Chutzpah is defined as “extreme self-confidence or audacity.” In AbbVie’s case, it’s audacity. AbbVie, for years, delayed competition for its blockbuster drug Humira at the expense of patients and taxpayers.
AbbVie orchestrated the delay by building a formidable wall of intellectual property protection and suing would-be competitors before settling with them to delay their product launches until this year. Their strategy has been a gold mine at the expense of patients and taxpayers.
Over the past 20 years, AbbVie and its former parent company increased Humira’s price about 30 times. Since the end of 2016, the drug’s list price has gone up 60 percent to over $80,000 a year, according to SSR Health, a research firm.
Medicare, which in 2020 covered the cost of Humira for 42,000 patients, spent $2.2 billion more on the drug from 2016 to 2019 than it would have if competitors had been allowed to start selling their drugs promptly. In interviews, patients said they either had to forgo treatment or were planning to delay their retirement in the face of enormous out-of-pocket costs for Humira.
Richard Gonzalez, C.E.O. of AbbVie, told a congressional hearing that his pay was tied to the price of the company’s drug for rheumatoid arthritis and other conditions, Humira.
Then there is the way they treat their employees.
CEO Richard Gonzalez explained that a “critical part” of pharmaceutical company AbbVie‘s success is “face-to-face” interaction as an excuse to bring AbbVie employees back to the office during the pandemic. CNBC said, “AbbVie workers worry that the company is putting profits ahead of safety and the health of its U.S. employees and their families at risk. At the same time, they say they feel pressure to come in”.
And about those profits…
In 2020, over 75% of AbbVie’s’ sales were made to American consumers, yet only 1% of AbbVie’s’ income was reported in the United States for tax purposes. AbbVie’s’ ability to exploit subsidiaries in offshore tax havens to avoid paying billions of dollars in taxes on U.S. prescription drug sales signals that big pharma will do anything to avoid hurting profits.
Under the Republican tax law, AbbVie has continuously paid an effective tax rate of less than half the U.S. corporate tax rate of 21% and the marginal tax rate of 22% paid by an American family with a combined income of $84,000. A multinational pharmaceutical corporation with annual sales of over $50 billion in yearly sales paid a lower tax rate than a postal service worker or a preschool teacher. It is unacceptable that this Republican-led giveaway has only created more loopholes for big pharma to shift profits offshore.
An investigation found that the Republican tax law has enabled AbbVie to generate the bulk of its sales and profits for brand-name drugs like Humira in the United States while booking those profits offshore for tax purposes. In AbbVie’s’ own words, “The changes made by the 2017 tax law altered U.S. taxation on foreign earnings for U.S. corporations and have significantly impacted AbbVie’s’ effective tax rate.
AbbVie has started a promotional campaign featuring its employees telling us how proud they are to work for the company. This defines chutzpah.