UPDATE 2-Allergan CEO: Marginal impact from proposed 'Botax'

Fri Dec 11, 2009 5:15pm EST

* Allergan CEO: Proposed tax discriminates against women

* Tax would apply to Botox, Juvederm, breast implants

* Company lobbying to get tax out of healthcare bill

(Adds CEO, Senate comments)

By Lisa Richwine

WASHINGTON, Dec 11 (Reuters) - Botox maker Allergan Inc (AGN.N) is actively fighting a proposed U.S. cosmetic surgery tax, but sees a marginal impact on the company, Allergan'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, he said.

Still, the company is lobbying to have the tax killed 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.

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

The tax would apply to 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," according to the bill.

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. (Reporting by Lisa Richwine; editing by Andre Grenon)

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