Bad Medicine: How GOP Tax Cuts Are Enriching Drug Companies, Leaving Workers & Patients Behind

April 26, 2018

View the Full Report in PDF here.


America’s 10 biggest prescription-drug corporations—the Pharma Big 10—are among the biggest winners from the Trump-GOP tax cuts but they are sharing few of the benefits with their employees and are offering no pricing relief to their customers. Instead, they are mostly rewarding their CEOs and other wealthy shareholders with fat stock buybacks and dividend hikes, recent public announcements and analysis reveal.

Following is a summary of the report’s findings, many of which are highlighted in Table 1 (data is current as of April 26, 2018):


  • Five of the Pharma Big 10 (the only corporations for which tax cut estimates have been publicly released) could save more than $6.3 billion in taxes in 2018 alone. [Table 1]
  • The Pharma Big 10 will save $76 billion in taxes on their offshore profits alone. The 10 firms had $506 billion in untaxed profits offshore in 2017, on which they owed nearly $134 billion under previous law. Under the Trump-GOP tax regime they will owe only about $57 billion—a tax savings of $76 billion—and they can stretch their tax payments over eight years. [Table 2] (An annualized version of this one-time savings has been included in the tax cut estimates provided in Table 1 for Amgen and Merck, as calculated by JUST Capital.)


  • Only two of the Pharma Big 10, Pfizer and Merck, have announced any quantifiable sharing of tax savings with existing employees through bonuses, wage hikes or fringe benefit improvements. They are providing one-time bonuses worth a total of $169 million. The industry’s estimated $6.3 billion in 2018 tax cuts is 37 times more than what drug companies are giving workers. (AbbVie has announced it would “enhance compensation” but offered no details.)
  • None of the other seven corporations—Johnson & Johnson, Eli Lilly, Gilead Sciences, Amgen, Bristol-Myers Squibb, Celgene and Biogen—has announced plans to share their tax-cut wealth with employees. However, many of these “Corporate Cheapskates” are doing share buybacks that will primarily benefit the wealthy, including their own CEOs.
  • The Pharma Big 10’s CEOs received total compensation in 2017 that ranged from 94 to 452 times what the typical worker received. For most of the companies, the CEO made over 100 times more than the typical worker; Johnson & Johnson’s CEO made 452 times more.

Table 1. Big Pharma’s Tax Cuts, Buybacks & Bonuses

Company  2018 Estimated Annual Tax Cut  One-Time Tax Cut on Offshore Profits  Stock Buybacks Announced Since November 28, 2017  2018 Stated or Estimated Cost of Promised Bonuses  CEO-to-Worker Pay Ratio***
AbbVie* $1,316,950,210 $3,881,000,000 $10,000,000,000 $0 144-1
Amgen** $987,400,000 $5,500,000,000 $10,000,000,000 $0 147-1
Biogen No estimate $1,060,400,000 None announced $0 Not reported
Bristol-Myers Squibb No estimate $4,827,300,000 None announced $0 169-1
Celgene No estimate $1,953,700,000 $5,000,000,000 $0 Not yet available
Eli Lilly* $163,905,000 $4,492,000,000 None announced $0 118-1
Gilead Sciences No estimate $7,000,000,000 None announced $0 94-1
Johnson & Johnson No estimate $9,031,800,000 None announced $0 452-1
Merck** $2,728,900,000 $13,135,900,000 $10,000,000,000 $69,000,000 215-1
Pfizer* $1,070,745,480 $25,503,000,000 $10,000,000,000 $100,000,000 313-1
TOTAL $6,267,900,690 $76,385,100,000 $45,000,000,000 $169,000,000 N/A

Sources: Americans for Tax Fairness,
*2018 tax cut estimated by the Senate Finance Committee
**2018 tax cut estimated by JUST Capital
***Compiled by Bloomberg based on company reports to the SEC

  • Unlike utility companies, none of the Pharma Big 10 has announced any plans to use their tax savings to reduce prescription drug prices despite huge price hikes in recent years. An AARP analysis found that the prices of 268 brand name drugs increased at least 15% a year from 2013 to 2015, the most recent data available. A recent ATF report found retail prices for a sample of leading American drugs had soared by 40% to 70%, or up to 14 times the rate of inflation, between 2011-2015. ATF found that over that same period profits for the Pharma Big 10 rose by almost 40%.


  • Five Pharma Big 10 firms have announced a total of $45 billion in stock buybacks since late 2017. That’s 266 times more than the $169 million in announced worker bonuses. Stock buybacks overwhelmingly benefit wealthy shareholders, including top executives and foreign investors.
  • Pfizer is getting a nearly $1.1 billion tax cut, which is 11 times more than the $100 million in one-time worker bonuses it attributes to the new tax law. Its tax rate will be just 17% in 2018. Pfizer has authorized spending $10 billion on stock buybacks this year—100 times more than it is sharing in bonuses—and raised its dividend by 6%.
  • Merck promised employees one-time bonuses estimated at $69 million but it’s receiving 39 times more in tax cuts—$2.7 billion—in 2018 alone. The company is also buying back $10 billion in stock—145 times more than it is spending on bonuses.
  • AbbVie’s estimated tax cut is $1.3 billion in 2018—its resulting tax rate will be just 9%, lower than that of many working families. While AbbVie has said it will “enhance non-executive employee compensation,” it has not said by how much or for how many workers.

The big tax discount on accumulated offshore profits, combined with ongoing savings from the corporate tax-rate cut from 35% to 21% on domestic profits, and the even lower tax rate (one-half the domestic rate or less) that now applies to future offshore profits, will turbocharge profits in an industry already flush with cash. But so far, few benefits are filtering down to hard-working employees—and none to long-suffering patients.

View the Full Report in PDF here.