Legal Notes

 

Early in August, Senators Tom Harkin (D-Iowa) and Orrin Hatch (R-Utah) introduced a bill in Congress entitled the Dietary Supplement Tax Fairness Act of 2001 S. 1330. This legislation would make the cost of dietary supplements, medicinal foods and foods for special dietary needs, when offered as a health insurance plan, tax deductible for employers and excluded from taxable income for employees. Currently, the tax code provides tax exemption for these products only if they are prescribed as drugs.

“Our current policy is unfair,” said Senator Harkin in a statement introducing the bill. “It’s failing to take full advantage of the potential to improve health and hold down health care costs through preventative health care practices available to consumers,” Harkin added. The Senator explained that both insurers and employers have been frustrated by not being able to offer this type of benefit in a manner consistent with other health care practices that receive favorable consideration within the Internal Revenue Code. “The Harkin-Hatch bill would change the IRS code to create an incentive for millions of Americans who invest in preserving their own health,” stated Michael McGuffin, President of the American Herbal Products Association (AHPA). “All AHPA members should consider requesting that their elected representatives support the bill S. 1330,” McGuffin added.

Harkin and Hatch reiterated their frustration with the Food and Drug Administration’s (FDA) failure to develop, release and implement Good Manufacturing Practice Standards (GMPs) for dietary supplements. The Senators have repeatedly pushed FDA to do so for the last seven years, since the passage of the Dietary Supplements Health and Education Act of 1994. The new legislation states that the insurance plans shall offer coverage only if such foods and supplements comply with applicable GMPs prescribed by the Food and Drug Administration or with other comparable standards.