pharma strikes again
Big pharmaceutical companies have paid billions of dollars to compensate for their roles in America's opioid crisis — and are planning to recoup a good chunk of it once tax season rolls around.
Thousands of lawsuits from individuals and governments have challenged opioid manufacturers and distributors for their roles in the deaths of an estimated 70,000 people from addiction each year. Four of those pharmaceutical companies — manufacturer Johnson & Johnson and distributors McKesson, Cardinal Health and Amerisource-Bergen — are in talks to pay a combined $26 billion to settle many of those cases. But as their financial records indicate, they're all planning to claim tax deductions from those payouts this year and bring back around $1 billion each, The Washington Post reports.
Cardinal Health, which paid $6.6 billion in settlements, said in a February 2021 Securities and Exchange Commission filing that it plans to claim a $974 million refund because it categorized the payout as a "net operating loss carryback." Johnson & Johnson plans to recoup $1.1 billion of its $5 billion payout, Amerisource-Bergen will make back $1.1 billion of its $6.6 billion settlement, and McKesson will regain $1.4 billion of $8.1 billion paid, the companies indicated in recent financial estimates.
Tax laws usually prevent companies from deducting legal costs, save for damages paid to victims, the Post notes. The IRS may also end up challenging the companies' deductions if they follow through. But because the $2 trillion CARES Act designed provide coronavirus relief also opened up billions of dollars in tax breaks to companies regardless of pandemic suffering, these massive deductions may just work out for the pharmaceutical giants. Read more at The Washington Post.