Senate Finance Committee Chair Ron Wyden (D-OR) has been investigating the tax practices of big pharmaceutical companies. His latest target: Merck.
Wyden on Monday released a letter to Merck CEO Robert Davis asking how the drugmaker managed to pay an effective tax rate of 11% last year and reported just 14% of its pretax income in the United States despite being headquartered and doing more than 46% of its sales here.
“Despite the United States market being the source of nearly half of Merck’s revenues and its richest price premiums, it appears that the company has minimized profits in the United States while reporting substantial foreign profits to avoid paying U.S. corporate income taxes,” Wyden said in his letter.
Wyden wrote that he is investigating how the 2017 Republican tax reform “created incentives for large multinational corporations to use offshore subsidiaries to report profits overseas as a way to avoid U.S. taxes.” He said that the 2017 law’s “flawed design enables large multinational corporations that primarily operate in the United States to structure their operations in a way that allows them to pay a tax rate that is a fraction of that paid by hard-working American families.”
The letter notes that Merck had lobbied for the 2017 law and its former CEO, Kenneth Frazier, had discussed tax policy with former President Donald Trump.
Wyden had previously sent similar letters to two other drug companies, AbbVie and Bristol Myers Squibb.
A spokesperson for Merck told Bloomberg News that the company had received the letter and would cooperate with the request.
