Big Pharma avoids Big Taxes.

Big Pharma avoids Big Taxes. Big Pharma has big experience and knowledge how to save money!

 

The six biggest U.S. drugmakers avoided paying $7.05 billion in U.S. taxes last year by shifting their profits overseas. That’s almost double the amount they saved using the same strategy 10 years earlier, according to data compiled by Bloomberg.

For years, multinationals such as Pfizer Inc., Merck & Co. and Johnson & Johnson have been moving ownership of patents and trademarks to subsidiaries in low- or no-tax countries. This has allowed drug companies, as well as businesses in several other industries, to skirt paying U.S. taxes on sales of those products unless the money is returned home.

While the practice of shifting assets and profits overseas is legal, that could change. As the trend continues to grow in an era when the government is desperate to raise revenue, the strategy has drawn the ire of legislators eager to shut it down.

“The right kind of tax reform could do a lot to bring corporate profits back to the United States for investment and job creation,” said Charles Grassley, a U.S. senator from Iowa, in an e-mail. “The current system provides an incentive for companies to keep money overseas indefinitely.”

Merck and J&J were the biggest drug company winners in 2012 with savings of about $2 billion each attributable to the strategy, according to regulatory filings. The reports by the six drugmakers, filed last month, come as U.S. lawmakers are debating potential tax code changes designed to shrink the federal budget deficit and crank up job-producing business activity in the U.S.