Gilead raking in billions off of foreign tax laws
- Thanks to favorable foreign tax laws, in 2014, Gilead earned more in non-U.S. net profits ($8.2 billion) than it recorded in non-U.S. sales, Bloomberg reports.
- Based on available data, analysts have suggested that Gilead is shifting intellectual property to low-tax countries, resulting in about 5% in taxes on its foreign income.
- According to a Congressional Research Service study, U.S.-based multinational corporations (including Gilead) hold a collective $2 trillion in stockpiled profits outside of the U.S. that have not been taxed by the federal government and result in opportunity costs (lost income) for the U.S. of roughly $100 billion.
Gilead is far from the only multinational pharma company benefiting from foreign tax laws. In fact, Pfizer, Merck, and BMS each has at least $24 billion outside of the U.S.
However, Gilead is a high-profile situation because of the costs of Sovaldi ($1,000 per pill) and Harvoni for hepatitis C. It turns out that the IP for Sovaldi is in Ireland, where the tax rates are substantially lower than in the U.S. Since approval in December 2013, Sovaldi has been an out-of-the-gate blockbuster, with $10.3 billion in total revenues in 2014, and Harvoni has already supplanted Gilead as the top-selling launch drug.