Pharmaceutical companies run away from paying taxes

A new Oxfam report indicates that the world's largest pharmaceutical companies are running away from paying taxes worth $3.8 billion a year.

The report, 'Prescription for Poverty,' examined the companies Pfizer, Merck & Co (MSD), Johnson & Johnson and Abbott, which are among the largest pharmaceutical companies in the world. Among other things, the report indicates that:

- Companies are escaping paying $112 million a year in taxes in seven developing countries: Thailand, India, Ecuador, Pakistan, Peru and Chile. If the governments of these countries had invested that money in health care, it would have been enough to vaccinate 10 million girls against the virus that causes cervical cancer, one of the deadliest forms of cancer that globally causes the death of a woman every two minutes.
- Corporations escape paying $3.7 billion in taxes in nine rich countries, including Australia, Denmark, France, Germany, Italy, New Zealand, Spain, the United Kingdom and the United States. The $2.3 billion the US missed out on in tax revenue would have been enough for health insurance for nearly a million poor children.

"Pharmaceutical companies appear to have cheated governments out of taxes that could have been invested in healthcare. They price their drugs so that poor people can't afford them and use their power and influence to shoot down any attempts at scrutiny and lower prices."

Winnie Byanyima, CEO Oxfam International

Oxfam's review indicates that the four companies are shifting profits from their countries of operation to tax havens and overpricing medicines, making them inaccessible to poor patients and under-resourced public health services. The report also describes how the pharmaceutical industry uses its economic and political influence to influence government policies on taxes, trade and health care to benefit its own interests - particularly in the US, where the pharmaceutical industry spends over $200 million annually on lobbyists and political donations.

Tax evasion exacerbates the inequality crisis that widens the gap between rich and poor. When pharmaceutical companies avoid paying taxes, the poorest are hit hardest as governments are forced to cut basic public services and raise other taxes, and the UN estimates that corporate tax avoidance costs poor countries $100 billion a year.