Four of the world’s biggest pharmaceutical companies appear to be dodging an estimated $3.8 billion in taxes each year across 16 countries, according to a new report released by Oxfam today.
The report, ‘Prescription for Poverty,’ analyzes the financial disclosures from Abbott, Johnson & Johnson, Merck & Co and Pfizer between 2013 and 2015 and finds that the companies appear to be dodging an estimated $3.7 billion in taxes in nine developed countries including Australia, Denmark, France, Germany, Italy, New Zealand, Spain, the UK, and the US, including an estimated $2.3 billion avoided in the US. The same companies also appear to be avoiding an estimated $112 million per year of tax across seven developing countries including Thailand, India, Ecuador, Colombia, Pakistan, Peru and Chile.
“No mother should watch her children agonize without healthcare or be forced to decide between buying food or medicine,” said Robert Silverman, Private Sector Advocacy Manager at Oxfam America. “If these four companies paid their fair share, governments would have the revenue to vaccinate 10 million girls against HPV, the virus that causes cervical cancer, and provide more than a million kids in America with health insurance.”
Oxfam’s analysis suggests these four companies are shifting profits out of countries where they do their business and into tax havens that charge little or no tax. The companies are secretive about their finances but available data reveals average pre-tax profit margins of just six percent in countries with standard tax rates, compared to 31 percent in the tax havens of the Netherlands, Belgium, Ireland and Singapore. Such practices, while not necessarily illegal, demonstrate that pharmaceutical corporations are masters at taking advantage of a broken international tax system.
Oxfam’s report also outlines how the companies undermine poor people’s health by overpricing medicines, putting them out of reach for cash-strapped public health services and poor patients. For example, a standard 12-week course of Pfizer’s breast cancer drug paclitaxel can be produced for $1.16, yet sells for $276 in the US and $912 in the UK. The report also details how the pharmaceutical corporations are using their economic and political clout to shape government policy on tax, trade and health in their own interest - particularly in the US where the industry spends over $200 million every year on lobbyists and political donations.
“Instead of paying their fair share, Abbott, Johnson & Johnson, Merck & Co, and Pfizer have been stashing billions of dollars in profits offshore and charging sky-high prices for medicines that families can hardly afford,” continued Silverman. “It is women living in poverty who pay the biggest price, losing out on education and healthcare, robbing them of opportunity to improve their lives and lift themselves and their children out of poverty.”
While tax avoidance figures appear lower in developing countries, the impact can be more severe because poorer countries often have weaker public services, have a higher poverty rate, and rely more heavily on corporate taxes to fund public services. The UN estimates that corporate tax avoidance around the world costs poor countries upwards of $100 billion a year.
Abbott, Johnson & Johnson, Merck & Co, and Pfizer produce well-known brands such as Band-Aid, Neutrogena, and Tylenol, as well as lifesaving medicines. They are among the world’s biggest pharmaceutical companies with global revenues topping $1.8 trillion in the 10 years from 2006 to 2015.
“Without greater transparency it is impossible for Oxfam or the public, to know whether company tax practices are legitimate or not, that’s why we’re calling on governments to insist that companies publish financial information for every country where they do business,” continued Silverman. “But the bottom line is that Abbott, Johnson & Johnson, Merck & Co, and Pfizer must pay their fair share of taxes, make their medicines affordable and stop rigging government rules in ways that undermine the fight against inequality and poverty.”
/ENDS
