Thanks to the Republican tax bill, drug companies are using massive kickbacks to enrich corporate executives through stock buybacks, while middle class Americans face higher costs for medicine, according to a new report looking at the 10 largest U.S.-based drug companies.
“The study, based on 4th quarter earnings calls, press releases and public statements, shows that in its early days, the new tax law has been almost entirely a boon to shareholders. Five drug companies alone have announced $45 billion in stock buybacks,” writes Andy Slavitt, who ran Medicare, Medicaid and the Affordable Care Act during the Obama administration.
This new study confirms the findings of other report that showed companies using the tax breaks to engage in multi-billion dollar stock buybacks. (A stock buyback occurs when a company uses excess cash to purchase its own stock, increasing the value of the stock for shareholders. Currently, 80 percent of stocks are owned by the richest 10 percent of Americans.)
And as stockholders get richer, average American citizens are facing higher prices for prescription drugs: “None of the 10 companies said they planned to make any pricing reduction announcements in the wake of the tax law. In fact, drug prices continue to climb. One survey of pricing data showed 116 price increases by Pfizer alone,” says Slavitt.
When the tax bill was rushed through Congress, supporters like Rep. Mimi Walters (R-Irvine) promised dramatically different outcomes. They told constituents the corporate kickbacks to wealthy corporations were going to shower the nation with higher wages and a boom in job growth.
Walters issued a statement saying the bill would “increase economic growth and create opportunities for all Americans.” Among the “opportunities” Americans are seeing are higher costs for necessary medications. As Slavitt notes, “For most of us, the quality of our lives — and our longevity — depend on prescriptions,” especially those for conditions like high blood pressure, diabetes, depression, or other conditions.
The latest jobs report shows the economy continues to perform like it did under President Obama, adding a good number of jobs each month — nothing like what was promised. And instead of better health care, the tax bill included provisions causing the cost of premiums in California to skyrocket by up to 30 percent next year.
While few Californians will see the kind of multi-billion kickbacks lavished upon wealthy drug companies, many will be hit with tax increases to help pay for them. As House Minority Leader Nancy Pelosi said, “California Republicans betrayed their constituents and their state to hand Speaker Ryan the votes for a bill designed to hit Californians with the largest net tax hikes of any state in the nation.”
Trump promised to address the issue of higher prescription drug costs. Walters and other Republicans who supported of the tax bill have voted with the Trump agenda 99 percent of the time, and thus far have nothing to show for this promise.
Republicans crafted a tax bill to benefit the wealthy, and it is working just as intended.