Expresses Concern About Reports of Top Pharmaceutical Companies Using Billions in Tax Savings to Enrich Investors Instead of Prioritizing Lower Prescription Drug Costs
Today, U.S. Senator Tina Smith questioned a group of major pharmaceutical executives on how they are using billions of their corporate tax cut dollars, expressing concern that the companies may be using the funds to enrich investors through stock “buybacks” and shareholder payouts instead of prioritizing lower prescription drug prices.
The Tax Cuts and Jobs Act, signed into law in December, reduced the corporate income tax rate by over 40 percent, providing these companies with a large windfall of corporate tax savings that could be used to bring down costs for consumers or invest in new research and development. However, late last month, reports surfaced that several top pharmaceutical companies used a sizable portion of their tax cut to drive up stock value and make investors wealthier.
In letters to five CEOs—representing Pfizer, Merck, Johnson & Johnson, AbbVie, and Abbott Labs—Sen. Smith asked each company to explain in detail how they plan to use their windfall from the tax bill.
“Given the growing national concern over the skyrocketing price of many prescription drugs, I would expect you to take every opportunity to lower the price of the drugs you produce, reducing the burden on consumers,” wrote Sen. Smith in her letters. “However, on February 22nd, Axios reported that top pharmaceutical companies have announced significant so called ‘buybacks,’ which benefit shareholders by driving up the value of their stock. This suggests that pharmaceutical companies have used these tax breaks to enrich investors, a decision that comes at the expense of lowering the price of prescription drugs, investing in research and development that could lead to new cures, or passing along savings to consumers.”
You can read copies of the letters below: