term ‘covered entity’ means—
‘‘(i) a sponsor of a prescription drug product (as such term is defined in section 735(3) of the Federal Food, Drug, and Cosmetic Act), or
‘‘(ii) a person that owns an outsourcing facility (as such term is defined in section 503B(d)(4) of such Act), either directly or indirectly through a subsidiary.
‘‘(B) COVERED DRUG.—The term ‘covered drug’ means—
‘‘(i) a prescription drug product (as such term is defined in section 735(3) of the Federal Food, Drug, and Cosmetic Act), or
‘‘(ii) a drug compounded in accordance with section 503A or 503B of such Act.’’

What this means: Specifies which companies (drug sponsors and owners of outsourcing facilities) and which products (prescription and certain compounded drugs) are subject to the new denial of advertising tax deductions.