By agreeing to pay penalties without admitting wrongdoing, the pharmaceutical companies that flooded the United States with opioids will be able to deduct billions from their taxes as a result.
Needless to say, the laws involving this need to change, pronto:
Four companies that agreed to pay a combined $26 billion to settle claims about their roles in the opioid crisis plan to deduct some of those costs from their taxes and recoup around $1 billion apiece.
In recent months, as details of the blockbuster settlement were still being worked out, pharmaceutical giant Johnson & Johnson and the “big three” drug distributors — McKesson, AmerisourceBergen and Cardinal Health — all updated their financial projections to include large tax benefits stemming from the expected deal, a Washington Post analysis of regulatory filings found.
The Dublin, Ohio-based Cardinal Health said earlier this month it planned to collect a $974 million cash refund because it claimed its opioid-related legal costs as a “net operating loss carryback” — a tax provision Congress included in last year’s coronavirus bailout package as a way to help companies struggling during the pandemic.
The deductions may deepen public anger toward companies that prosecutors say played key roles in a destructive public health crisis that kills tens of thousands of Americans every year. In lawsuits filed by dozens of states and local jurisdictions, public officials have argued that the companies, among other corporate defendants, flooded the country with billions of highly addictive pills and ignored signs they were being steered to people who abused them.
Gee, you think that allowing these companies to turn their malevolent activities into tax breaks might be a bit controversial?
All four firms disavow any wrongdoing or legal responsibility. The companies have said they produced government-approved prescription pills, distributed them to registered pharmacies and took steps to try to prevent their misuse.
U.S. tax laws generally restrict companies from deducting the cost of legal settlements from their taxes, with one major exception: damages paid to victims as restitution for misdeeds. Still, Congress has placed stricter limits on such deductions in recent years, and some tax experts say the Internal Revenue Service could challenge the companies’ attempts to deduct opioid settlement costs.
Harry Cullen, a Brooklyn-based activist who has worked to hold drug companies accountable for the epidemic, said it is “incredibly insulting” that companies would try deduct the settlement payments. “As if they are donating it to these people who they harmed in the first place.”
I would also note that the entire “No admission of guilt” settlement regime needs to end.
When the end result is, “No harm, no foul, pay 15% of what you made thought your evil deeds,” these companies will continue to do harm to society.