Pharma responds to Oxfam ‘Prescription for Poverty’ report

By Flora Southey

- Last updated on GMT

(Image: Getty/BrianAJackson)
(Image: Getty/BrianAJackson)

Related tags Oxfam Tax

Major pharmaceutical companies have defended their accounting and tax policies following the release of an Oxfam report, which claims some of industry’s major players hid profits in overseas tax havens.

Oxfam, which represents charitable organisations tackling global poverty, published the ‘Prescription for Poverty​’ report last week. The document states that Abbott, Johnson & Johnson, Merck & Co (known as MSD outside of North America) and Pfizer “systematically” ​hid profits in tax havens between 2013 and 2015.

According to the report, Oxfam examined data on subsidiaries of Abbott, J&J, Merck, and Pfizer, and found that “in the countries analysed that have standard corporate tax rates, rich or poor, the corporations’ pre-tax profits were low.”

However, in four countries with low, or no corporate tax rates, profit margins appeared high – at 31%, the report continued.

“While the information is far from complete, the pattern is consistent: this is either an astounding coincidence or the result of using accounting tricks to deliberately shift profits from where they are actually earned, to tax havens,” ​wrote author Mark Fried.

Pharma defends tax practice

Generics manufacturer Abbott, which separated off its proprietary pharmaceutical business in 2013, has spoken out against ‘Prescription for Poverty’, claiming that it is misleading on a number of fronts, “particularly relative to the nature of our pharmaceutical business, which exclusively sells off patent, affordable, high-quality, generic medicines,” ​company spokesperson Scott Stoffel told us.

According to Stoffel, Abbott pays all taxes owed in every country in which it operates. “With businesses in more than 150 countries, our tax contribution is substantial and global in scope, and we make significant contributions to the health and economies of societies around the world,” ​he added.

Pfizer has similarly defended its tax practices, with a company spokesperson telling us “Pfizer abides by all accounting and tax laws wherever we do business and pays all taxes due.”

Merck’s statement affirms the company “complied with all tax rules on a worldwide basis”.​ J&J did not respond to a request for comment ahead of publication.

Oxfam calls for transparency

While Oxfam has not accused drugmakers of illegal activity, the document claims recent findings expose “how corporations can use sophisticated tax planning to take advantage of a broken system that allows multinational corporations from many different industries to get away with avoiding taxes.”

The confederation of charities has called on companies to increase transparency by publishing all information regarding their tax practices, in an accessible format. In addition, Oxfam highlighted a need to publish a list of company subsidiaries in every country they operate, as well as a public commitment to pay tax on profits where value is created.

Oxfam has also requested governments demand that “companies…adhere to full transparency” ​and “mandate and implement country-by-country financial reporting for all large multinational companies”.

Related topics Markets & Regulations Regulations

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