Vermont senator and Democratic presidential candidate Bernie Sanders has slammed the just-announced corporate merger of giant drug makers Pfizer and Allergan, urging the Obama administration to use its authority to block a deal that would raise prices for the public while evading billions in federal taxes.
“The Pfizer-Allergan merger would be a disaster for American consumers who already pay the highest prices in the world for prescription drugs,” Sanders said, in a statement issued by his U.S. Senate office. It also would "allow another major American corporation to hide its profits overseas.”
The deal, announced Monday, would enable the two companies, whose combined market value would be $330 billion, to evade new Treasury Department rules designed to stop companies from renouncing their American citizenship, thereby ending their federal tax obligations, by moving their corporate headquarters offshore.
In this case, the U.S.-based Pfizer, whose history of making major breakthrough drugs dates back to the Civil War, would operate under the supervision of the slightly smaller Allergan, based in Ireland.
“The Obama administration has the authority to stop this merger, and it should exercise that authority,” Sanders said. “Congress also must pass real tax reform that demands that profitable corporations pay their fair share of taxes.”
In late October, a spokesman for Hillary Clinton said she also opposes the Pfizer-Allergan merger, saying Congress should reform the corporate tax code to prevent the international tax-evasion tactic at the heart of the deal.
“Clinton is committed to cracking down on so-called ‘inversions,’ where a company chooses to leave the U.S. on paper to game the tax system, and believes we should reform our tax code to encourage investment in the U.S., rather than shipping earnings and jobs overseas,” Clinton spokesman Ian Sams said, as reported in the Irish Times.
The late October report said that Ireland has a 12.5 percent corporate tax rate, and quoted Pfizer CEO Ian Read at an investment conference saying he was determined to pursue any strategy yielding more profits for shareholders. Read previously tried to move Pfizer's corporate headquarters offshore by buying Britain’s AstraZeneca in a controversial $119 billion takeover bid. That bid failed, in part, because of objections by U.S. and U.K. lawmakers.
President Obama has repeatedly called such overseas mergers and tax-evasion tactics “unpatriotic.” The Treasury Department just passed new rules intended to stop U.S. corporations from buying foreign firms as a way to evade taxes. In this deal, however, Ireland-based Allergan is buying Pfizer, even though Pfizer is the larger company. That gambit allows it to evade the new Treasury rules.
The New York Times reported that Pfizer “kept $74 billion in earnings offshore last year to avoid” paying U.S. corporate taxes.
Sanders has repeatedly criticized the greed-driven approach exemplified by the Pfizer merger, most recently at last week’s Georgetown University speech where he described what democratic socialism meant to him and would mean for the nation if he were elected president.
Sanders singled out the U.S. drug industry for price-gouging consumers, describing its notorious lobbying achievement of getting legislation passed barring federal officials who run Medicare, the government health program for seniors, from negotiating for lower prices.
by Steven Rosenfeld
November, 23, 2015
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