Oxfam: "Four pharmaceutical giants endanger the health of citizens"

Pills of poverty

A new report denounces the removal of tax and aggressive behavior on the prices of medicines. It is estimated that a deficit of $ 3.7 billion per year between 2013 and 2015 in advanced economies, $ 270 million per year only for Italy


The world's leading pharmaceutical companies endanger the health of citizens, deprive governments of valuable public resources that can be invested in strengthening public health systems and endangering access to essential medicines for millions of people. Moreover, it is not uncommon to use undue influence to counter attempts to control drug costs and to strengthen control and public oversight of the sector.

This comes from the new report Recipe for poverty published today by Oxfam, which investigates the direct and indirect effects on economic and health inequalities due to the activities of Pfizer, Merck, Johnson & Johnson and Abbott Laboratories. Notes for products such as Neutrogena, Polase and Brufen, as well as many life-saving medicines, are among the most important companies in the pharmaceutical sector, with sales volume of $ 1.8 trillion in the decade 2006-2015. An amount slightly below the Italian GDP of 2016.

More profit recorded in tax havens
Oxfam conducted an analysis of the consolidated financial statements of the parent companies in the United States and examined the public balance sheets of 359 subsidiaries of the 4 groups in 19 countries in the period 2013-2015, finding traces of a possible transfer of profits from countries to medium load. high to jurisdictions of subsidized tax authorities.

"Aggressive tax planning, which is probably not contradictory to the requirements of the law, raises serious questions about compliance with the spirit of tax rules and tax fairness, some of the investigated companies explicitly stated to be inspired in their company mission and policies" , stated Elisa Bacciotti, director of the Oxfam Italia campaigns.

In the advanced economies studied (Australia, Denmark, France, Germany, Italy, New Zealand, the United Kingdom, Spain) and in the margins of emerging markets and developing countries (Chile, Colombia, Ecuador, India, Pakistan, Peru and Thailand) the average earnings of Pfizer, Merck, Johnson & Johnson and Abbott before tax were extremely low: 7% and 5% respectively in the three-year period 2013-2015. In other words, a gross profit of only 7 and 5 cents for every billed dollar.

Yet the four giants on a global scale have reported annual profits to the SEC, the Consob of the United States, which in some cases reached 30% of revenue. The missing profits have not disappeared, but they have found traces in four tax havens for companies (Belgium, Ireland, the Netherlands and Singapore). Oxfam found the average profit margins before tax of 31% in these countries.

The non-governmental organization estimates that the potential transfer of profits to jurisdictions with tax-free tax may have resulted in total tax losses for advanced economies of $ 3.7 billion per year in the three-year period 2013-2015.

For Italy, where the pre-tax profit margin averaged 6%, the sub-contribution of the 4 giants could have caused an annual loss of $ 270 million.

A shortage sufficient to vaccinate 10 million girls in 7 developing countries
In the most vulnerable contexts of the 7 developing countries studied, the estimate of tax losses was $ 112 million per year. This is a sufficient amount to vaccinate 10 million girls against the virus that causes cervical cancer, one of the deadliest cancers, responsible for death in a woman's world every two minutes. Nearly 90% of deaths relate to women living in developing countries.

"Governments must act resolutely in the fight against corporate taxes and the ensuing systematic deprivation, for the State Treasury, of the resources needed to stimulate investment in public services such as health." Stopping the fierce global downward trend on area of ​​corporation tax, starting with the contrast with the tax havens that are the extreme representation – explained Elisa Bacciotti, director of the Oxfam Italia campaigns – We ask our government to support measures for greater transparency of companies in the EU, starting with an effective public reporting country per country, needed to know the operation and level of contribution of multinational companies in each country where they operate ".

Non-sustainable drug prices for countries with low and average incomes
The report also shows how pharmaceutical companies increase the health of the poorest people, apply supplements to medicines and make them inaccessible. An example is the 12-week standard cycle of Paclitaxel, an anticancer drug produced by Pfizer for $ 1.16 and resold in the United States at $ 276 and in the UK for £ 912.

The costs of medicines have increased in recent years. In 2017, seven out of nine best-selling medicines from Pfizer, Merck and Johnson & Johnson experienced price increases of more than 10% in the US. The cost of Lyrica, a neuropathic pain medication in diabetic patients, saw Pfizer increase by 29% last year, contributing to sales of more than $ 4.5 billion. The cost of monthly treatment with Ibrance, a medication produced by Pfizer for the treatment of metastatic breast cancer, is just under $ 10,000 on the US market. An unsustainable price in the United States, where the costs of medical expenses are the first cause of personal bankruptcy. In low and middle-income countries, such prices also put public health budgets under strong pressure, forcing the state to pay the expenses directly to patients and their families. For example, it is the case of bedaquiline, a medicine for the treatment of complex multiresistant tuberculosis. The cost of a six-month therapy in South Africa, determined by a Johnson & Johnson subsidiary, is $ 820. A price that excludes availability for most of those who need it, since the estimated cost of a generic equivalent if available, would be around $ 48.

"Strategies to combat high drug prices and promote patient-driven innovation must remain an absolute priority for governments – concludes Bacciotti – It is worth mentioning here the report of the Secretary-General's High Level Panel for access to Medicines, which set out a series of recommendations to governments on speedy reforms to promote accessible health care technologies and reach the needs of those who need it, actions at both national and global level, Italy, which has been able to meet the needs of its putting patients at the center of the negotiations on the price of medicines (such as in the case of hepatitis C), should give a global boost to innovative strategies to make medicines available and accessible to everyone, even in poor countries ".

$ 200 million per year lobbying
Finally, the conditioning of the entire American political spectrum by the pharmaceutical sector is not neglected, with lobby costs (200 million dollars a year and an army of 1500 people in 2017) unmatched by companies in other sectors. An action that is taken to protect its interests in both health and tax, as well as to strengthen its business positions. Of the pharmaceutical companies involved in the report, Pfizer is in second place to lobby for expenses, followed by Johnson & Johnson, in sixth place, Merck in seventh place and Abbott in thirteenth place.

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