Gilead Avoids Billions in U.S. Taxes on Its $1,000-a-Pill Drug
(Bloomberg) -- Gilead Sciences Inc., whose $1,000-a-pill hepatitis C treatment is one of the world’s most expensive drugs, is avoiding billions of dollars in U.S. taxes by booking profits overseas.
The company reported foreign income before taxes of $8.2 billion for 2014, earning more in non-U.S. profits than it recorded in non-U.S. sales. The data released in a securities filing Wednesday suggest that Gilead is taking advantage of U.S. rules that let companies shift valuable intellectual property to low-tax countries, said Robert Willens, an independent tax consultant based in New York.
“Whenever you have huge, very high profit margins and a lot of income as well, it almost always results from the exploitation of intangibles,” Willens said in a telephone interview. “It’s quite a dramatic increase from one year to the other. That’s something you don’t see very often.”
Gilead’s disclosure is the latest example of tax planning by U.S.-based multinational corporations, which hold about $2 trillion in stockpiled profits outside the country that haven’t been taxed by the U.S. The federal government loses as much as $100 billion in revenue annually because of such international tax planning, according to estimates cited in a Congressional Research Service study.
Other U.S. drugmakers have kept profits offshore as well. Pfizer Inc., Merck & Co. Inc. and Bristol-Myers Squibb Co. each has at least $24 billion outside the U.S., according to filings.
Cara Miller, a spokeswoman for Gilead, declined to comment beyond the information in the filing.
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