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U.S. Senator: Merck Avoided Billions In Taxes By Offshoring Drug Profits
- By The Financial District
- Jul 30, 2022
- 2 min read
Drugmaker Merck & Co. avoided billions of dollars of US taxes in recent years on its top-selling cancer drug Keytruda by booking all the profits from the treatment outside of the United States, an ongoing investigation by Democrats on the Senate Finance Committee showed, Michael Erman reported for Reuters.
Photo Insert: Merck's effective tax rate last year was 11%.
The committee's chairman Senator Ron Wyden of Oregon sent a letter to Merck Chief Executive Robert Davis on Wednesday criticizing the drugmaker for refusing to provide all the information the committee has requested. Wyden's office provided a copy of the letter to Reuters.
Democrats on the committee have been investigating how the tax law passed by Republicans in 2017 benefited large US pharmaceutical companies such as Merck and AbbVie and whether those companies have been exploiting foreign subsidiaries to avoid taxes.
Wyden said in the letter that Merck was able to avoid US taxes on Keytruda - even on sales in the US- by holding patents in the Netherlands and manufacturing the drug in Ireland.
"Prior to today, we have received two letters from the Senate Finance Committee requesting responses to questions around our tax rate, and in each case, we have cooperated and responded with information that we believe appropriately addressed their inquiries," Merck said in an emailed statement.
Cancer immunotherapy Keytruda is one of the world's top-selling drugs. Merck sold around $17.2 billion of it in 2021, with around $9.8 billion of those sales in the US. Merck's effective tax rate last year was 11%, Wyden said in his letter, just over half the current US corporate tax rate of 21%.
Wyden said the $22.4 billion of sales it reported in the United States accounted for 46% of Merck's sales in 2021. Still, the company only reported $1.85 billion in pretax income in the US for the year - less than 15% of its total pretax income.
