Post by icemandios on Mar 31, 2021 15:57:23 GMT
How Biden’s infrastructure plan will go after biopharma companies beyond drug pricing
Zachary Brennan
Senior Editor
The White House early Wednesday unveiled a detailed plan for Congress to pass a $2 trillion investment in US infrastructure, with details on how President Biden will attack multinational companies — including many of the top biopharma companies — that are using tax havens abroad.
First and foremost, Biden wants to increase the corporate tax rate from 21% to 28%. But he also said he wants to make it more difficult for US corporations to avoid US taxes by claiming to be a foreign company, which is what many top biopharma firms have done over the years, although some of these so-called inversions been aborted more recently (i.e. Pfizer and Allergan or AbbVie and Shire).
In addition, Biden, who’s headed to Pittsburgh on Wednesday to roll out the plan, said he wants to eliminate an incentive from former President Trump’s tax law, known as the“Foreign Derived Intangible Income.” The incentive was designed to make it attractive for US firms to retain profits from their intellectual property (IP) in their US headquarters rather than shift those profits abroad.
But this “intangible” income is calculated in a way that effectively creates a disincentive for production in the US, meaning a firm that reduces its tangible US assets by licensing its IP to an offshore subsidiary that supplies global markets from a manufacturing site abroad would have a lower tax rate than a firm that keeps its factory in the US, according to testimony from Brad Setser, senior fellow at the Council on Foreign Relations, before a House subcommittee.
For example, a company that develops a drug in the US, and then produces it in Ireland or a similar tax haven, and then imports the active ingredient from that haven back to the US for domestic sales would likely be taxed at a rate of below 13%, rather than the current rate of 21%, Setser explained.
“All of these measures will make it much harder for the largest corporations to avoid or evade taxes by eliminating parts of the tax code that are too easily abused,” the White House said of its plans. “This will be paired with an investment in enforcement to make sure corporations pay their fair share.”
In addition to tax reforms, Biden is also taking a page out of his predecessor’s book by crafting a plan to onshore more active pharmaceutical ingredient (API) manufacturing in the US. As of August 2019, only 28% of the manufacturing facilities making APIs to supply the US market were in the US, according to testimony from acting FDA commissioner Janet Woodcock.
Biden is calling on Congress to invest $50 billion to create a new office at the Department of Commerce dedicated to monitoring domestic manufacturing capacity and funding investments to support the production of critical goods.
He’s also seeking:
$30 billion over 4 years to create US jobs and prevent the severe job losses caused by pandemics through major new investments in medical countermeasures manufacturing; research and development; and related biopreparedness and biosecurity;
$50 billion for the National Science Foundation to create a technology directorate that will collaborate with and build on existing programs across the government, with a focus on different fields including biotech; and
$40 billion in upgrading research infrastructure in laboratories across the country, including brick-and-mortar facilities and computing capabilities and networks.
Notably absent from Wednesday’s White House details on its infrastructure plan is any mention of an attempt, floated by House Speaker Nancy Pelosi (D-CA) last week, to pay for part of the bill by cracking down on drug pricing.
Experts previously told Endpoints News that major drug pricing reforms will be tagged onto the infrastructure bill because Democrats will likely be able to pass the infrastructure bill with a simple majority, rather than 60 votes they would need to pass a standalone drug pricing bill.
This is "going after" drug companies? Sounds more like "going after" jobs. 21% is too low, 28% is about right, but if you move production to, say, Ireland, the less than 13% is the "PENALTY." Plus we get rid of all those nasty, carbon emitting, environment polluting production facilities (and the people that work there - who can just learn to code.)
And they say Biden isn't sharp.
Zachary Brennan
Senior Editor
The White House early Wednesday unveiled a detailed plan for Congress to pass a $2 trillion investment in US infrastructure, with details on how President Biden will attack multinational companies — including many of the top biopharma companies — that are using tax havens abroad.
First and foremost, Biden wants to increase the corporate tax rate from 21% to 28%. But he also said he wants to make it more difficult for US corporations to avoid US taxes by claiming to be a foreign company, which is what many top biopharma firms have done over the years, although some of these so-called inversions been aborted more recently (i.e. Pfizer and Allergan or AbbVie and Shire).
In addition, Biden, who’s headed to Pittsburgh on Wednesday to roll out the plan, said he wants to eliminate an incentive from former President Trump’s tax law, known as the“Foreign Derived Intangible Income.” The incentive was designed to make it attractive for US firms to retain profits from their intellectual property (IP) in their US headquarters rather than shift those profits abroad.
But this “intangible” income is calculated in a way that effectively creates a disincentive for production in the US, meaning a firm that reduces its tangible US assets by licensing its IP to an offshore subsidiary that supplies global markets from a manufacturing site abroad would have a lower tax rate than a firm that keeps its factory in the US, according to testimony from Brad Setser, senior fellow at the Council on Foreign Relations, before a House subcommittee.
For example, a company that develops a drug in the US, and then produces it in Ireland or a similar tax haven, and then imports the active ingredient from that haven back to the US for domestic sales would likely be taxed at a rate of below 13%, rather than the current rate of 21%, Setser explained.
“All of these measures will make it much harder for the largest corporations to avoid or evade taxes by eliminating parts of the tax code that are too easily abused,” the White House said of its plans. “This will be paired with an investment in enforcement to make sure corporations pay their fair share.”
In addition to tax reforms, Biden is also taking a page out of his predecessor’s book by crafting a plan to onshore more active pharmaceutical ingredient (API) manufacturing in the US. As of August 2019, only 28% of the manufacturing facilities making APIs to supply the US market were in the US, according to testimony from acting FDA commissioner Janet Woodcock.
Biden is calling on Congress to invest $50 billion to create a new office at the Department of Commerce dedicated to monitoring domestic manufacturing capacity and funding investments to support the production of critical goods.
He’s also seeking:
$30 billion over 4 years to create US jobs and prevent the severe job losses caused by pandemics through major new investments in medical countermeasures manufacturing; research and development; and related biopreparedness and biosecurity;
$50 billion for the National Science Foundation to create a technology directorate that will collaborate with and build on existing programs across the government, with a focus on different fields including biotech; and
$40 billion in upgrading research infrastructure in laboratories across the country, including brick-and-mortar facilities and computing capabilities and networks.
Notably absent from Wednesday’s White House details on its infrastructure plan is any mention of an attempt, floated by House Speaker Nancy Pelosi (D-CA) last week, to pay for part of the bill by cracking down on drug pricing.
Experts previously told Endpoints News that major drug pricing reforms will be tagged onto the infrastructure bill because Democrats will likely be able to pass the infrastructure bill with a simple majority, rather than 60 votes they would need to pass a standalone drug pricing bill.
This is "going after" drug companies? Sounds more like "going after" jobs. 21% is too low, 28% is about right, but if you move production to, say, Ireland, the less than 13% is the "PENALTY." Plus we get rid of all those nasty, carbon emitting, environment polluting production facilities (and the people that work there - who can just learn to code.)
And they say Biden isn't sharp.
