Pfizer, Inc. has been accused of engaging in the largest tax dodging scheme in pharmaceutical history. After a four-year investigation into pharmaceutical companies purported abuse of 2017 tax breaks, Democratic members of Congress have uncovered unprecedented corruption. Senator Ron Wyden of Oregon recently stated that Pfizer allegedly “carried out what could be the largest tax-dodging scheme in the history of Big Pharma.”1
In a press release, Sen. Wyden, who sits on the Senate Finance Committee, said that in 2019, despite selling $20 billion worth of drugs in the United States, the drug giant reported zero taxable profits in the U.S. Pfizer paid no taxes. Instead, It shifted all of its profits to foreign tax havens and “Confidential arrangements” between the governments of Puerto Rico and Singapore allegedly allowed Pfizer to keep this tax scheme secret.
Sen Wyden concluded:
That means Pfizer dodged billions of dollars in federal income tax on its U.S. drug sales. There is every reason to believe it continues to do so.3
Pfizer denied the allegations stating that the reports lacked complete information and was not a true representation of how the 2017 Tax Cuts and Jobs Act affected the drug company. Pfizer claims to have pad $12.8 billion in U.S. taxes over the last four years.4
Senator Welch of Vermont, also a member of the Senate Finance Committee, said:
We found that a major United States pharmaceutical company was able to make sales of $20 billion of its product in 2019 and report zero in income. Zero in profits here in this country. What that ultimately means is that what Pfizer paid on its taxes—despite this extraordinary profit—they paid less than a mail room clerk pays in Social Security. They paid less than the pharmacist at the drugstore who dispenses the prescriptions. They paid less than the delivery drivers who may have brought these prescriptions to a person’s home. They paid less than the employees of Pfizer, whether it was a lab technician or a clerk or anyone at that company.5
Drug Companies Accused of ‘Round Tipping’
The investigation accuses Pfizer of a round tipping scheme. With round tipping, a U.S. company treats U.S. sales as foreign sales for tax purposes. Round tipping allowed the drug giant to divert 100 percent of its taxable profit to its foreign subsidiaries shielding its income from the 21 percent U.S. corporate tax rate and instead utilizing the lower 10.5 percent GILTI tax rate. The report contends that Pfizer went even further and entered into agreements with Singapore and Puerto Rico which are low or zero-dollar tax jurisdictions. Utilizing this tax scheme from 2019-2022, Pfizer was allegedly only taxed at the rate of 5.4 percent, 5.3 percent, 7.6 percent, and 9.6 percent over those years respectively.6
Pfizer is not alone in shifting financial gains offshore to avoid paying U.S. taxes. The Senate Finance Committee has also discovered alleged tax dodging schemes by Amgen, AbbVie, Bristol Myers Squibb and Merck & Co. Merck engaged in the same round tipping scheme to shield all of the U.S. profits from its cancer drug, Keytruda. From 2019-2022, none of its 37.1 billion in income from Keytruda sales in the U.S. were treated as income earned in the U.S. for tax purposes.7
The Finance Committee alleges that Pfizer’s scheme was the largest of the big pharmaceutical companies.8 The previously biggest scheme was procured by AbbieVie. In 2022, even though AbbieVie is headquartered in the U.S. and 75 percent of its sales are in the U.S., the drug company shifted 99 percent of its taxable income offshore, thereby avoiding paying billions of dollars in U.S. taxes. AbbVie wound up paying the going U.S. tax rate of 21 percent on merely one percent on its taxable income.
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Click here to view References:1 Kansteiner F. Senate investigation claims Pfizer shifted profits offshore in what could be pharma’s ‘largest tax-dodging scheme’. Fierce Pharma Mar 28, 2025.
2 Senator Wyden. Announcing New Findings on Pfizer Tax Dodging, Wyden Blasts Republican Plan for More Corporate Tax Breaks. United States Senate Committee on Finance Mar. 27, 2025.
3 Ibid.
4 Markets Insider. Senator Slams Pfizer (PFE) for “Biggest Tax-Dodging Scheme in Pharma History”. Mar. 27, 2025.
5 Press Release. Welch Speaks on Finance Committee’s Investigation into Pfizer’s Tax Scheme: “What we’re talking about today proves that the suspicion that Vermonters have about things being rigged—they’re right.” Mar. 28, 2025.
6 Democratic Staff Investigation. Pfizer’s Colossal Tax Avoidance: How Pfizer Used “Round Tripping” Scheme to Avoid Billions in taxes on U.S. Drug Sales. Mar. 2025.
7 Ibid.
8 Democratic Staff Investigation. Pfizer’s Colossal Tax Avoidance: How Pfizer Used “Round Tripping” Scheme to Avoid Billions in taxes on U.S. Drug Sales. Mar. 2025.
