NJ Citizen Action Highlights Drug Company Tax Breaks in New Report

NEWARK, NJ – May 17, 2021 – As Congress prepares to debate President Biden’s proposals to increase taxes on the wealthy and corporations as part of his “Build Back Better” economic stimulus and recovery package, state and national advocates released a new issue brief this Tax Day making the case for increasing taxes on drug corporations to fund investments in health care affordability.

New Jersey Citizen Action released the short report titled, “Congress Must Make the Wealthy and Corporations Pay Their Fair Share of Taxes to Support Healthcare and Economic Recovery” in collaboration with the national Healthcare Over Wealthcare project that supports tax fairness reforms to generate more revenue for healthcare and safety net expansions. The brief describes how the wealthy and corporations continued to prosper from the Trump era Tax Cuts and Jobs Act (TJCA) and long-standing tax loopholes while average-income people lost jobs, income, and healthcare during the pandemic.

In New Jersey, for instance, where 1,009,521 of people have been infected with COVID and many are still struggling to recover health and economic stability:

• 571,000 in state are struggling to afford enough food;
• 356,000 are struggling to pay rent;
• The unemployment rate remains high at 7.8% and there are 332,300 fewer jobs today than when the pandemic started.

Conditions could deteriorate further if the Supreme Court overturns the Affordable Care Act (ACA) and Medicaid expansion, a source of healthcare for 832,360 New Jerseyites which also provides consumer protections to 1,359,000 people with pre-existing conditions in the state. The Supreme Court is due to rule on the constitutionality of the law again this summer.

As millions of Americans lost jobs and healthcare in 2020, the wealthiest households and prescription drug corporations continued to get tax breaks throughout the pandemic. The wealthiest 1% of households in New Jersey received a tax break of $37,640 last year, while the poorest households, those making under $24,000 received $100.

Prescription drug corporations, a number of which are based in New Jersey and already received billions in tax breaks under the Trump tax law continue, nevertheless raised their prices on hundreds of drugs in both 2020 and 2021. Yet they continue to receive tax breaks even as they raise prices so high that a third of people with insurance can’t afford medicines.

Some of the largest of these corporations, including Johnson & Johnson and Pfizer, also received billions in taxpayer funds to develop, manufacture and distribute the new COVID-19 vaccine. Pfizer announced recently that it expects to generate $26 billion in revenue in 2021 from the vaccine.  The price of prescription drugs is rising faster than any other good or service even as demand for medicines is increasing because of COVID.

“No one should have to choose between paying for medicine and paying for other basic needs like food, rent or transportation, but many like me are forced to every month,” said Lisa Wetzel-Trainor of Princeton. “After suffering trauma at 16, I was diagnosed with PTSD and ADHD at 19 years old, and prescription medications are vital for managing my symptoms and day-to-day life. Due to a change in my husband’s insurance in 2020 I am no longer covered for Vyvanse, a key prescription that has no generic alternative. I have had to stop taking the medicine altogether due to the exorbitant cost at $1000 per month, and my quality of life has dropped significantly. Americans cannot live like this. Congress must require affordable drug costs from these corporations instead of handing them billions in tax breaks on a silver platter.”

President Biden’s “Made in America Tax Plan,” would raise about $3.6 trillion in revenue from a combination of corporate tax increases, raising taxes on households making over $400,000, closing loopholes and increasing enforcement of tax laws, particularly on higher income payers. Drug corporations would face increased domestic rates and increased offshore rates on profits stashed in tax havens. The revenue would support popular investments like increased premium tax credits for people buying ACA coverage, childcare and family leave expansions, jobs and infrastructure repairs.

“Average Americans are struggling to afford healthcare and medicine they need, while pharmaceutical corporations continue to increase prices and be rewarded with huge tax breaks,” said Maura Collinsgru, Health Care Program Director at NJ Citizen Action. “President Biden’s proposals to increase corporate tax rates on companies like these drug corporations are long overdue. Right now, patients are paying three times for prescription medicines: once for research and development, once at the pharmacy and then once more for the tax breaks that these corporations get annually. It’s time to flip the script and make them pay their fair share.”

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New Jersey Citizen Action (NJCA) is a statewide advocacy and social service organization that advocates for social, racial and economic justice for all while also meeting the pressing needs of low and moderate income New Jerseyans through education and direct service.

Health Care for America Now (HCAN) is a grassroots coalition of state and national groups that led the fight to pass the landmark Affordable Care Act (ACA). Healthcare Over Wealthcare is a campaign of Health Care for America Now that advocates for prioritizing investments in equitable, affordable healthcare for everyone over tax breaks for the rich and corporations.