Guest AuthorThe big drug company Pfizer has been squeezing Florida families by hiking its prices while dodging its taxes, putting a strain on both personal and public budgets. Now it’s pursuing its biggest tax avoidance scheme ever. Luckily, President Obama can stop it.
Nothing has stopped Pfizer’s recent price gouging. The pharmaceutical giant has routinely raised its prescription drug prices by many multiples of the rate of inflation, according to a new study by Americans for Tax Fairness (ATF).
The nearly 3 million elderly and disabled Floridians in Medicare’s Part D prescription drug program saw the cost of the widely prescribed nerve-pain medication Lyrica go up nine times the inflation rate between 2010 and 2014. The price of cholesterol treatment Lipitor went up by 20 times the inflation rate – and that of anti-inflammatory Celebrex, 27 times – in just the past few years, according to government figures cited in the report.
Of course, nearly all drug companies have been raising their prices recently. But Pfizer’s average cost hike for seven of its leading medications was four times worse than even the prescription-drug inflation rate between 2013 and 2015.
Other countries have it better. In Ireland, for instance, a single 20 mg. dose of Lipitor costs the equivalent of about 25 cents. Here, it costs nearly $9. Ironically, Pfizer’s ultimate tax dodge involves merging with an Irish company in order to share its national identity and pay the lower tax rates of Ireland, a well-known tax haven.
But this overseas move is strictly an accounting illusion. The new Pfizer would still be operated and managed from the U.S., enjoying all the benefits of being an American company – public highways, schools, research labs – without paying its fair share to support them. Which raises an interesting question: If Pfizer can stay in the U.S. but pay discounted Irish tax rates, can American consumers stay put, too, and pay discounted Irish drug prices?
Not likely. The whole point of Pfizer’s phony nationality makeover is to strengthen that squeeze play of charging more and paying less. In fact, the ATF report reveals the company would walk away with up to $35 billion in unpaid U.S. taxes if it pulls off its scheme, money it owes on some $150 billion in profits it’s kept stashed overseas.
Thirty-five billion dollars could do Florida and our nation a lot of good. We could provide a tuition-free community college education for 5 million striving students, for instance, or fund the life-saving work of the National Cancer Institute for almost seven years.
The ATF report explains how the Obama Administration – without needing the help of our recalcitrant Congress – can prevent Pfizer from pulling off this $35 billion tax dodge. There’s already a rule in place barring American corporations from ducking out on pre-existing U.S. tax bills through these kinds of offshore mergers. But Pfizer figured out how to structure its deal to avoid the rule. A simple, logical change in how deals are defined would block Pfizer’s cash grab.
Pfizer’s grabbed enough cash already. Even as it dodges the taxes that fund our government, it gets a billion dollars a year in federal contracts. Through a particularly perverse loophole, we taxpayers subsidize the multimillion-dollar paychecks of Pfizer’s top executives. And thanks to its aggressive price gouging, the company’s profit margin last year was 50 percent higher than it was four years earlier.
There’s still time for the President to act, but he must do it soon. Pfizer’s deal, announced last year, will be final in a few months. And other corporations are already lining up to use the same loophole Pfizer hopes to exploit.
U.S. Sen. Bill Nelson could also help by urging President Obama to use his executive authority to close the loophole Pfizer is exploiting.
Florida, with its large retiree population, has been a good market for Pfizer’s products. But we’re not buying its $35 billion offshore tax rip-off. President Obama has the prescription in hand to prevent it – he should fill it now.
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Mark Ferrulo is executive director of Progress Florida. Column courtesy of Context Florida.
