Pfizer Pharma Pays Price for Business As Usual
Announcing the settlement Wednesday, the Justice Department said that it included the largest criminal fine in U.S. history — $1.2 billion. The agreement also included a criminal forfeiture of $105 million.
Authorities called Pfizer a repeat offender, noting it is the fourth such settlement of government charges in the last decade. They said the government will monitor the company’s conduct for the next five years to rein in the abuses.
- Pfizer to pay record $2.3B penalty over promotions
by Devlin Barrett (AP)
… and the US Government continues to spend taxpayer money prosecuting the more egregious behavior to recoup $1.2 billion in money which it should have collected in taxes.
Far from making an example of Pfizer, this penalty drives home the point that there are some abuses which will not be tolerated – it’s acceptable to shift your tax burden overseas with dodgy accounting and creative interpretation of tax law, however, if you employ the same deceit in your promotions you’ve simply gone too far.
Moving profits from the United States to low-tax jurisdictions is the way prosperous U.S. pharmaceutical companies keep their taxes low. And that domestic-to-foreign shift has clearly accelerated in recent years. By Tax Analysts’ calculations, in 1999 foreign profits accounted for 39.2 percent of worldwide profits of large U.S. drug companies. By 2005 that percentage had jumped to 69.9 percent.
. . .
The rising share of foreign profits relative to total profits for the companies is shown in Figure 1. Their declining effective tax rate is shown in Figure 2. The data in the figures are from the annual reports of the nine U.S. pharmaceutical companies in the Fortune 500: Pfizer ($51 billion in revenue and number 31 on the Fortune list in 2006), Johnson & Johnson ($51 billion, 32nd), Abbott Laboratories, ($22 billion, 93rd), Merck ($22 billion, 95th), Bristol-Myers Squibb ($20 billion, 110th), Wyeth ($19 billion, 119th), Eli Lilly, ($15 billion, 148th), Amgen ($12 billion, 181st), and Schering Plough ($9.5 billion, 250th).
- Drug Firms Move Profits to Save Billions
by Martin A. Sullivan
More business as usual…
