WASHINGTON, D.C. – The largest 10 pharmaceutical companies in the nation have announced no plans to pass on any of their newfound tax savings from the Republican tax bill to consumers in the form of lower drug prices, according to a new 15-page report released today by U.S. Senator Cory Booker (D-NJ).
Instead, half of the firms plan to use their windfall to repurchase shares of their own stock, a mechanism used to boost the individual stock price for shareholders. So-called stock buybacks overwhelmingly benefit wealthy individuals – 84 percent of stocks are controlled by the wealthiest 10 percent of Americans.
Senator Booker’s staff reviewed transcripts of the fourth quarter earnings calls and other public forecasting statements of the largest 10 U.S.-headquartered pharmaceutical companies – Pfizer, Merck & Co., Johnson & Johnson, Gilead Sciences, AbbVie, Amgen, Bristol-Myers Squibb, Eli Lilly & Co., Celgene, and Mylan.
Their findings revealed no evidence that drug companies are using any of their tax savings to lower the price of prescription drugs. Instead, their analysis revealed that five of the 10 firms have announced $45 billion in new stock buyback programs. That figure represents roughly one-fifth of the more than $200 billion in recent buyback announcements across all industries.
“This early snapshot of how drug companies are using their newfound tax savings is profoundly discouraging,” Senator Booker said. “Instead of using the windfall to benefit consumers in the form of lower drug prices, they’re using their savings to line the pockets of wealthy shareholders and executives. That’s unacceptable. Too many Americans have to choose between basic necessities such as taking their medicine and paying their utility bill. The pharmaceutical industry needs to get its priorities straight and do more for patients struggling with skyrocketing drug prices.”
“While today’s report captures only a first glimpse at how these major drug companies will allocate their tax savings, it is a powerful indicator of how these and other major pharmaceutical companies intend to deploy their tax benefits,” Booker added. “I hope these companies prove me wrong and use this windfall to lower drug prices for Americans.”
Booker sent his 15-page report today to the CEOs of the 10 drug companies, and urged them to use their tax savings to combat skyrocketing drug prices.
Today’s report is part of Booker’s ongoing effort to lower consumer drug prices for the millions of New Jerseyans and Americans who struggle to afford their medicine. Last year, Senator Booker introduced a bill – the Affordable and Safe Prescription Drug Importation Act – with Senators Bernie Sanders (I-VT) and Bob Casey (D-PA) that would allow Americans to import safe, low-cost medicine from Canada and other advanced countries. Booker is also a sponsor of legislation that would allow Medicare to negotiate lower prescription drug prices, make it easier to get generic drugs to market, and make other key reforms to bring down high drug costs.