- The Washington Times - Monday, November 23, 2015

All three Democrats seeking the White House in 2016 blasted Monday’s announcement of a massive merger involving two top pharmaceutical firms — a so-called “corporate inversion” that will result in the world’s largest drug company.

Hillary Rodham Clinton, Sen. Bernard Sanders and former Maryland Gov. Martin O’Malley each took aim at the deal, which would combine Pfizer and Allergan into a single company headquartered in Ireland. By moving its corporate base out of the U.S., the new company reportedly would save about $1 billion in taxes each year.

The inversion trend has become especially popular in the last decade as companies seek to escape disproportionately high U.S. tax rates. The Obama administration has made minor regulatory changes in an effort to discourage the practice, but Monday’s news highlights how little the federal government can do absent legislation from Congress.

But Mrs. Clinton, in particular, promised that her would-be administration could get the job done and prevent future inversions.

The Democratic Party’s 2016 presidential front-runner said she’ll propose specific steps to stop inversions in the coming weeks.

“For too long, powerful corporations have exploited loopholes that allow them to hide earnings abroad to lower their taxes. Now Pfizer is trying to reduce its tax bill even further,” Mrs. Clinton said in a statement. “This proposed merger, and so-called ‘inversions’ by other companies, will leave U.S. taxpayers holding the bag. As President, I will fight to reform our tax system to reward growth, innovation, and job creation here in the United States. We cannot delay in cracking down on inversions that erode our tax base.”

About 50 U.S. companies have inverted over the past 10 years, according to the Associated Press. Pfizer PIc — the name of the soon-to-be-formed mega drug company — would shave about 30 percent off of its annual $3.1 billion corporate tax bill through the deal. Its tax rate would fall from 25 percent to about 18 percent.

While the White House, presidential candidates and Democratic lawmakers all slammed the deal Monday, Pfizer PIc leaders said the new arrangement will allow the company to dedicate more time, money and resources to new treatments, including a potential cure for Alzheimer’s disease.

“The impact for patients is great, both short term and long term,” said Pfizer CEO Ian Read, who will be chairman and CEO of the new company.

Despite the potential benefits for patients, the very nature of the deal has turned Pfizer and Allergan into targets for Democrats.

Obama administration officials said it’s up to Congress to stop inversions.

“We continue to believe that that’s something that Congress should act on. I think just about every Democrat agrees with the president that this should be a priority,” White House press secretary Josh Earnest told reporters.

Democrats seeking the White House were even harsher in their critiques.

Mr. O’Malley said the deal shines a light on the potential problems with the American capitalist economy.

“The Pfizer-Allergan merger is fundamentally unfair, and a prime example of how our capitalist economy is not supposed to work,” he said in a statement. “American small businesses and middle-class taxpayers do not have the ability to game the system and avoid paying the taxes they owe — Pfizer should not be able to either.”

Mr. Sanders called the potential deal a “disaster” and said all Americans will feel the impact.

“This merger would be a disaster for Americans who already pay the highest prescription drug prices in the world,” he tweeted.


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