The US Senate Finance Committee, led by Democratic lawmakers, has been investigating Big Pharma's tax strategies for four years, focusing on how companies might have exploited a 2017 tax break. In this probe, Pfizer has emerged as a primary target, with accusations of executing what Sen. Ron Wyden, D-Oregon, calls potentially "the largest tax-dodging scheme in the history of Big Pharma." Wyden, a key figure in the Senate Finance Committee, made these remarks on March 27, 2025, spotlighting Pfizer's financial manoeuvres in 2019.
The investigation claims that Pfizer, a New York-based drugmaker who gave us one of the mRNA vaxxes, reported $20 billion in U.S. sales in 2019 but declared zero taxable U.S. profits for that year! This was allegedly achieved by shifting those earnings to offshore subsidiaries, allowing the company to evade billions in federal income taxes. The Committee's report, claims that this wasn't an isolated incident, Pfizer reportedly showed zero taxable U.S. income in 2018 and 2020 as well, suggesting a pattern of aggressive tax avoidance.
The report highlights Pfizer's use of "sweetheart tax deals" with Singapore and Puerto Rico, where the company secured income tax exemptions. These arrangements, shrouded by non-disclosure agreements, reportedly hindered the Committee's efforts to fully uncover the details. Democrats label this tactic "round-tripping," a method where U.S. companies attribute domestic sales income to foreign entities for tax purposes. This practice is tied to the 2017 tax law under President Donald Trump, which slashed the U.S. corporate tax rate from 35 percent to 21 percent and introduced a lower 10.5 percent global intangible low-taxed income (GILTI) rate for foreign earnings. Wyden argues this law effectively halves the tax rate on profits shifted offshore, incentivising companies like Pfizer to move income out of the U.S.
Wyden's scrutiny of Pfizer intensified nearly a year ago, in May 2024, when he wrote to CEO Albert Bourla seeking answers about the company's low effective tax rate—far below the 21 percent U.S. corporate benchmark. He pointed out that despite raking in over $364 billion in sales from 2018 to 2023, Pfizer's tax rate was lower than that of many American households. Pfizer, in response, has noted it paid over $12.8 billion in U.S. income taxes from 2021 to 2024, per its public financials, though this doesn't directly address the zero-profit years flagged by the Committee.
The investigation isn't exclusive to Pfizer. It has also exposed similar profit-shifting by Amgen, AbbVie, Bristol Myers Squibb, and Merck. For instance, Merck reportedly earned $22.24 billion in U.S. sales in 2021 but booked just $1.85 billion in U.S. pre-tax income, while claiming over $12 billion in international pre-tax income on $27 billion in foreign sales, a stark disparity Wyden ties to offshore tax strategies.
This probe unfolds against a broader economic backdrop. Potential tariffs proposed by Trump, including on imports from China, Mexico, Canada, and Ireland, aim to pressure drugmakers to bring manufacturing back to the U.S. These measures, alongside industry-specific duties, are rattling the life sciences sector, with groups like the Biotechnology Innovation Organization (BIO) noting widespread concern among biotechs. Trump's tariff threats, including a jab at Ireland for attracting U.S. pharma, add another layer of tension to the tax debate.
In essence, the Senate investigation paints Pfizer as a poster child for Big Pharma's alleged exploitation of the 2017 tax law, using offshore subsidiaries to slash its U.S. tax bill while reaping massive domestic sales. Wyden and his team see this as a systemic issue, fuelled by legislative loopholes, with Pfizer's $20 billion zero-profit year in 2019 as a glaring example. Whether this leads to policy shifts or just more political noise remains up in the air.