U.S. Sen. Ron Wyden (D-OR), chairman of the Senate Finance Committee, is seeking information from Amgen on what he deemed “efforts to avoid billions in taxes through profit-shifting to subsidiaries in Puerto Rico.”
It is part of Wyden’s continuing investigation of Big Pharma’s tax practices.
Wyden had asked for this and other information in a letter to Amgen officials back in August. While Amgen responded to the letter and has engaged with the committee, it did not provide specific information related to pre-tax earnings, profit margins, and tax paid in the United States, Wyden said.
Specifically, Wyden is examining sales of the company’s best-selling arthritis drug Enbrel. While Enbrel sales are overwhelmingly in the United States, Wyden said it appears that its income from Enbrel and other drugs is mostly booked in jurisdictions treated as foreign for tax purposes, including Puerto Rico. So, Wyden is seeking information about the discrepancy between where drugs are sold and where income is booked for tax purposes.
In 2021, Amgen generated 70 percent of its sales in the United States yet reported just 28 percent of its pre-tax income in the United States. Additionally, the IRS has claimed that Amgen shifted nearly $24 billion in income to subsidiaries in Puerto Rico to avoid paying billions of dollars in federal taxes on U.S. prescription drug sales. Wyden points out that Amgen has not yet clarified how much taxable income it books in offshore subsidiaries.
“As part of this investigation, I requested detailed information from Amgen to understand the methods by which Amgen paid an effective tax rate of 12.1 percent in 2018, 14.2 percent in 2019, 10.7 percent in 2020, and 12.1 percent in 2021; rates that are substantially lower than the statutory U.S. corporate tax rate of 21 percent. Specifically, I requested country-specific information related to Amgen’s pre-tax earnings, profit margins, employee headcount, and tax paid for tax years 2018 – 2021. This included copies of Amgen’s IRS form 8975, an annual country-by-country tax reporting required for large corporations with over $850 million in annual income. I also requested information related to Amgen’s taxable income for years 2018 – 2021, including how much of Amgen’s taxable income was reported by controlled foreign corporations (CFCs),” Wyden wrote. “Unfortunately, Amgen declined to provide the committee this information, choosing to keep secret how much of its profits are reported by offshore subsidiaries that are treated as foreign for tax purposes.”
Wyden asked the company to provide several pieces of information and answer several questions on this matter by Dec. 21. He also asked for a detailed country-by-country breakdown of Amgen’s pre-tax earnings, profit margins, employee headcount, and tax paid from 2018 through 2021.