One of the most notorious members of the drug price-gouging industry posted its highest quarterly net profit in three years, thanks to a one-time tax benefit that can be credited simply to Trump’s tax cuts.
According to Wednesday’s fourth quarter earnings report, Valeant Pharmaceuticals, a Canadian company that trades on the New York Stock Exchange earned a net income of $2.404 billion in 2017, mainly attributed to an “increase in the benefit from income taxes.”
That benefit came to a whopping $1.32 billion.
Trump’s tax cut bill, which came into law on December 22, 2017, cuts the corporate tax rate in the US from 35 percent to 21 percent and offers companies a permanent break from overseas profits, meaning that they bring back money that they had stashed overseas at a much lower tax rate—15.5 percent instead of 35 percent.
But while Trump promised Americans that “the rich will not be gaining at all” with the new tax bill, a sentiment echoed by his current Treasury Secretary and Goldman Sachs alumni Steve Mnuchin, it is massive corporations like Valeant, and Warren Buffett’s Berkshire Hathaway that have benefited tremendously from the December tax cuts. The latter company, in fact, earned an incredible $29 billion in 2017 from the new tax law.
The scenario is even more egregious considering how Valeant raked in its profits—on the backs of sick Americans with weak insurance coverage.
In 2016, the company was accused by US lawmakers of gouging patients to reward Wall Street investors—the price of its most famous drug Syprine, used to treat the rare genetic disorder Wilson’s disease, went up by more than 3000 percent in the span of a few weeks, back in 2016.
Valeant’s unethical business practices came at the same time former US drug company executive Martin Shrkeli raised the price of a popular HIV drug Daraphrim from $13 to $750, gaining him the moniker “Pharma Bro,” and later, a jail sentence for defrauding investors.
Valeant, in fact, raked in billions of dollars in revenue by taking out debt to snap up small pharmaceutical companies, then hiking the price of their drugs. That business model sparked Senate and Congressional investigations into unfair pricing, and resulted in Valeant’s stock plunging from a high of $335 to $36 in a span of six months between 2015 and 2016.
But that was the end of it. In 2017, with a massive change in C-suite leadership, investors regained confidence and Valeant’s stock slowly picked back up. Wednesday’s earnings report projects that the company will bring in a revenue of $8.1 billion in 2018.
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