Skip to main content

Sign up for our newsletter.

Quality journalism. Progressive values. Direct to your inbox.

"While tens of millions of Americans are experiencing extreme economic hardship and dealing with intermittent and often inadequate governmental support for unemployment, food, housing, and small business continuity," said Robert Weissman of Public Citizen on February 12, 2021, "Johnson & Johnson, McKesson, Cardinal Health, and Amerisource-Bergen are laughing all the way to bank." (Photo: Mark Ralston/AFP via Getty Images)

"While tens of millions of Americans are experiencing extreme economic hardship and dealing with intermittent and often inadequate governmental support for unemployment, food, housing, and small business continuity," said Robert Weissman of Public Citizen on February 12, 2021, "Johnson & Johnson, McKesson, Cardinal Health, and Amerisource-Bergen are laughing all the way to bank." (Photo: Mark Ralston/AFP via Getty Images)

'Beyond Outrageous': Big Pharma Using Loophole to Get Taxpayers to Fund Billions in Fines for Fueling Opioid Crisis

"The tax code is so rigged for the rich that even when they kill people they get a tax break."

Kenny Stancil

Four pharmaceutical corporations that agreed to pay a combined $26 billion to settle lawsuits resulting from a deadly opioid crisis they helped create reportedly plan to recoup a portion of those costs by deducting roughly $4.6 billion of the payouts from their taxes—sparking intense condemnation.

Big Pharma is attempting to make the public cover some of the fines related to lawsuits filed by dozens of state and local governments highlighting the culpability of opioid manufacturers and distributors in the deaths of an estimated 70,000 people per year.

As Public Citizen president Robert Weissman put it in a statement released Friday, "The drug companies are settling with taxpayers (local government entities) and then demanding that taxpayers pay part of the cost (via a federal tax subsidy)."

The Washington Post, which analyzed regulatory filings, reported Friday that "as details of the blockbuster settlement were still being worked out, pharmaceutical giant Johnson & Johnson and the 'big three' drug distributors—McKesson, AmerisourceBergen, and Cardinal Health—all updated their financial projections to include large tax benefits stemming from the expected deal."

Weissman called it "beyond outrageous for the drug makers and distributors to take a tax deduction for their settlement of city and county claims relating to the drug companies' alleged role in creating and worsening the opioid addiction epidemic."

"Making this scheme even more infuriating," he added, "is that the opioid manufacturer and distributor companies are preparing to claim billions in tax subsidies via a Covid-19 relief provision."

According to the Post, "U.S. tax laws generally restrict companies from deducting the cost of legal settlements from their taxes, with one major exception: Damages paid to victims as restitution for the misdeeds can usually be deducted."

The newspaper noted that "Congress has placed stricter limits on such deductions in recent years, and some tax experts say the Internal Revenue Service could challenge the companies' attempts to deduct opioid settlement costs."

But the ploy might work, as The Week noted, thanks to the CARES Act, which "opened up billions of dollars in tax breaks to companies regardless of pandemic suffering."

The Post provided an example of how one of the companies may exploit the loophole: "Dublin, Ohio-based drug distributor Cardinal Health said earlier this month it planned to collect a $974 million cash refund because it claimed its opioid-related legal costs as a 'net operating loss carryback'—a tax provision Congress included in last year's coronavirus bailout package as a way of helping companies struggling during the pandemic."

"Whether the payments will be deductible may hinge on specific word choices in the final terms of the settlement," the newspaper reported. "Though recent changes to the tax code have attempted to close loopholes that permit companies to deduct taxes when they have committed wrongdoing, many companies now push to make sure their settlements include a 'restitution' payment for victims—the 'magic word' that often qualifies them for deductions."

"Greg McNeil, whose son became addicted to opioids and died from an overdose... said $26 billion is only a small fraction of the epidemic's financial toll and argue[d] the proposal doesn't include what many family members of opioid victims want the most: an admission of guilt," the Post added.

Not only do "all four firms disavow any wrongdoing or legal responsibility," the Post noted, but there is now a chance that Big Pharma could make the public foot part of the bill for its corporate malpractice—in the midst of the devastating coronavirus pandemic.

"While tens of millions of Americans are experiencing extreme economic hardship and dealing with intermittent and often inadequate governmental support for unemployment, food, housing, and small business continuity," Weissman said, "Johnson & Johnson, McKesson, Cardinal Health, and Amerisource-Bergen are laughing all the way to bank."


Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.

This is the world we live in. This is the world we cover.

Because of people like you, another world is possible. There are many battles to be won, but we will battle them together—all of us. Common Dreams is not your normal news site. We don't survive on clicks. We don't want advertising dollars. We want the world to be a better place. But we can't do it alone. It doesn't work that way. We need you. If you can help today—because every gift of every size matters—please do. Without Your Support We Simply Don't Exist.

Please select a donation method:

With Amazon Accused of Cheating, NLRB Official Says Workers Should Get Another Union Vote

"Amazon cheated, they got caught, and they are being held accountable," said the head of the Retail, Wholesale, and Department Store Union.

Jake Johnson ·


Biden, Pelosi, and Schumer Told 'Stop Playing the Blame Game' and Extend Eviction Moratorium

"Who are the adults in the room?" asked the Sunrise Movement's advocacy director. "Do whatever it takes to extend the eviction moratorium and end this eviction emergency."

Jessica Corbett ·


Report Outlines 'Crucial' Need for Biden Administration to Aid Climate Refugees

"Ready solutions are available to address root causes and displacement that are centered in human rights and humanitarian protection."

Brett Wilkins ·


Hundreds Arrested in DC Demanding Voting Rights, End to Poverty, and Death of Filibuster

Clergy and low-wage workers with the Poor People's Campaign are also calling on Congress to treat the nation's immigrants with respect.

Jessica Corbett ·


'He Should Resign': Women's Rights Group Denounces Violent Misogyny of Kevin McCarthy

"With Kevin McCarthy voting against the reauthorization of the Violence Against Women Act, it is clear that his comments are reflective of his deeply held beliefs about how women should be treated."

Brett Wilkins ·