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Capitalism is NOT Patriotism: Drug Maker Pfizer Merges With Ireland-Based Corp to Avoid Billions in US Taxes

Pharmaceutical giant Pfizer has sealed a more than $150 billion merger with fellow drug maker Allergan, marking one of the largest takeovers in the history of the healthcare industry. Because Allergan is headquartered in Ireland, the deal will allow Pfizer to avoid billions in U.S. taxes. It’s believed to be the largest example to date of a so-called tax inversion – where a U.S. firm acquires a firm based overseas in order to dodge U.S. taxes.DemocracyNow

Illustration by David Goehring
Illustration by David Goehring

By Beth Mole
In what’s called a “reverse-inversion,” Allergan, a small Dublin-based drug company that makes products such as Botox, will technically buy the US-based pharmaceutical behemoth Pfizer, which makes products such as Viagra and Lipitor.

The $160 billion merger, officially announced Monday, will allow Pfizer to move its executive offices to Ireland, thus lowering its tax rate, while also morphing into the world’s largest drug maker.

Such inversions, which are said to cost the American government billions in lost tax revenue, have drawn scorn from the Obama Administration and the Treasury Department. Last year, President Obama referred to the deals as “unpatriotic” loopholes and proposed to close them. And last week, the Treasury announced new rules to make such deals more difficult.

But Pfizer’s reverse-inversion skirts the rules, in part by keeping ownership split somewhat evenly between the two companies. After the deal is complete, current shareholders of Allergan, which has the majority of its operations in the US, will own 44 percent of the mega company. The remaining 56 percent will be owned by current Pfizer shareholders.

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