American drug companies in Pakistan: tax dodgers, price gougers named

Oxfam report shows four mega drug firms peddle influence

ISLAMABAD : Pakistan is among seven countries across the globe where four American drug companies appear to underpay and deprive the economies of the developing countries by an estimated ‘$112 million in taxes every year’, according to a research report published by Oxfam.

The new research report titled Prescription for Poverty: Drug companies as tax dodgers, price gougers, and influence peddlers, shows that “four pharmaceutical firms—Abbott, Johnson & Johnson, Merck, and Pfizer—systematically stash their profits in overseas tax havens. They appear to deprive developing countries of more than $100 million every year—money that is urgently needed to meet the health needs of people in these countries—while vastly overcharging for their products.”



The Oxfam has estimated that in Pakistan, Chile, Colombia, Ecuador, India, Peru, and Thailand the four US drug corporations appear to underpay by an estimated $112 million in taxes every year.

It further says these corporations deploy massive influencing operations to rig the rules in their favour and give their damaging behaviour a veneer of legitimacy.
Tax dodging, high prices and influence peddling by drug companies exacerbate the yawning gap between rich and poor, between men and women, and between advanced economies and developing ones, according to the report.

The report cites pneumonia as one of the effects of these companies avoidance of paying fair taxes, which kills one million children worldwide each year and is the leading cause of mortality in children under five. “An estimated 408,000 children will die from pneumonia in India each year, and another 91,000 will die in Pakistan. But the pneumonia vaccine can have a substantial impact in reducing these deaths.

With the estimated missing tax money, India could buy vaccines for 8.3 million children, almost one-third of the children born in 2016.
Thailand could buy vaccines for 90,000 children, or 13 percent of the children born in 2016.



In total, the seven developing countries we looked at (Chile, Colombia, Ecuador, India, Pakistan, Peru, and Thailand) could buy pneumonia vaccines for 8.9 million children with the estimated missing tax money.”

The international organisation also examined operations of the four American drug companies in four tax haven countries that offer either low tax rates or special tax advantages. These countries are: Belgium, Ireland, Netherlands and Singapore.

“A clear and consistent pattern emerged: companies report low profit margins in developing countries and advanced economies, and high profit margins in tax havens.”

In the seven developing countries, Abbott may have underpaid taxes by $30.47 million, Johnson & Johnson by $54.63 million, Merck by $5.46 million and Pfizer by $2.1 million, the report says.

In Pakistan, the report suggested, Pfizer may have annually underpaid taxes by $1.65 million. The tax underpayment figures for other three companies (for Pakistan) were not available in the report.

And in eight wealthy countries; Australia, Denmark, France, Germany, Italy, New Zealand, Spain and United Kingdom, the four American drug companies may underpay by an estimated $3.7 billion— $2.3 billion of it in the United States.

Oxfam says it reached out to all of the companies named in its report to “share the data we gathered, the methodology we employed, and the findings of our research.” The corporations neither confirmed nor denied the specific research findings in the report.