WASHINGTON — A tax policy group here is trying to rally outrage over last year’s Republican-backed tax cut by pointing to one of its main beneficiaries: the pharmaceutical industry.
Americans for Tax Fairness, a coalition of left-leaning groups that advocate for placing a heavier tax burden on corporations and the wealthy, said in a report that drug companies are “among the biggest winners from the Trump-GOP tax cuts, but they are sharing few of the benefits with their employees and are offering no pricing relief to their customers.”
The group released a report calculating that five companies it analyzed would save a combined $6 billion in 2018 — and that 10 would save $76 billion in taxes on offshore revenue. Instead of passing those savings on to consumers or hiking employee wages, most companies have favored major stock buybacks or raising dividends. Drug prices have also continued to increase.
In its report, Americans for Tax Fairness pointed specifically to Pfizer, which raised list prices for over 40 of its drugs last month.
With midterm elections approaching, Democrats are expected to campaign in opposition to the GOP tax plan and to home in on frustration over high drug prices. A link between the tax bill and rising pharmaceutical industry profits could provide Americans for Tax Fairness and like-minded groups an opportunity to do both.
President Trump in recent months has hinted that drug companies were set to announce voluntary and substantial price decreases, though no company to date has caved to White House pressure.
“Even as drug companies reap tens of billions of dollars in tax savings under the new tax law, they retain a free hand to continue jacking up prescription drug prices,” Americans for Tax Fairness said in its report. “And contrary to ‘trickle down’ claims that huge tax cuts will benefit the employees of these pharmaceutical giants, evidence so far shows the companies are sharing relatively little with their workers.”
The report did, however, nod to Pfizer and Merck as companies that offered employee bonuses following the tax cut. The report noted that AbbVie has also indicated it plans to up compensation in light of the tax cuts, but has not offered a plan for doing so.
Pharmaceutical manufacturers contacted by STAT largely dismissed the report either as conflating separate issues or having undervalued the ways in which the tax bill benefited the companies, and, in turn, their employees and consumers.
“Tax reform and the cost of medicines are two distinct topics, and we are proactively addressing both,” Nicole Araujo, a spokeswoman for Johnson & Johnson, said in an email.
The tax bill, she said, led Johnson & Johnson to increase its planned investment in research and development by 15 percent over the next four years.
A Merck spokesman pointed to the company’s 2017 pricing transparency report, which also touted increased R&D spending and the introduction of a biosimilar the company said was priced 35 percent lower than its reference product.
A Pfizer spokeswoman similarly highlighted a one-time employee bonus that resulted from the tax cut, as well as increased capital investment in the U.S.