AbbVie has been the target of numerous legal investigations and pricing and patent protection challenges. Now a U.S. Senator takes a look at the company's taxes, specifically how it benefited from recent changes to corporate tax laws under the previous administration.
Senator Tom Wyden launched an investigation into the company's tax practices as a kind of indictment of the Republican tax plan signed during the Trump administration. Specifically, Wyden, an Oregon Democrat, is looking for information on how the 2017 corporate income tax law allowed the company to "continue to abuse tax havens and avoid taxes on prescription drug sales in the US." Wyden said the company took advantage of loopholes in the law and kept its tax rate lower than the corporate tax rate of 21%. According to Wyden's announcement, AbbVie's tax rate was 8.7% in 2018, 8.6% in 2019 and 11.2% in 2020.
Before the 2017 Tax Act was passed, AbbVie paid effective tax rates of 20 percent in 2016 and 19 percent in 2017, Wyden wrote. The Oregon Senator said AbbVie was able to do this by taking advantage of offshore loopholes and reporting net losses in the US and net income outside the US. By moving profits overseas and reporting losses in the US, AbbVie avoids paying higher tax rates.
“While the US market is AbbVie's source of most of its revenue and premium mark-ups, it appears that the company has consistently posted net losses in the United States, along with significant overseas profits.
In 2020, AbbVie reported a domestic pre-tax loss of $ 4.5 billion and foreign pre-tax profit of $ 7.9 billion. Likewise, AbbVie reported a domestic pre-tax loss of $ 2.8 billion and foreign pre-tax profit of $ 11.2 billion in 2019. AbbVie also posted a domestic loss in pre-tax profit in 2018, ”Wyden wrote in his letter.
Wyden said the Illinois-based company is exploiting legal loopholes to the benefit of its shareholders while increasing the prices of the best-selling drugs covered by Medicare – price increases that are the subject of ongoing congressional investigations.
AbbVie isn't the only company facing legal challenges. Generics giant Mylan, which merged with Pfizer's UpJohn to create Viatris, is the target of a lawsuit filed by Sanofi over anti-competitive practices related to the EpiPen. Sanofi, the maker of Auvi-Q, is filing a new lawsuit over its claims that Mylan has a monopoly on the market.
Last year the US District Court did one summary judgment in favor of Mylan, rejecting Sanofis Allegations of unfair marketing practices. Sanofi claimed the company raised prices on the EpiPen and then offered big discounts to insurance payers. The French pharmaceutical giant said the discounts were only available if payers didn't cover Auvi-Q.
Sanofi believes the judgment is wrong and requests a new trial. A company spokesman said if the trial goes to a jury, it is likely that Mylan is violating antitrust laws.
GlaxoSmithKline celebrates a court win related to its anti-nausea drug Zofran. The company has been sued over claims that the drug may cause congenital disabilities in women who took the drug while pregnant, and that GSK failed to properly warn of the risks.
However, a court ruled that GSK and Novartis, which has acquired the rights to Zofran, has submitted several safety reports to the US. Food and Drug Administration Over the years, and that the regulator chose not to add a pregnancy warning, the claims made under state law were anticipated by federal law.
Another ongoing high profile litigation involves the Sackler family, which owned Purdue Pharma, the maker of OxyContin. According to the NPR, a judge is moving forward with a bankruptcy plan This could provide the family with immunity from future opioid-related lawsuits. Purdue's OxyContin is seen primarily as a catalyst for the country's ongoing opioid epidemic.
In October, Purdue applied Chapter 11 Bankruptcy in 2019 and voted one $ 8 billion comparison with the US Department of Justice for its opioid marketing practices. The bankruptcy deal is turned down by several attorneys general who do not want the family's immunity from future legal proceedings.