It was bad enough that Gilead Sciences, the California-based pharmaceutical giant, has been charging seriously ill Americans and government health providers -- including Medicare, Medicaid and the Department of Veterans Affairs – sky-high prices for its drugs that treat the potentially fatal hepatitis C virus.
Gilead earnings have rocketed up the charts with sales of the specialty drugs Sovaldi and Harvoni, which carry retail list prices of between $84,000 and $94,500 for a standard 12-week treatment to cure the liver disease. In recent years, the company has grown to become one of the largest drug manufacturers in the world, with revenues last year of $32.6 billion.
Members of Congress, consumer advocates and government watchdogs have denounced Gilead as a poster child for drug industry price gouging, especially since the company’s prices are far lower in many other countries.
Now comes a new report asserting that Gilead has moved a substantial portion of its assets to a tax shelter in Ireland, allowing income from some of its U.S. drug sales to be shifted abroad and taxed at a much lower rate than the top corporate rate of 35 percent in this country. And, according to Americans for Tax Fairness, a left-leaning advocacy group and watchdog, Gilead has also avoided paying nearly $10 billion in taxes by refusing to bring some of its foreign profits back to the U.S.
The report released Wednesday found Gilead’s sales and profits have soared since the drugs launched, while its tax rate has dropped substantially. “Gilead’s worldwide revenues recently tripled—from $11.2 billion in 2013 to $32.6 billion in 2015,” the study found. “Corporate pre-tax profits soared even more: rising from $4.2 billion to $21.7 billion from 2013 to 2015, a five-fold increase. But, over the same period Gilead’s worldwide effective tax rate plummeted by 40%—dropping from 27.3% in 2013 to 16.4% in 2015.”
The study highlights how one major firm taking advantage of U.S. and international tax law has been able to sharply reduce its U.S. tax obligation even while the vast majority of its drug sales were made in this country. In the case of Gilead, nearly two thirds of the company’s revenues were generated by U.S. sales in 2015, according to the report, yet only 37 percent of Gilead’s profits were subject to U.S. taxation.
The Obama administration and congressional leaders have long debated the need for legislation to encourage or force U.S. multi-national companies to repatriate billions of dollars in revenues from overseas tax havens. In response to a query from the Securities and Exchange Commission, Gilead reported that it would owe $9.7 billion in taxes if it brought $28.5 billion of its profits home, according to Americans for Tax Fairness. Instead, the company is paying a foreign tax rate of only one percent, according to the report.
Gilead declined to comment on the findings.