The global pharmaceuticals industry sucks billions from our pockets every year by selling the medicines that keep us alive. But come tax day, much of that wealth quickly “vanishes” into regulatory loopholes that let companies inject cash into hidden, untaxable offshore accounts. According to an in-depth investigation by Oxfam, the global tax-dodging machinery allows multinationals to withhold huge potential tax payments and, in turn, deny critical funding for governments, often at the expense of the same health-care systems with which they do business.
A forensic accounting of available financial data of the pharmaceutical giants Johnson & Johnson, Pfizer, Merck Sharp & Dohme, and Abbott—shows that from 2013 to 2015, these four multinational drug makers collectively avoided paying about $3.7 billion to the governments of Australia, Denmark, France, Germany, Italy, New Zealand, Spain, the United Kingdom, and the United States (underpaying by about $2.3 billion in the US alone).
Multinational corporations often counter that they are operating within the law, and simply doing no more than what local tax codes require. That is technically true, but don’t tax authorities see how corporate tax dodgers are effectively flouting financial oversight and draining their countries’ social budgets? Actually, the global corporate shell game is the byproduct of rigged corporate-tax laws that allow companies to minimize their tax burdens in high-tax countries. Using the limited data available, researchers calculated “average pre-tax profit margins of just six percent in countries with standard tax rates, compared to 31 percent in the tax havens of the Netherlands, Belgium, Ireland and Singapore.”
Had the missing tax dollars in the United States actually been paid to the government, Oxfam says, millions of lives might be saved. Even in a country as rich as the United States, “If these four companies paid their fair share, governments would have the revenue to vaccinate 10 million girls against Human Papilloma Virus (HPV), the virus that causes cervical cancer, and provide more than a million kids in America with health insurance.”
The system stretches well beyond richer nations where these companies are based. In many poorer countries—where access to basic medicine is most critical—tax dodging appears to be draining the public coffers of seven developing countries—Thailand, India, Ecuador, Colombia, Pakistan, Peru, and Chile—by collectively escaping $112 million in taxes. That’s $112 million in missed potential revenue that might otherwise go to fund child-vaccination programs, or insulin and HIV/AIDS treatments for the poor.
In India, where a fragile health system struggles to provide basic care for millions, the government has bled an estimated $74 million in tax revenues out of public coffers and into the four companies’ hidden offshore accounts. Oxfam stresses the human costs facing victims of Japanese encephalitis, a mosquito-borne virus that kills many children living in poor sanitary conditions: The lost potential tax payments from the four companies “would be more than enough to buy Japanese encephalitis vaccines and bed-nets for every child born in the whole of India in one year.” But instead, drug makers suck maximum profits from the impoverished patients whose lives depend on their medicines.