Industry Trade Groups Seek Repeal of OTC FSA Restrictions

The Global Market Development Center (GMDC), a trade association that represents large and small retailers, wholesalers, and consumer product goods manufacturers, joined several industry associations, including the Consumer Healthcare Products Association, the National Association of Chain Drug Stores, and the National Grocers Association, last week when they called upon the U.S. Congress to reverse a provision within the Patient Protection and Affordable Care Act.

The provision, also known as the Cough and Cold Tax, prevents consumers from using flexible spending accounts (FSAs) to purchase over-the-counter (OTC) medicines without a prescription, and is scheduled to go into effect on January 1, 2011.

“The new FSA restrictions will add additional confusion and expense, and eliminate a benefit many consumers have come to depend upon to cost-effectively purchase medicines they need,” said Dave McConnell, president and CEO of GMDC. “Consumers depend on OTC medicines as a first line of defense for their families’ healthcare needs, and retail stores are in the business of providing remedies in an accessible, consumer-friendly way. Eliminating OTCs from FSA eligibility is counterproductive from the overall goal of healthcare reform.”

The GMDC communication to House and Senate leadership asserted that the Department of Treasury also proposed rules that would unfairly prohibit consumers from using FSA debit and credit cards to purchase OTC medicines, beginning January 15, 2011.

GMDC’s wholesale/retail members are committed to prohibiting the enactment of this legislation, citing that FSAs are of critical importance to the approximately 35 million working Americans who rely on voluntary contributions of pre-tax dollars to fund their FSAs and purchase OTC medicines.

Colorado Springs, Colo.-based GMDC serves general merchandise and health, beauty, and wellness retailers, wholesalers, and suppliers.