Tax Breaks Will Offset $26 Billion Opioid Settlement, Drug Companies Say : NPR

Lawmakers are blasting the nation’s greatest drug makers and distributors for trying to make use of a pandemic tax-break loophole to jot down down losses coming from settlements linked to the opioid epidemic.


Johnson & Johnson has gotten a number of reward for its single-dose COVID-19 vaccine accredited by the FDA final weekend. However as it really works to finish the pandemic, Johnson & Johnson can also be amongst 4 of America’s greatest well being care corporations which might be negotiating a settlement for his or her position within the nation’s lethal opioid disaster. Tens of billions of {dollars} are at stake, however the corporations are additionally planning to make use of company tax breaks, together with a brand new one created throughout the pandemic, to offset these opioid payouts. Some members of Congress are livid about this.

NPR habit correspondent Brian Mann joins us now. Brian, so we talked about Johnson & Johnson, however there are different corporations on this state of affairs, proper?

BRIAN MANN, BYLINE: Yeah, that is proper, Rachel. So Johnson & Johnson’s clearly the identify model firm right here. These different three, Cardinal Well being, AmerisourceBergen and McKesson labored extra behind the scenes. They’re these actually large companies that earned big earnings distributing extremely addictive opioid medicines, and now they face this wave of lawsuits tied to that enterprise. We all know from monetary filings that the businesses are near a settlement that may resolve all that. Here is Cardinal Well being CEO Michael Kaufmann talking to buyers final month.


MICHAEL KAUFMANN: I am going to simply cowl the opioids shortly. You already know, as I’ve mentioned prior to now, it continues to be, as you understand, advanced negotiations, a number of shifting elements. However we’re persevering with to make progress there.

MANN: Underneath the tentative phrases of this deal, Cardinal Well being and these different three corporations aren’t anticipated to confess any wrongdoing. However as a lot as $26 billion can be paid out to assist communities slammed by the opioid disaster.

MARTIN: However now these corporations have revealed plans to jot down off a portion of these opioid funds on their taxes. How’s that presupposed to work?

MANN: Yeah, that is actually controversial. In monetary filings, the companies say they plan to declare these opioid funds as losses, which is a deduction, proper? It is much like one anyone may use to pay much less in federal taxes. So in the event that they pay $26 billion in opioid settlements, they may recoup as a lot as 4 billion in tax advantages. And that basically angers some lawmakers, together with Congressman Jimmy Gomez. He is a Democrat from California. He says these communities want that cash.

JIMMY GOMEZ: In the event that they get away with it, meaning much less cash going into the Treasury. Which means much less cash for packages that can assist cope with the fallout of the opioid disaster.

MANN: The businesses, in the meantime, say, you understand, they’re simply following federal tax regulation, and that seems to be the case.

MARTIN: One of many corporations, Cardinal Well being, says it plans to make use of a brand new tax break created final yr below the CARES Act. This was a regulation signed by former President Trump meant to assist corporations that had been struggling due to the pandemic. Is Cardinal Well being a struggling firm?

MANN: No. And this, once more, is why that is so controversial. These well being care and drug corporations have completed rather well financially over the past yr. However Cardinal Well being has confirmed it nonetheless plans to make use of that pandemic tax profit to recoup as a lot as $420 million in taxes already paid out. The corporate despatched an announcement to NPR, saying their tax plan is, quote, “permissible below federal regulation.” However Congressman Gomez described this use of the CARES Act as outrageous and improper. His committee, the Home Oversight and Reform Committee, despatched letters to all of those corporations asking for extra details about their tax methods. We count on to listen to some solutions to these questions by subsequent week.

MARTIN: NPR habit correspondent Brian Mann, thanks.

MANN: Thanks.

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