CHPA Urges Congress to Make OTCs Tax Deductible Medical Expenses

Association says overall healthcare savings from nonprescription medicines are significant

Washington, D.C. (June 2, 2003)—The Consumer Healthcare Products Association (CHPA) today called on Congress to once again allow American consumers to deduct nonprescription, over-the-counter (OTC) medicines as medical expenses. The Association issued this statement in response to a recently published Internal Revenue Service (IRS) revenue ruling that reiterated that, under the current law, consumers may not deduct OTC products, even if the medicines are recommended as a treatment by a doctor. OTCs were deductible prior to 1984.

“It is very unfortunate that current IRS rules do not recognize the enormous benefits of nonprescription medicines,” said CHPA President Linda A. Suydam, D.P.A. “OTCs are real medicines that provide real treatments and real savings to the healthcare system and they should be treated as such.”

In order for the actual savings of OTCs as a sensible first-line of therapy to be clearly understood, several factors must first be considered. One of the most obvious and alarming points is the fact that over 40 million Americans currently do not have any form of healthcare insurance. Even for those who do have insurance, there is still the cost of a doctor’s visit, lost time from work, and the cost of the prescription medicines to think about.

According to the ruling, the IRS only allows taxpayers to deduct the cost of medicines that are available only by prescription and insulin. The ruling also permits deductions for other healthcare items, such as crutches or even bandages.

“Taxpayers who take deductions in the lower income brackets use the medical deduction much more frequently than higher income earners,” explained Suydam. “It just doesn’t make any sense that consumers can deduct the cost of the bandage that covers the wound, but not the OTC therapies that take the pain of the injury away,” she added. “Consumers should not be penalized for using an affordable method of treatment.”

Tax deductible medical expenses may become even more of an issue for consumers in the future. The cost benefits of OTC medicines are expected to increase as OTC options are considered for long-term, chronic conditions.

“If Congress allowed the IRS to adjust for the deduction of OTCs, it would be a very modest reform for the agency,” said Suydam. “But it would provide a great deal of relief for those who need it most.”

Contacts: Donna Edenhart and Mimi Pappas, 202.429.9260

CHPA is the 122-year-old trade association representing U.S. manufacturers and distributors of over-the-counter medicines and nutritional supplement products.