A recent Oxfam report says just four leading pharma companies received $7 billion in savings.
A recent report from Oxfam International, a global organization working to end the injustice of poverty, calls out big pharma companies for misdirecting the public on how they spent the billions of dollars in savings they received as a result of The Tax Cuts and Jobs Act passed by the U.S. Congress in 2017.
The legislation reduced the statutory tax rates from 35% to 21% and provided rebates on previously untaxed offshore earnings. Johnson & Johnson (J&J), Merck, Pfizer and Abbott Laboratories alone received $7 billion in savings, according to Oxfam, with J&J receiving the largest benefit at $2.48 billion.
The report also says that the Trump Administration claimed the legislation was designed to create jobs and lead to investment in R&D, but these companies used most of the savings to make payouts to investors and buy back stock, not lower drug prices, create more jobs or invest in R&D.
For instance, despite a statement that it reinvested its $1.22 billion tax break from 2018 into R&D, Merck did not spend much more on drug research and development than it had in previous years (about $10 billion). On the other hand, investors received $14.26 billion in 2018 compared with just over $9 billion in 2017. Similarly, payouts to investors by Pfizer increased noticeably from $12.5 billion in 2017 to $20 billion in 2018, with the company only spending $8 billion on R&D.
J&J and Abbott did not dramatically increase investor payouts in 2018. However, Abbot reported that its taxes for the first 9 months of 2018 were reduced by 96% from $1.28 billion to $57 million –– just slightly more than the company earns per day in Humira sales. AbbVie did commit to $350 million in charitable donations in 2018.