As part of an ongoing Senate investigation into pharma companies’ tax rates, Sen. Ron Wyden (D-Ore.) has asked Pfizer CEO Albert Bourla to explain irregularities in its reported revenues, losses and taxes paid.
Sen. Ron Wyden (D-Ore.) on Tuesday asked Pfizer CEO Albert Bourla to explain discrepancies between the company’s large and growing drug sales in the U.S. and the comparatively low taxes that it pays.
Wyden, chairman of the Senate Committee on Finance, in a six-page letter to Bourla flagged that Pfizer paid “tax rates that are substantially lower than the U.S. corporate tax rate of 21%.” In 2022, Wyden noted that Pfizer’s effective tax rate sat at just 9.6%, which dipped to negative values last year.
While Pfizer brought in more than $58 billion in revenue in 2023, its effective tax rate last year dropped to negative 105.4%. The pharma even “received a refund that exceeded the taxes it paid that year,” Wyden pointed out in his letter. “Despite generating over $364 billion in sales over the last six years, Pfizer incomprehensibly pays a lower tax rate than millions of working American families.”
The Democratic senator contends that the tax issues started in 2017 after a Trump administration tax law went into effect. The law allowed pharma companies to sidestep steep U.S. corporate income tax via foreign subsidiaries, which instead pay a Global Intangible Low-Tax Income rate of 10.5%.
In his letter, Wyden conceded that the methods by which Pfizer manages to lower its tax rates remain “unclear,” though he noted that the pharma “books most of its earnings offshore” allowing it to take advantage of the 2017 tax law that lowers tax rates on foreign profits of U.S. companies. Pfizer also enjoys “significant tax incentives” in Puerto Rico, Singapore and possibly Ireland, according to Wyden.
These arrangements resulted in the “a substantial discrepancy between where Pfizer generates prescription drug sales and where Pfizer books earnings from those drug sales for tax purposes,” the letter states.
While Pfizer makes more than half of its annual drug sales in the U.S.—selling more than $160 billion worth of products between 2018 and 2023—the pharma “books all of its taxable income outside of the U.S.” while even claiming losses in the U.S. “for tax purposes,” Wyden alleges.
As part of the investigation, the senator is seeking detailed tax information from Pfizer including a country-by-country breakdown of its pre-tax earnings, profit margins and employee headcount from 2018 to 2023. Wyden is also asking the pharma to explain the discrepancies in the taxes it paid, the revenues it booked and the losses it reported.
The pharma has until June 17, 2024 to respond to Wyden’s letter.
Tristan Manalac is an independent science writer based in Metro Manila, Philippines. Reach out to him on LinkedIn or email him at tristan@tristanmanalac.com or tristan.manalac@biospace.com.
