Washington, DC – Axios is reporting that America’s largest pharmaceutical companies are using their windfall from the GOP tax scam to drive up their own stock prices to the tune of $50 billion, “a sum that towers over investments in employees or drug research and development.” Protect Our Care Campaign Director Brad Woodhouse responded:
“Every day millions of Americans struggle to afford their prescription drugs, too often being forced to choose between their medication and a meal. But while they cry crocodile tears over the cost of prescription drugs, President Trump and the GOP are giving Big Pharma an even bigger windfall through their tax bill. This isn’t about patients, it’s about profits.
“Everywhere you look, you can find Republicans voting to raise prescription drug costs, from the health care repeal that would get rid of Medicare’s prescription drug benefit to confirming a Big Pharma executive who let drug prices skyrocket to lead HHS. Now, it turns out, their tax plan is enriching Big Pharma at patients’ expense.
“It’s time for President Trump and his allies in Congress to work for patients instead of profiteers. Enough is enough – it’s time for Republicans to stop making health care more expensive.”
Axios // Bob Herman // February 22, 2018
The pharmaceutical industry is using a large portion of its windfall from Republicans’ corporate tax cuts to boost its stock prices. Nine drug companies are spending a combined $50 billion on new share buyback programs, a sum that towers over investments in employees or drug research and development.
The bottom line: All of those buybacks were announced during or after the passage of the Republican tax bill. That money is enriching hedge funds, other Wall Street investors and top drug company executives, but it isn’t necessarily helping patients.
That’s not all: Some drug companies also increased quarterly dividends following the tax overhaul. For example, AbbVie increased its cash dividend by 35% while at the same time committing to a new $10 billion share repurchase program.
- Dividends dole out cash to existing investors, and share buybacks boost a company’s stock price by making shares scarcer.
- The new tax law, which slashed the corporate tax rate and made it easier for companies to repatriate overseas cash, has made dividends and share buybacks quick and appealing options.
- Several drug company buybacks are a lot larger than prior share repurchase programs.
- Stock returns help people with 401k retirement accounts, but they mostly benefit wealthy investors and executives. And half of U.S. households don’t own any stock.
The big picture: The large buyback programs are rolling out while the same pharmaceutical companies raise drug prices and while Americans struggle to afford their prescriptions.
Pharmaceutical Research and Manufacturers of America, the main drug industry trade group, referred share buyback questions to employer groups.