Genetherapy

Allergan CEO Fights US ‘Botax’ Plan – UPDATE 3-INTERVIEW

By Lisa Richwine

WASHINGTON (Reuters) – Botox maker Allergan Inc is trying to rally opposition to kill a proposed U.S. tax on wrinkle fillers, nose jobs and other elective cosmetic procedures, the company’s chief executive told Reuters on Friday.

Healthcare legislation pending in the U.S. Senate includes a 5 percent tax on elective cosmetic surgery procedures, nicknamed the “Botax” after Allergan’s popular wrinkle-fighting injection.

The impact would be “pretty marginal” for Allergan overall, CEO David Pyott said in an interview.

He said adding 5 percent to the average $440 cost of a Botox procedure would have a “very marginal” impact on demand, but could have a “larger” effect on breast implant procedures that cost upward of $5,000.

Still, the company is lobbying against the tax because “we really feel strongly this is bad policy,” Pyott said.

“I think it’s a dangerous precedent. It’s extremely discriminatory against women,” who make up about 90 percent of cosmetic surgery patients.

“Why not have a tax on drugs for male balding or for erectile dysfunction? Why are we picking on women?” he said.

Many patients are middle-class, working women and not just the wealthy, Pyott said. He pointed to an American Society of Plastic Surgeons survey that showed 60 percent of people planning to have cosmetic surgery lived in households with annual income below $90,000.

The tax in the Senate bill is estimated to raise roughly $5 billion over 10 years to help pay for a healthcare overhaul costing $849 billion. It is not included in health legislation that passed the House of Representatives.

The bill said the tax would be levied on cosmetic procedures that are “not necessary to ameliorate a deformity” related to “a congenital abnormality, a personal injury resulting from an accident or trauma, or disfiguring disease.” That could apply to elective procedures ranging from wrinkle-smoothing shots to nose jobs, tummy tucks and face lifts.

Among Allergan’s products, the tax would apply to Botox, wrinkle filler Juvederm, eyelash drug Latisse and breast implants, Pyott said.

Sales of Botox rose about 3 percent in the third quarter to $328 million following declines in previous quarters that the company blamed on waning use of cosmetic procedures during the economic downturn. Allergan’s breast implant sales amounted to $69 million in the third quarter.

Allergan would not pay the tax directly, but doctors would be required to collect it from patients.

The company’s lobbying efforts include a website and Facebook page to rally tax opponents. The website calls the plan “a tax on self-improvement.”

More than 10,000 people have signed an online petition opposing the tax and more than 7,500 letters have been sent to senators, Pyott said.

The tax was added recently to the Senate healthcare bill as lawmakers looked for new ways to help fund wider insurance coverage and other changes.

“We needed money to make the bill work while using a funding mechanism that would allow us to stay within the healthcare arena,” said Jim Manley, a spokesman for Senate Majority Leader Harry Reid.

Allergan shares fell nearly 0.4 percent to close at $60.36 on the New York Stock Exchange.
(Reporting by Lisa Richwine; editing by Andre Grenon and Carol Bishopric)

Allergan, Inc.
800.433.8871
www.botoxcosmetic.com

Source: Reuters