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Pharma Giant Pfizer Denied the Chance to Flee U.S. Taxes

Posted by on April 7, 2016 in Agencies & Systems, Government, Policies with 12 Comments

pfizer tax evasion denied

By Martha Rosenberg | AlterNet

Big Pharma received $127 billion of our tax dollars in 2014 through the federal programs Medicare, Medicaid, VA, and TRICARE. But just because they live on our tax dollars, doesn't mean Pharma companies want to pay taxes. Increasingly, they seek tax inversions, reincorporating in countries like Britain, Ireland or the Netherlands, often merging with a European entity to duck U.S. taxes.


This week, Pfizer's $160 billion merger with Dublin-based Allergan was scrapped because of new Treasury Department rules to stop such tax dodges. Pfizer, which calls itself the “world's largest research-based pharmaceutical company,” is known for the blockbusters Lipitor and Viagra. Allergan is known for Botox, the high-tech drugs Alphagan, Restasis and the artificial tears eye drug Refresh.

Related Article: Bernie Sanders Demands Treasury Block Pfizer Tax Dodging Deal That Could Cost U.S. $35 Billion

The new Treasury rules disregard the U.S. assets acquired quickly by “serial inverters” like Allergan which made the Dublin based Botox maker too small to serve as Pfizer’s inversion partner. Moreover, the new Treasury rules limit what is known as “earnings stripping” to lower companies’ effective tax rates so the inversion would not have given Pfizer the tax deductions it sought.

Pfizer is far from the first Pharma company to want to take the money and run. In 2014, Illinois-based AbbVie sought to merge with ADHD drug maker Shire which is based on a small island in the English Channel. The deal would have made the drug duo bigger than Boeing or McDonald’s but was scrapped because of imminent new tax rules from the U.S. Treasury Department to stop such tax dodges. The same year, the U.S.'s largest pharmacy chain, Illinois-based Walgreen, also sought a tax inversion, but changed its mind when customers and lawmakers termed the move unpatriotic and unfair to corporations that remain in the U.S. (Patriotism concerns did not stop device maker Medtronic from the successful acquisition of Dublin-based Covidien to dodge taxes last year.)

Still, Pfizer may have the worst track record among Pharma companies trying to dodge taxes. It has had to ink three Corporate Integrity Agreements (CIA), an enforcement tool used by the Office of the Inspector General to promote compliance with health care regulations after wrongdoing. One CIA was for withholding $20 million in Lipitor rebates owed to Medicaid and two were for off-label marketing of Neurontin, Lyrica and other drugs. Off-label marketing, claiming drug benefits that have not been identified or verified by the FDA, hiding risks that have and marketing drugs to patients for whom they have not been approved or found safe clearly can and does kill. Why even have an FDA if Pharma devises its own marketing package of benefits, risks and indications?

Related Article: Pfizer Pays $60 Million Settlement For Bribing Foreign Officials to Dispense More Drugs

Some say Pfizer actually courts trouble. In 2000, it bought Warner-Lambert after its diabetes drug Rezulin was withdrawn and linked to deaths and while it was under criminal investigation. It then bought hormone maker Wyeth which was staggering under heart valve suits from its diet drug Fen-Phen and cancer lawsuits from its hormone drug Prempo.

In just one week in 2010, Pfizer

  • agreed to pull its 10-year-old leukemia drug Mylotarg from the market because it caused more, not fewer patient deaths;
  • suspended pediatric trials of Geodon two months after the FDA said children were being overdosed in the trials;
  • suspended trials of tanezumab, an osteoarthritis pain drug, because patients got worse not better, some needing joint replacements;
  • sas investigated by the House of Representatives for off-label marketing of the kidney transplant drug Rapamune and targeting African-Americans;
  • sitnessed its client researcher, Scott S. Reuben, who put Bextra, Celebrex and Lyrica on the map, trotted off to prison for research fraud;
  • was sued by Blue Cross Blue Shield to recoup money it overpaid for Bextra and other drugs;
  • received a letter from Sen. Charles Grassley (R-Iowa) requesting its whistleblower policy; and
  • had its appeal to end lawsuits by Nigerian families who accused it of illegal trials of the antibiotic Trovan in which 11 children died, rejected by the Supreme Court.

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12 Reader Comments

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  1. 10154105525269508@facebook.com' Peggy Salano says:

    Ava S. Johnson

  2. 10205824144188863@facebook.com' Kathy Gavin Kelley says:

    Good!!

  3. 1079438498786235@facebook.com' Donor Gillis says:

    They all suck

  4. 259432724394417@facebook.com' Shibshankar Chakraborty says:
  5. 10154128339814345@facebook.com' M.J. Norman says:

    YES!

  6. 1043267315753970@facebook.com' Cynthia Potts says:

    Not going to happen!

  7. 10206045713960306@facebook.com' Thomas Chenhall says:

    I want Pfizer and GSK to be LIQUIDATED. They are a HARM.

  8. 199659863734659@facebook.com' Beatrice Silver says:

    They own Monsanto.

  9. 10154493581204045@facebook.com' Tim Douglas-Denton says:

    Do what you want with them now, I got my redundancy payout!

  10. 880518655367337@facebook.com' Christopher Leblanc says:
  11. 10204904286201493@facebook.com' Vetta Marie Thompson says:

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