It’s one thing for Pfizer (NYSE:PFE) to renounce its U.S. citizenship, moving its official residence to Dublin, Ireland, as a tax dodge — all the while continuing to run the business in the United States. That disgusting tactic happens to be disgustingly legal, thanks to our indolent Congress and its failure to fix the corporate tax laws.
It’s quite another to insult the public with blatant phoniness that avoiding billions in U.S. taxes gives the company “the strength to research, discover and deliver more medicines and therapies to more people around the world.” Those are the words of Pfizer’s chief executive, Ian Read, an accountant by training.
The Pfizer deal involves a merger with a much smaller Allergan, an Ireland-based company that happens to do its business in New Jersey. Wall Street analysts scoffed at the notion that the deal had any purpose other than to let the company avoid billions in U.S. taxes — billions that other American taxpayers will have to replace.
Since Read took the helm in 2010, Pfizer has slashed its research and development budget.
We assume the company will expect the United States to continue subsidizing research through the taxpayer-supported National Institutes of Health. We assume it wants the U.S. government to continue defending its intellectual property rights.
Pfizer made headlines more than a decade ago when it persuaded the city of New London, Connecticut, to use eminent domain to seize a working-class neighborhood around its shiny new headquarters — and replace it with an upscale shopping, hotel and office complex more to the company’s liking. Actually, it was a condition of its move to the city, according to The Day in New London.
The Supreme Court gave the controversial plan a green light in 2005. Four years later, Pfizer abandoned New London.
Yes, the drugmakers know how to make government work for them. Their lobbying group, the Pharmaceutical Research and Manufacturers of America, leads efforts to ensure that Americans pay far more for their products than citizens of other countries.
The drugmakers’ crowning achievement was getting a Republican-controlled Congress to write a Medicare drug benefit law to their specifications. While funneling billions in taxpayer subsidies toward helping the elderly buy drugs, it forbade the U.S. government to negotiate the prices on behalf of said taxpayers.
No other Western country lets drug companies charge whatever they think they can get away with. This is why the government of Norway pays about $460 for an injection of the asthma drug Xolair and our Medicare pays about $860.
(Pfizer also lobbied against proposals to let Americans buy their drugs from other countries at these lower prices.)
These conversations always circle back to the drugmakers’ argument that Americans must pay their price to cover the high expense of developing wonderful life-enhancing products.
We can close that circle by asking: To the extent that high U.S. drug prices support research and development benefiting the world, why are Americans the only ones footing the bills?
The drugmakers don’t talk much about that publicly for a very simple reason. It is not in the interests of their executives and investors to stop Americans from playing the chump. If they can get the job done by writing checks to obedient U.S. politicians and the chumps keep re-electing them, why make trouble for themselves?
In a recent annual report, Read told shareholders of Pfizer’s desire to earn “greater respect from the public,” which entails “acting as a respectable corporate citizen.”
Read may have reason to take the American public for easily deceived children. Basic decency, however, demands that he limit such thoughts to private dinner parties.