Democrats Question Pharmaceutical Giants on Tax Practices Amid Senate Review of GOP Tax Plan

Democratic lawmakers are scrutinizing five of the nation’s largest pharmaceutical companies over their corporate tax practices and lobbying efforts as the Senate weighs a Republican-led tax and spending package that could extend industry-favorable provisions, CNBC reports.

On Tuesday, Senator Elizabeth Warren (D-Mass.) and Representative Jan Schakowsky (D-Ill.) sent letters to Pfizer, Merck, Johnson & Johnson, AbbVie, and Amgen, raising concerns about the companies’ reportedly low federal tax contributions despite consistently high profits.

The lawmakers allege that the companies used offshore subsidiaries in low-tax jurisdictions such as Ireland and Bermuda to minimize their US tax bills. These practices, they say, were facilitated by provisions in the 2017 Tax Cuts and Jobs Act, signed into law by President Donald Trump, which aimed to discourage tax avoidance but, according to critics, created new incentives for profit shifting overseas.

“Charging Americans some of the highest drug prices in the world while avoiding taxes raises serious concerns,” Warren and Schakowsky wrote, referencing what they described as systemic advantages built into the tax code.

The letters also ask whether pharmaceutical companies used recent lobbying efforts to advocate for keeping existing tax structures in place. The inquiry comes as the Senate debates the GOP’s reconciliation bill, informally referred to as Trump’s “One Big Beautiful Bill Act”, which passed the House in late May. If enacted, it would make several provisions of the 2017 tax law permanent, including those that affect multinational corporate tax obligations.

Citing data from OpenSecrets, the letter to Johnson & Johnson notes that the company spent over $150,000 in the fourth quarter of 2024 lobbying on international tax matters.

Democrats have voiced opposition to aspects of the bill, particularly provisions that extend corporate tax breaks while proposing significant cuts to federal programs such as Medicaid. Still, with Republicans holding a Senate majority, efforts to revise or remove corporate tax loopholes face steep political hurdles.

This latest round of scrutiny follows earlier investigations into the tax strategies of major drugmakers. In March, a Senate Finance Committee report accused Pfizer of avoiding US taxes on approximately $20 billion in drug sales by using a process known as “round-tripping,” wherein domestic profits are routed through international subsidiaries. Pfizer responded by stating it paid $12.8 billion in US taxes over four years and has provided documentation to the Securities and Exchange Commission.

The Tuesday letters cite a Council on Foreign Relations estimate that closing the offshore tax loophole could raise at least $100 billion over the next decade.

The lawmakers have requested responses from the companies by July 1, including details about their lobbying activities and estimated federal tax liabilities.

The push comes as the pharmaceutical industry faces growing pressure from both sides of the aisle. President Donald Trump has floated the idea of imposing tariffs on imported pharmaceuticals, arguing that tax-friendly jurisdictions like Ireland have lured manufacturers away from the US.

As of Tuesday, none of the five companies had publicly responded to the letters.