Four big healthcare companies who are facing almost $26 billion in payments to settle the federal case involving their role in manufacturing and distributing highly addictive opioid medications are doing everything they can to pay less.
Members of Congress monitoring the situation say because of corporate tax breaks that the drug companies are hoping to leverage, it could reduce the amount they pay in penalties by over $4 billion.
Rep. Jimmy Gomez (-CA)) spoke for his colleagues when he said what the companies are doing will have ripple effects.“If they get away with it, that means less money going into the treasury, less money for programs that would help deal with the fallout for the opioid crisis.”
AmerisourceBergen, Cardinal Health, Johnson & Johnson, and McKesson are the companies on the hook for the money, but public filings reveal they all plan on writing off future payouts as operating losses. That means they will ultimately pay much less in corporate income taxes.
There is a new corporate tax break that was part of the CARES Act which was created to assist companies that were facing financial struggles during the pandemic, and one of the big Pharma firms plans on leveraging it to save money.
CFO Jason Hollar of Cardinal Health said in an investor call that this provision would save his company $420 million they paid in taxes paid back all the way to 2015.
Needless to say, there are some ticked off politicians. The House Committee on Oversight and Reform sent Cardinal a letter telling them the CARES Act provision is not intended for them.
“Cardinal Health is seeking to exploit the CARES Act provision despite being fiscally healthy during the pandemic.”
The committee gave all four companies a March 18 deadline to answer questions of their tax strategies as it relates to the Opioid crisis.
The drub companies are currently negotiating with cities and counties affected by the crisis, with a deal not yet finalized.
Nearly 45,000 people have died since the opioid epidemic began, according to the CDC.