opinion

Sanders: Drug 'merger' must be stopped

The American drug corporation Pfizer announced it was merging with a smaller overseas company called Allergan so that it can evade American taxes.

They didn’t put it that way, of course. Pfizer’s CEO used double-talk instead, saying that “we’ve assessed the legal, regulatory and political landscape and are moving forward with our strategy to combine these two great companies for the benefit of the patients and to bring value to shareholders.”

Let’s put that in plain English. Pfizer has been an American company based in New York for 166 years. Now it wants to merge with a company based in Ireland so that it can dodge its tax responsibilities and pay a lower rate than many teachers and nurses do in this country.

This is a phony move. The new company will still be based in New York. It will still earn huge profits in the United States, which will still be its biggest market. Pfizer shareholders will own more than half of the merged corporation. And yet, when tax time rolls around, this company will want us to believe that it is really Irish and not American.

Do they expect us to fall for that?

This kind of maneuver is called an “inversion,” and I have introduced a bill called the Corporate Tax Dodging Prevention Act to make it illegal. (It would close a number of other corporate loopholes as well.)

This merger would be a disaster for American consumers, who already pay the highest prices in the world for prescription drugs. In all likelihood, it would lead to even higher drug prices. Pfizer already has a poor record on that score.

As Bloomberg News reported just last month, Pfizer “raised prices on 133 of its brand-name products in the U.S. this year … more than three-quarters of which added up to hikes of 10 percent or more.”

After the merger, the company would be the largest drug company in the world. That would give it unprecedented market power, in a health economy rife with profit-driven mergers and acquisitions. That should concern everyone.

Pfizer has slashed its workforce in recent years. It has repeatedly cut its research budget in favor of acquisitions and other profit-driven maneuvers. And now it wants to be financially rewarded for being unpatriotic.

It’s not as if this company deserves a reward for good behavior. Pfizer agreed to a $2.3 billion fraud settlement in 2009, after pleading guilty to illegally marketing an arthritis drug for unapproved uses. Prosecutors characterized Pfizer as a repeat offender, and the 2009 deal was its fourth fraud settlement in 10 years. It was the largest health care fraud settlement at the time, and the largest criminal fine in history.

Now Pfizer wants to dodge its U.S. tax bill.

Reports have made clear that the main purpose of the Allergan deal is to avoid taxes. Someone who has been briefed about its CEO’s thinking said, “If the tax stuff went away entirely, the deal would be off.” And this isn’t just about avoiding future taxes, either. Pfizer has stashed approximately $140 billion from past years’ profits offshore, much of it in tax havens. It might be able to evade taxes for this income, too, if this deal goes through.

This “inversion” deal would be a victory for greed, tax lobbyists, and the politicians who serve corporate interests — and a loss for everyone else. The Obama administration has the authority to stop this merger on antitrust grounds. It should exercise that authority. Congress must also pass real tax reform which ensures that profitable corporations pay their fair share of taxes.

Working people in this country have been paying their fair share of taxes for decades, while corporations as billionaires game the system and avoid their responsibilities. This merger would reward Pfizer’s bad behavior by allowing it to inflate its already-enormous profits on the backs of the American people.

Enough is enough. The Congress and the president must stop Pfizer’s merger, and then act to end this enormous tax loophole once and for all.

Sen. Bernie Sanders, an independent from Vermont, is running for the Democratic nomination for president. Contact: BernieSanders.com