Why Allergan and Medicis Should Embrace the "Botox Tax" in Senate Health Bill
The idea that Botox is a civil rights issue is ludicrous — and yet that is the line being pushed by Allergan (AGN) in its fight against the 5 percent “Botox tax” proposed in the Senate healthcare reform bill.
Instead, Allergan and its rival, Medicis (MRX), should embrace this new “Botax.” Having the federal government dependent on them for revenue will give both companies more clout within the halls of Congress — something they can use to their advantage when lobbying for future changes in the law or the increasingly outlandish products that both companies want to market in the future (the LipoSonix, anyone?)
The bill seeks to tax luxury, discretionary healthcare procedures to help pay for care for the masses. Both Allergan and Medicis — which make Botox and its competitor, Dysport, respectively — oppose the tax. Allergan said the tax “discriminates against women,” according to the WSJ. That follows the line of the plastic surgeons lobby group, which said:
Elective surgery taxes discriminate against women, given that 86 percent of cosmetic surgery patients are female.
Medicis CEO Jonah Shacknai took a more down-to-earth position:
“What’s next? Are we going to tax people who color their hair?”
Allergan spokseperson Caroline Van Hove, told BusinessWeek that:
… the tax [was] “ill-conceived” since it does not reduce costs or seek to change unhealthy behaviors. In an e-mail, Van Hove says the tax “is a random hit on an easy target that is only punitive and not corrective.”
Allergan faces $110 million to $120 million in taxes if the bill passes. And so it should. There is something morally offensive about the fact that 45 million citizens in the richest nation on the earth cannot obtain basic healthcare coverage while their neighbors spend billions on vanity procedures.
If Allergan and Medicis should take a deep breath and ask whether their knee-jerk opposition to the tax is a good idea in the long run. Aside from baking themselves in to the tax code — always good for business, which is why brothel owners in Nevada favor similar taxes — the tax would allow them to tell their customers (and the public) that every dollar spent on wrinkle-removers generates 5 cents that pays for real healthcare for the poor. That’s the kind of PR the two companies should have thought of on their own — now the Senate has done it for them.
The last word goes to Oppenheimer analyst Amit Hazan:
“The good people of Beverly Hills, Dallas, and the Upper East Side of Manhattan will wake up feeling a little bit angrier today, and perhaps looking a little bit older tomorrow,” he wrote in a note to investors.
Image by Flickr user Vancouver Laser & Skincare Centre, CC.
Jim Edwards, a former managing editor of Adweek, has covered drug marketing at Brandweek for four years, and is a former Knight-Bagehot fellow at Columbia University's business and journalism schools. Follow him on Twitter or send him an email.
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