Big Pharma Gets $3.3 Billion Tax Cut From GOP, Continues Exploiting Patients to Enrich Executives
FOR IMMEDIATE RELEASE:
Friday, November 2, 2018
WASHINGTON, D.C. — Nine months after Republicans slashed the corporate tax rate, big pharma continues to rake in massive profits from the GOP tax law. The top four U.S. pharmaceutical corporations reported giant tax breaks from the law for the first three quarters of 2018—including some companies with effective tax rates as low as 1 percent—resulting in tax breaks totaling $3.3 billion for AbbVie, Johnson & Johnson, Merck, and Pfizer.
The Republican tax law gave Pfizer $1.3 billion in tax cuts, while AbbVie received $1.4 billion, Johnson & Johnson received $430 million, and Merck received $139 million.
In response, Not One Penny spokesperson Ryan Thomas released the following statement:
“The American people are paying too high a price for pharmaceutical companies’ greed and Republicans’ corruption. Even after these companies got billions in tax breaks, they continue raising prices on consumers and laying off employees to increase their profits. It could not be more clear that the GOP’s tax law won’t help working families afford life-saving medication or reduce prices for seniors—it helps enrich already-wealthy investors.
“The executives who have enabled this bad corporate behavior for decades must be held accountable and the Republican lawmakers who supported this tax law must be voted out of office.”
Earlier this year, Tax March and Not One Penny released a video of Steve Gomez, a father whose son has complex medical needs, talking about how tax cuts for big pharma haven’t helped his family afford his son’s health care needs.
- In first three quarters of 2018, Pfizer had a net income of $11.5 billion and received a tax cut of $1.3 billion from Republicans’ tax law.
- In the third quarter of 2018, the company’s tax rate was less than 2 percent. Pfizer posted a 45 percent jump in its third-quarter profits, in large part due to the federal tax cut.
- Pfizer’s giant nine-month tax cut is on top of a $10.7 billion tax benefit under the GOP tax law at the end of 2017.
- The company announced a $10 billion buyback program on December 18, 2017, just prior to the tax act being signed into law. It anticipates spending $5 billion on buybacks in 2018.
- In the meantime, the company announced it is planning layoffs early next year, in order to shrink its workforce by “a couple percentage points.” With a workforce of 90,000, nearly 2,000 workers could be laid off. Hundreds of workers have already been laid off in Connecticut, Massachusetts, and New York since the tax act passed.
- On October 11, 2018, the New York Attorney General announced a settlement with Pfizer following an investigation into deceptive advertising practices. As part of a co-payment program, consumers were told that they would “pay no more than” $15 or $20, for example, for certain drugs – but ended up spending far more at the pharmacy cash register. Under the settlement, the company paid over $700,000 – $200,000 in restitution for consumers, plus $500,000 in penalties, fees, and costs.
- Pfizer’s CEO, Ian Read, received nearly $28 million in executive compensation in 2017—up 61 percent from $17.3 million in 2016.
- In first three quarters of 2018, AbbVie had a net income of $7.5 billion and received a tax cut of $1.4 billion from Republicans’ tax law. In that same nine-month period, AbbVie had an effective tax rate of less than 1 percent.
- In February 2018, AbbVie announced a $10 billion buyback program soon after the tax act was passed.
- In June 2018, a U.S. judge found that AbbVie violated antitrust laws when it illegally prevented the testosterone replacement drug AndroGel from getting to market. AbbVie and a partner were ordered to pay $448 million.
- AbbVie, together with Abbott, will pay a total of $25 million to resolve U.S. Justice Department charges that Abbott paid kickbacks to doctors in exchange for prescribing the cholesterol drug TriCor and promoted the medication for unapproved purposes. (AbbVie was spun out of Abbott in 2013.)
- In September, California’s insurance commissioner sued AbbVie, alleging the company used kickbacks to boost sales of Humira. A second class action lawsuit was filed in the company’s home state of Illinois in October on behalf of shareholders, stemming from the California case.
Johnson & Johnson
- In first three quarters of 2018, Johnson & Johnson had a net income of $12.3 billion and received a tax cut of $430 million from Republicans’ tax law.
- During that same period, the company laid off 340 workers in Pennsylvania.
- In first three quarters of 2018, Merck had a net income of $8.9 billion and received a tax cut of $139 million from Republicans’ tax law.
- This quarter, the company announced a new $10 billion share buyback program.
- On November 1, 2018, the company confirmed reports that it is ending a long-term agreement to supply a lifesaving vaccine for children in West Africa. At the same time, the company has started sending the vaccine to China, where it will likely be sold for a much higher price.
- In February 2018, laid off 50 workers in Charlotte, NC.
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