While Forest Laboratories Inc., the medicine’s maker, sells Lexapro only in the U.S., the voyage ensures most of its profits aren’t taxed there — and they face little tax anywhere else. Forest cut its U.S. tax bill by more than a third last year with a technique known as transfer pricing, a method that carves an estimated $60 billion a year from the U.S. Treasury as it combines tax planning and alchemy. (See an interactive graphic on Forest’s tax strategy here.)
Transfer pricing lets companies such as Forest, Oracle Corp., Eli Lilly & Co. and Pfizer Inc., legally avoid some income taxes by converting sales in one country to profits in another — on paper only, and often in places where they have few employees or actual sales.
Forest Laboratories is being investigated for offering kickbacks to doctors for prescribing antidepressants Celexa and Lexapro and for pushing their use on children, which was not an approved indication.
Oracle reported $5.6 billion in net income last year, 14 percent more than it would have reported without foreign earnings taxed at lower rates, according to the analysis. Oracle recently bought Sun Microsystems, which had bought MySql a few years ago. So now Oracle owns MySql. In other words, they have a near monopoly on database systems.
But it’s these pharmaceutical companies that bother me, or should I say the flood of drug commercials around supper time. For a while, there was some talk of regulating them but nothing ever came from it. That would probably “violate” free speech.
DRUDGE RETORT 