On Tuesday, two Democratic lawmakers confronted five leading pharmaceutical companies regarding their minimal tax contributions and whether they support the extension of significant tax breaks included in a GOP reconciliation bill.
Senator Elizabeth Warren, D-Mass., and Representative Jan Schakowsky, D-Ill., allege that Pfizer, Merck, Johnson & Johnson, AbbVie, and Amgen have paid little to no federal taxes on profits earned in 2024 and earlier years, despite raking in billions from their medications.
In letters sent to each of the companies, the lawmakers claim that these pharmaceutical firms have sidestepped U.S. tax obligations by shifting their profits to offshore subsidiaries in low-tax jurisdictions like Ireland and Bermuda. This strategy was made possible by a provision in the Tax Cuts and Jobs Act of 2017, initiated by President Donald Trump. Intended to limit corporate tax evasion, it instead created new incentives for U.S. multinational companies to relocate profits and operations overseas.
Warren and Schakowsky pointed out in their correspondence that this situation exemplifies “just one of the ways in which our tax code has been skewed to benefit wealthy pharmaceutical corporations, enabling them to profit off Americans, charging them the highest drug prices in the world, without paying their fair share of taxes.”
The lawmakers inquired whether the substantial amounts spent by these companies on lobbying Congress were aimed at preserving the tax loophole in Trump’s “One Big Beautiful Bill Act,” which received approval from the Republican-led House in late May. For instance, Johnson & Johnson allocated more than $150,000 on lobbying related to international tax issues in the fourth quarter of 2024, as detailed in the letter referencing data from OpenSecrets.
Should the proposed multitrillion-dollar tax and spending package be enacted in its current form, many provisions from the 2017 tax act would become permanent. The package also includes significant cuts to programs benefiting low-income Americans, such as Medicaid.
As the bill awaits consideration in the Senate, Republicans may choose to discard or alter many provisions pushed by hard-line House Republicans advocating for spending reductions alongside tax cuts. However, any Democratic effort to eliminate the offshore tax loophole could face significant obstacles, given the Republican majority in the upper chamber.
Despite these challenges, Democrats aim to galvanize public opposition to certain aspects of the legislation as the GOP navigates varying party interests in order to advance it. Over the years, both parties have targeted pharmaceutical companies for scrutiny.
Warren remarked to CNBC, “It’d be a slap in the face for Congress to expand tax loopholes for Big Pharma companies that are making billions in profit while overcharging Americans. These companies need to be held accountable for prioritizing their profits over people.”