“When considering drug donations and patient assistance, one must not forget that these programs are not without benefit to the pharmaceutical companies. Besides the public relations opportunity afforded them by announcing their charitable donations or including a reassuring phrase at the close of their drug commercials, there is significant tax benefit as well. In 1985, the enhanced deduction provision was enacted in the Internal Revenue Code. Under IRC 170(e)(3), “when a corporation donates products to a charitable organization…the amount allowable as a charitable deduction is equal to the unrealized appreciation, not to exceed twice the taxpayer’s basis in such property”… For example, Merck’s patient assistance program page states that over the last decade, they have made donations “representing a total value (wholesale acquisitioncost) of more than $2.67 billion.” This large donation was not purely altruistic then, Merck would have seen considerable tax deductions over this ten year period under the enhanced deduction provision. To what extent are US taxpayers subsidizing multibillion dollar pharmaceutical companies through these charitable donation programs?”
Cassedy, Claire; Reply Comments of Claire Cassedy , regarding drug company patient assistance programs, USTR docket # USTR20130040, Special 301. March, 2014.