NPA: Supplements backed by official health claims deserve tax breaks

By Elaine Watson

- Last updated on GMT

Related tags: Dietary supplements, Flexible spending account, United states congress

NPA: If drugs get tax breaks, why not supplements with FDA-approved claims?
NPA: If drugs get tax breaks, why not supplements with FDA-approved claims?
A Bill set to be introduced to Congress for the fourth time calling for tax breaks for dietary supplements backed by official health claims has a much better chance of success this time around, the Natural Products Association (NPA) has predicted.

Natural Products Association (NPA) chief executive John Gay was speaking to NutraIngredients-USA.com after NPA’s annual Natural Products Day in Washington, in which industry representatives met with members of Congress and their staff to discuss issues affecting the natural products sector.

The main point of the day was to engage with new Congressmen and women, said Gay. But it was also an opportunity to urge them to support the Tax Equity for Meal Replacements and Supplements Act​.

The Bill, which has “not made much progress​” when previously introduced to the House admitted Gay, would amend the Internal Revenue Code to allow Flexible Spending Account (FSA) dollars to be used for supplements backed by health claims such as folic acid, calcium and vitamin D.

Under US tax law, you can put aside dollars pre-tax for use in deferring certain healthcare costs. But currently, you can only use them on pharmaceutical products and not dietary supplements or meal replacements that carry health claims that have been approved by the FDA (Food and Drug Administration), which we believe is unfair.

“"Dietary supplements meeting the FDA-required level of scientific evidence supporting their ability to reduce the risk of disease deserve the same treatment.”

Different dynamics this time around?

The NPA had not calculated how much money was at stake, but the figure would run into millions, said Gay. “The Bill has been introduced several times before, but the dynamics are somewhat different this time around.

“Last year, the Healthcare Reform Bill had a provision that excluded over-the-counter (OTC) medication from FSA accounts​ [only prescribed drugs are now reimbursable under the Patient Protection and Affordable Care Act] and the OTC sector wants them back in, and they are pushing very hard.

“So we say, if it is fair that OTC products get back in, it’s only fair that supplements backed by FDA-approved claims should be included as well.”

The Bill would again be sponsored by Democratic congressman Earl Blumenauer from Oregon, but would ideally get a Republican co-sponsor to ensure it was bipartisan, said Gay.

American Herbal Products Association (AHPA) president Michael McGuffin said: "AHPA has supported the Tax Equity bill each time that it has been introduced and we intend to do so again this year. It just makes sense that dietary supplements and meal replacements that qualify for FDA-approved health claims should be included in FSAs and HSAs​ [health savings accounts]."

The last time the Bill (HR 3406) was introduced in July 2009 it had five co-sponsors including Jason Chaffetz (R-UT), who has just made a second attempt to introduce his Free Speech About Science Act 2011 (HR1364) in the House.

An FSA allows an employee to set aside some earnings to pay for certain medical expenses. Money deducted from an employee's pay into an FSA is not subject to payroll taxes, resulting in payroll tax savings.

Related topics: Regulation

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1 comment

Sounds Good.

Posted by Oliver,

I don't know very much about this legislation, but if it passes, it seems like dietary supplement manufacturers may have an incentive to achieve the FDA-required level of scientific evidence, and make their products better for the consumer, since the DSHEA prevents the FDA from actually checking up on these manufacturers before they get their product out.

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