Pfizer, the $207 billion pharmaceutical firm responsible for everything from Advil to Viagra to Zoloft with hundreds of wonder drugs in between, announced its intention to merge with Allergan, another behemoth in the industry. Allergan, which started in 1948 in Los Angeles as a supplier of eye care products and came to own the multi-billion dollar Botox business in 1991 when it acquired Oculinum, is today based in Dublin, Ireland. Pfizer’s drug-induced hard-on for merging with Allergan has less to do with the luck of the Irish, and everything to do with bagging a nice, low corporate income tax rate. Last year, Pfizer posted revenues of $49.6 billion and paid an effective tax rate of 25.5%. The top rate in Ireland is 12.5%.
(Side note: Although the merger has been portrayed as a $160 billion deal, implying that one side is paying that sum to buy out the other, in reality the process involves a mundane paper-process of exchanging old stock shares for new ones.)
In order to reap the tax benefit, Pfizer must do a tax inversion and turn Irish. To do that, the smaller Allergan will, as a formality, acquire giant Pfizer in what is called a reverse merger. Once that happens, the combined company will rename itself . . . Pfizer. Nothing else much will change – except the amount of tax it pays to the U.S. Government. It will keep its stock symbol on the NYSE where it is a component of the Dow Jones Industrial Average, and maintain its headquarters building in New York City. Best of all, Pfizer will continue to enjoy all the benefits of doing business in America while stiffing the government that protects its interest here and abroad. The whole thing stinks of a greedy scam, but as observers note, it’s perfectly legal. Why shouldn’t Pfizer take advantage of a loophole in the law that lets it reduce its tax burden by billions? Why should CEO Ian Read be satisfied with his paltry $23 million pay package when he could be pocketing 30 mil plus? Why should Pfizer shareholders accept almost $7 billion in dividends when that number could easily jump by billions funded from tax savings?
Valid questions all. But not as valid as this one: Why should Pfizer continue to benefit from American protections? If the Pfizer/Allergan deal goes through it’s only fair that they forgo things they no longer have to pay for. Some ideas:
No more U.S. patent protection for Pfizer. The U.S. Government is the world’s leader when it comes to protecting the inventions of companies for up to 17 years from being copied and sold in competition with the originator. The Patent Office and the U.S. courts that take legal challenges run on taxpayer money. Pfizer wants to be Irish? Let them appeal to the Irish government for redress when someone mixes up a generic version of Eliquis, or Lyrica, or Celebrex, or Chantix.
Quit allowing Pfizer to advertise on TV. Other than New Zealand, the U.S. is the only country that allows pharmaceutical companies to directly advertise their products to consumers. That’s why the names Eliquis, Lyrica, Celebrex and Chantix sound so familiar – they’re ceaselessly hawked on TV. Because the government bends over backward to accommodate the pharma lobby, Pfizer is allowed to deploy the sinister tactic of hypnotizing people into asking their doctors “if Eliquis is right for you.” No better time than the present to clamp down on Pfizer’s televised assaults.
Unshackle Medicare to negotiate lower drug prices from Pfizer. Today, by law, the U.S. Government cannot negotiate lower prices for drugs from the pharmaceutical companies. Clearly a sop to the drug makers, this provision means the taxpayers spend about $16 billion more for drugs than they would otherwise have to. With Pfizer looking to shirk its tax duty, there’s really no point in keeping this ridiculous provision in place. Time to play hardball with Pfizer and squeeze some savings out of their fat asses.
Stop Federal agencies from endorsing Pfizer’s products. Last year, under relentless pressure from Pfizer, the Centers for Disease Control (CDC) recommended the use of Pfizer’s Prevnar by people older than 65. (You know Prevnar – it’s a pneumonia vaccine that appears in TV ads every 15 minutes.) But given Pfizer’s disdain for support of the U.S. Government, it’s unseemly that an august body like the CDC should loan their name to a traitorous company.
Delist Pfizer from the NYSE. Being listed on the New York Stock Exchange brings companies enormous power and cache’. Pfizer deserves to derive neither. Let them take up residence on the Irish Stock Exchange with noted companies Glanbia, Fyffes, Smurfit Kappa Group, and Paddy Power.
WARNING: Call your doctor if the thought of Pfizer shamelessly avoiding taxes causes unexpected bleeding or bleeding that lasts a long time, such as unusual bleeding from the gums, nosebleeds that happen often, or menstrual or vaginal bleeding that is heavier than normal; bleeding that is severe or you cannot control; red, pink, or brown urine; red or black stools (looks like tar); coughing up or vomiting blood or vomit that looks like coffee grounds; unexpected pain, swelling, or joint pain; headaches, or feeling dizzy or weak or just extremely pissed off.
End Note: If it’s any consolation . . .
He murdered three people, but at least he’s pro-life.