Pharma is already playing the COVID card.
In the face of a comprehensive global tax agreement intended to stymie opportunities for tax avoidance, industry executives and lobbyists are mounting a quiet campaign to push back against the measure, The Wall Street Journal reports.
This time around, however, pharma has a new negotiating tool: the goodwill garnered by the rapid deployment of COVID-19 vaccines.
In early July, the U.S. won international backing from 130 countries for a minimum corporate tax rate of 15%, intended to equitably tax tech companies. While the tech industry welcomed the idea of a simpler global tax rate, pharma is mounting a closed-door fight against the measure, the Journal reports.
The minimum tax measure could have an outsized impact on pharma’s bottom lines given that many companies sell their products globally. On top of that, many drugmakers keep their intellectual property offshore to avoid paying more on corporate income taxes domestically.
Drug companies, led by pandemic heavyweights Pfizer and Johnson & Johnson, are fighting the global effort through private industry meetings and discussions with congressional staffers, the Journal reports.
Central to their argument has been the rapid development and deployment of life-saving COVID-19 vaccines, people familiar with the matter told the newspaper. Pfizer reps have also argued that the tax rate could leave domestic companies vulnerable to foreign takeovers, according to the report.
One senior tax official with J&J noted that “pharma is going to get hit hard” by the minimum tax rate, according to the report. In an argument not unfamiliar among the pharma world, drugmakers have said that higher taxes could impact the sort of research and development that led to the widely deployed pandemic vaccines.
Representatives for Pfizer and Johnson & Johnson weren’t immediately available to comment on the Journal’s report or the minimum global tax rate.
This is just one battle the pharma industry is waging on Capitol Hill. The Biden administration rattled pandemic drugmakers in May when it backed an international measure that would waive intellectual property rights on COVID-19 vaccines in an effort to boost global supply.
Then there’s the open-ended dispute over prescription drug prices. While attempts to rein in costs haven’t amounted to much in recent years, the White House reiterated in June that the president remains supportive of reforms “that would bring down drug prices by letting Medicare negotiate payment for certain high-cost drugs.”