Rep. Peter Welch, co-chair of the House Drug Pricing Task Force, called on the Obama Administration this week to block an effort by pharmaceutical giant Pfizer to dodge billions of dollars in federal taxes.
Welch was joined by his Task Force co-chair, Rep. Lloyd Doggett (D-TX), and other House colleagues in sending a letter to Secretary of the Treasury Jack Lew urging the Administration to use its executive authority to deny Pfizer, one of the world's largest drug companies, the tax benefits of its proposed corporate inversion. Pfizer, maker of Celebrex, Lipitor, Lyrica, and Viagra, is attempting to permanently dodge an estimated $35 billion of U.S. taxes it currently owes, by merging with Allergan, a drug firm based in Ireland, according to a new report by the Americans for Tax Fairness.
"As if gouging the American people with overpriced prescription drugs wasn't enough, Pfizer is now trying to dodge $35 billion in taxes. You can't make this up." said Rep. Peter Welch. "Pharmaceutical companies provide good drugs that are life-saving and pain-reliving, but their prices are killing us. Adding insult to injury, Pfizer now wants to pay Irish taxes yet deny Americans low Irish drug prices. The Administration should throw a monkey wrench into Pfizer's plan, stat."
In addition to Welch and Doggett, the letter was signed by Representatives Elijah Cummings (D-MD), Rosa DeLauro (D-CT), Raul Grijalva (D-AZ), Barbara Lee (D-CA), Mark Pocan (D-WI), Jan Schakowsky (D-IL), and Chris Van Hollen (D-MD).
The Americans for Tax Fairness report also documents a rapid rise in Pfizer's prescription drug prices in recent years, and it compares the vast difference in the prices Pfizer charges for the same drugs in the U.S. and in Ireland, the country to which it is changing its corporate address.
The tax benefits of these corporate inversions could be denied if the Treasury Department revises a Notice it issued in 2014 intended to remove costly tax breaks U.S. companies receive when they merge or invert with a foreign company based in a tax haven. Johnson Controls had $8.1 billion in offshore profits in 2015 on which it will likely be able to avoid paying U.S. income taxes should the proposed merger be completed.
"By dodging taxes while boosting prescription drug prices, Pfizer squeezes American families and communities from two sides at once," said Americans for Tax Fairness 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."