Pfizer’s Tax Dodge and the Impllications for Human Needs
One hundred and sixty-six years after its founding in New York City, one of the world’s largest pharmaceutical companies is about to renounce its American identity.
But not its American profits.
Pfizer, which makes the popular drugs Celebrex, Lipitor, Lyrica and Viagra, among others, wants to merge with fellow drug firm Allergan, which is based in the tax haven of Ireland.
You probably know where this is headed. Pfizer wants to avoid paying $35 billion in U.S. taxes owed on about $148 billion in profits it currently maintains offshore. Pfizer’s scheme is important because it has key implications for human needs in a couple of different areas.
First, at the same time that it seeks to dodge taxes, the company is gouging American consumers – often with the aid and assistance of the federal government. Pfizer has routinely hiked the prices of dozens of prescription drugs at ten times or more the rate of inflation each year since 2012. Seven of Pfizer’s top-selling drugs had their prices hiked an average of 39 percent over two years – from 2013 to 2015 – under the Medicare Part D prescription program, 23 times the inflation rate and four times the prescription drug rate.
Lipitor, Pfizer’s widely prescribed cholesterol treatment, jumped 35 percent during this two-year period. Pfizer’s nerve medication Lyrica spiked 77 percent between 2010 and 2014. Some Americans just can’t afford the drug price hikes. And to add injury to insult, Pfizer receives about $1 billion a year from U.S. taxpayers in the form of federal contracts.
Second, human needs are implicated by Pfizer’s actions because of the waste involved. The $35 billion in taxes the company seeks to dodge could, if collected, fund the National Cancer Institute for almost seven years. Or it could provide high-quality, early childhood education for every 4-year-old from low- and moderate-income families in the U.S. for nearly five years. Or it could provide free tuition for two years of community college for up to nine million students over a five-year period.
Nine million students.
On Thursday, joined at a Capitol Hill news conference by five members of Congress, Americans for Tax Fairness released its report, Pfizer: Price Gouger, Tax Dodger. (Full disclosure: Coalition on Human Needs is a proud member of the ATF coalition, which boasts 425 national and state endorsing organizations.)
“By dodging taxes while boosting prescription drug prices, Pfizer squeezes American families from two sides at once,” said AFT Executive Director Frank Clemente. “In the company’s biggest insult to America yet, Pfizer’s merger would allow it to go on enjoying all the benefits of being based here – everything from a publicly-educated workforce, to an excellent communications infrastructure, to a reliable patent system – without adequately paying to support them.”
Clemente nails it. A 166-year-old American company, built with American ingenuity and American resources, and thriving in part due to American consumers and American taxpayers, now wants to shed its American identity. (But not its American dollars.)
There is one final irony.
Pfizer charges American consumers under the Medicare program 12 times as much for its seven top-selling drugs as it charges consumers in Ireland, which obviously does a better job than we do of controlling prescription drug costs.
“If Pifzer wants to be an Irish company to cut its taxes but still be based in America, then it should charge American patients the same, much lower drug prices it charges Irish consumers,” Clemente noted.
If you want to toss some indignation Pfizer’s way, AFT has this nifty petition.