>This, of course, is a big charade. The cost of producing a drug is low relative to its sales price (gross margins are high, see the pharmaceutical companies’ 10-Ks!)
A drug is not a widget. You can't just make one. Almost all drug programs end in abject failure, usually far before even the clinical trial phase. Gross margins have to be high because you have to pay for 10 failed programs with the successful one.
And one reason that profits are low in the US because that's where there R&D happens.
Oh, that definitely explains the record profits. How silly of everyone. Everyone you can put the pitchforks down, it’s fine, we should just ignore that they run an excessively profitable business overcharging for basic life-saving drugs developed 10 years ago because they occasionally lose money on new drugs, even though it’s not nearly enough to cause a dip in profit. It’s fine, it’s all fine, move along.
Big Pharma profits low in the US? Please. Their R&D happens wherever talent is cheapest, their tax havens wherever laws are loosest, and their profits—record-breaking year after year—safely deposited wherever shareholders are happiest. If only their medicines were as creative as their accounting.
The real innovation is their business model: socialize the research costs, privatize the profits. Billions in taxpayer dollars fund the basic science, university labs, and early clinical trials that underpin 'breakthrough' drugs. Yet when these public investments strike gold, not a penny in dividends flows back to the public coffers that made it possible. Instead, we pay twice—first through our taxes to develop the drugs, then through world-leading prices to access them. That's not capitalism; that's a publicly-subsidized monopoly.
The expensive parts of drug R&D aren't the 'talent', it's the clinical trials. You can't simply offshore those, not if you want FDA approval.
Summit Therapeutics is the largest drug company by market cap without an approved product and has only 159 employees. Only a fraction of which are scientists. They are spending 2x as much on R&D every quarter as they are on total G&A expenses company-wide. It's basically all clinical trials. They're already in about $600m for R&D alone since they went public. If they don't get that back from patients/insurers, they're unsustainable.
Summit Therapeutics embodies the exact pharma model we've been critiquing - their business strategy isn't about bearing enormous R&D risks alone, but about strategically distributing those risks while maintaining private profit potential.
Their lead product, Ivonescimab, wasn't discovered or developed by Summit at all. They simply licensed it from Akeso for $500 million upfront.
They received up to $72.5 million from BARDA (taxpayer money) for Ridinilazole development and another $7.8 million from CARB-X (a public-private partnership) for SMT-738.
Their "innovation" model relies heavily on academic partnerships - Ridinilazole originated from publicly-funded university research, and they're leveraging MD Anderson's infrastructure rather than building their own.
Meanwhile, their executives received enormous compensation packages - in 2023, just two executives (Zanganeh and Soni) received compensation valued at $44.2 million, representing over 74% of their entire GAAP R&D budget that year.
Even their clinical trials for Ivonescimab combinations are being funded by Pfizer, not Summit.
This isn't a small company heroically bearing enormous R&D costs - it's a company that has masterfully distributed those costs across government grants, academic partnerships, and external collaborations while positioning itself to capture the profits if any of these products succeed.
How much of that budget goes to actual research versus 'seeding trials' designed to familiarize doctors with prescribing patterns?
When taxpayers fund the foundational research and patients pay premium prices, perhaps the real innovation isn't in the lab but in a business model where public investment yields private profit.
That's not risk-taking capitalism: that's having your cake, eating it too, and charging the baker.
The cost of trails and approvals is not something that needs to be covered because these costs are optional (and i guess the processes can be paused arbitrarily). Profits allow you to invest in new drugs but there are other ways of financing those, like investors or loans.
The general point is, that large drug companies can leverage many things while pretending R&D _requires_ high margins.
The US blocked the treaty which would have prevented companies getting a meaningful benefit from profit shifting by agreeing a minimum corporate tax rate
"According to Lucasfilm, Return of the Jedi (1983) "has never gone into profit", despite having earned $475 million at the box office against a budget of $32.5 million." - https://en.wikipedia.org/wiki/Hollywood_accounting
All this while our country has already cut antiretrovirals for children in Africa with zero warning or opportunity for private org or another country to take over. Our legacy as a country is going to look pretty gross.
Your son is a sex tourist, your daughter has it from a hostel stay too and you got it frim agnes, the secretary. And yes, your dick may rot off, cause everyone in the world is 5 "IdontGiveAFucks" away from it.
Inability to deal with a complex world does not make it go away. Its like stopping to pay rent to saving up for a house.
America shouldn’t have been spending money on that in the first place. Our role in this world should be to put ourselves first, just like every country is already putting themselves first.
Never mind that spending small sums of money to help control disease in other countries is pretty beneficial to America, diseases don't respect imaginary border walls.
Yes, restrict global traffic and further fuck our economy for… the economy?
At this point, you lot aren’t advocating cutting funding because it will help us. You understand it won’t. You’re advocating it because you desire to hurt others.
The solution for that is years of therapy and potentially institutionalization, not politics.
Why do we keep giving money to that one country then? Because the political benefits pay off for the politicians. So those same benefits could apply from foreign medical aid, but we don't value helping others less fortunate?
Ugh I hate that as well! But unfortunately they have bought our politicians.
I’m hoping that after Trump both sides can bow up popular pressure to stop supporting them. In younger generations in both the left and right there is less star struck awe at the mention of that country, so I’m hopeful.
The implications of this is that that money was never taxed which is likely untrue. Just because the money left Lucasfilm, doesn't mean it wasn't taxed.
There's a reason why the IRS isn't going after them. So called "Hollywood accounting" is a lot more about screwing actors out of royalties than it is about not paying taxes
The implication is that "reported losses" don't have anything to do with actual losses. Citing the corporations creative accounting results convinces no-one.
This is all just accounting nonsense and tax loopholes. Did you even read the article? FTA:
> Merck reported a loss of almost $2 billion in the U.S. while making $22 billion abroad. Johnson and Johnson reported losing just under $500 million in the U.S. while making $17 billion abroad. Pfizer reported U.S. losses of around $500 million while making $9 billion abroad. AbbVie apparently lost nearly $8 billion in the U.S. while making over $11 billion abroad (mostly in Bermuda) and Bristol Myers Squibb reported a loss of $15 billion in the U.S. (tied to the accounting of an acquisition) and $6.5 billion of foreign profits.
This is a well researched article, my main disagreement in this field is the hubris necessary to even think greater tax receipts are the goal, and this is reflected in the language choice.
I think this is a blind spot as it seems the only people interested would be those hoping for some kind of "tax justice" which taps into a popular sentiment: people choosing to wonder why we aren't being screwed equally, instead of wondering why we are being screwed at all.
I get it, your tax bill comes and is inconvenient, someone else in a seemingly higher tax bracket seems to leverage a card or chess move that you don't have the ability to pursue.
But this is all a red herring. To the Supreme Court, choosing to go to a gas station in a neighboring town for lower tax rates is just as valid as doing what some multinational does for lower tax rates by having a nominal structure in another country. (And that's from the Supreme Court you actually liked!)
The aggregate priority of the US government is velocity within the economy. The speed that money moves within the economy, not the revenue collection from [ostensibly] facilitating it.
And even detractors to this reality can never reach agreement on what a "fair share" is. A completely arbitrary and undefined sentiment, based on a misunderstanding of the world and that individual's own socioeconomic status or outright mediocrity.
What is the most interesting is that these multinationals are sometimes paying tax somewhere else. Like the article mentions about how they are currently paying Denmark at 22% and have an inability to deduct enough. Ultimately, the state needs to figure out their revenues, taxing earnings is not the only way to do that and its only controversial to say that because some states can't balance their budget without it, and yet, others can by providing a good or service people are willing to pay for.
I wound say the reaction when people don’t meet an observer’s understanding of “spirit” is where the hubris arises
And I explained that earlier: people want others to suffer as much as them. But it doesn't make any sense. The government isn't entitled to your productivity, assuming otherwise is where the hubris arises.
I mean look at the name
of the regulation that was passed for using offshore entities: GILTI (“guilty”). And now it is ironically being used to nullify tax receipts. But the United States isnt entitled to be the recipient of all capital and productivity. No state is. It doesn't matter that they offer some semblance of stability and infrastructure, that doesnt justify any particular percentage. Their funding problem doesnt justify any particular percentage. Thats where the hubris becomes apparent.
> And I explained that earlier: people want others to suffer as much as them.
Or perhaps they want others to also contribute to the shared government services that they benefit from. I.e. the free rider problem that taxes address.
Corporations aren't taking nearly as much money from the government as the people they employ and your employer pays half if your social security tax already.
It's not like corporations are collecting social security and medicaid.
Those are things we, as people, choose to incentivize with our tax dollars. Why would we incentivize corporations to do a thing and then tax them on it too?
The spirit of the law is that corporations only pay taxes on profits.
The "fair share" crowd don't seem to ever consider that a corporate tax isn't a given. The money that passes through corporations gets taxed through many means. The economic activity they create creates tax revenue that would otherwise not be there, even without showing a profit.
Because of that, there's a very reasonable, non-corporatist argument that they could just not pay taxes at all and it would generate just as much tax revenue. It's not a given that they should.
Yeah -- if the government pays for individuals' food, housing, and health care, then that money also stimulates the economy and gives people a good base to stay out of trouble, get a job, raise their family, or whatever.
Likewise, if you invite a company to set up in a given town or region, then they're creating jobs, they're purchasing assets, goods and services, and their employees are eating lunch and shopping nearby, they're moving into town, and paying their income tax where they're at.
It was interesting for me to watch Downton Abbey and learn how a manor house operated, you know, like a corporation. It wasn't such rich snobs just living on a huge piece of land, they were really stewards of a huge workforce, and the farmers and animal husbrandry that went on were sources of income for the whole common good there.
Even McMansion owners need to command a cadre of service workers, handymen, repair pros, to keep the house running when they own it. Not everyone hangs out at the hardware store every weekend.
Sometimes it seems like the only people who actually pay tax are middle class, full-time employees.
All my friends, even who have random part times businesses just seem like they have a lot more spare cash floating around than me. It's the only explanation I have, they're not being honest about the tax they pay and mostly getting away with it.
If I had 40% more income I'd be cruising pretty nicely too.
This is a keeping up with the joneses tale. People with flashier spending habits often have rotten savings habits. Never judge yourself by what other people show you.
In a way; but even 'savings' are easily manipulated with business vs w2 income. You can do mega 401k contributions (60k-100k+ per year dependent on circumstances), can roll to IRA, use a self-directed ira for further investments in family land or businesses ($millions per year).
Management companies in different states/countries work wonders to drop your tax and increase money you can spend. Even small guys $1mil rev are doing things like a Dubai management company nesting.
Personally I just think it's the reality. The bulk of busy tax payers are middle income earners who just do the honest thing and don't have the time available to workout how to rort the system.
Once you have enough disposable incoming, you can start to pay accountants to do money magic for you.
>This, of course, is a big charade. The cost of producing a drug is low relative to its sales price (gross margins are high, see the pharmaceutical companies’ 10-Ks!)
A drug is not a widget. You can't just make one. Almost all drug programs end in abject failure, usually far before even the clinical trial phase. Gross margins have to be high because you have to pay for 10 failed programs with the successful one.
And one reason that profits are low in the US because that's where there R&D happens.
Oh, that definitely explains the record profits. How silly of everyone. Everyone you can put the pitchforks down, it’s fine, we should just ignore that they run an excessively profitable business overcharging for basic life-saving drugs developed 10 years ago because they occasionally lose money on new drugs, even though it’s not nearly enough to cause a dip in profit. It’s fine, it’s all fine, move along.
I don't think we need to have any empathy for drug companies which acquire existing drugs and then bump the price multiple times.
Big Pharma profits low in the US? Please. Their R&D happens wherever talent is cheapest, their tax havens wherever laws are loosest, and their profits—record-breaking year after year—safely deposited wherever shareholders are happiest. If only their medicines were as creative as their accounting.
The real innovation is their business model: socialize the research costs, privatize the profits. Billions in taxpayer dollars fund the basic science, university labs, and early clinical trials that underpin 'breakthrough' drugs. Yet when these public investments strike gold, not a penny in dividends flows back to the public coffers that made it possible. Instead, we pay twice—first through our taxes to develop the drugs, then through world-leading prices to access them. That's not capitalism; that's a publicly-subsidized monopoly.
The expensive parts of drug R&D aren't the 'talent', it's the clinical trials. You can't simply offshore those, not if you want FDA approval.
Summit Therapeutics is the largest drug company by market cap without an approved product and has only 159 employees. Only a fraction of which are scientists. They are spending 2x as much on R&D every quarter as they are on total G&A expenses company-wide. It's basically all clinical trials. They're already in about $600m for R&D alone since they went public. If they don't get that back from patients/insurers, they're unsustainable.
Funny you specifically mention them:
Summit Therapeutics embodies the exact pharma model we've been critiquing - their business strategy isn't about bearing enormous R&D risks alone, but about strategically distributing those risks while maintaining private profit potential.
Their lead product, Ivonescimab, wasn't discovered or developed by Summit at all. They simply licensed it from Akeso for $500 million upfront.
They received up to $72.5 million from BARDA (taxpayer money) for Ridinilazole development and another $7.8 million from CARB-X (a public-private partnership) for SMT-738.
Their "innovation" model relies heavily on academic partnerships - Ridinilazole originated from publicly-funded university research, and they're leveraging MD Anderson's infrastructure rather than building their own.
Meanwhile, their executives received enormous compensation packages - in 2023, just two executives (Zanganeh and Soni) received compensation valued at $44.2 million, representing over 74% of their entire GAAP R&D budget that year.
Even their clinical trials for Ivonescimab combinations are being funded by Pfizer, not Summit.
This isn't a small company heroically bearing enormous R&D costs - it's a company that has masterfully distributed those costs across government grants, academic partnerships, and external collaborations while positioning itself to capture the profits if any of these products succeed.
You’re outright wrong - offshoring clinical trials is pervasive - here’s some reports of it:
https://prosperousamerica.org/pharmaceuticals-are-heavily-ou...
https://pmc.ncbi.nlm.nih.gov/articles/PMC6132216/
https://www.onderlaw.com/blog/offshore-drug-trials-big-pharm...
How much of that budget goes to actual research versus 'seeding trials' designed to familiarize doctors with prescribing patterns?
When taxpayers fund the foundational research and patients pay premium prices, perhaps the real innovation isn't in the lab but in a business model where public investment yields private profit.
That's not risk-taking capitalism: that's having your cake, eating it too, and charging the baker.
Exactly. We don't live in a cyberpunk world were corporations run their own universities and have their own private army.
Everything that allows a company to exist- from electricity to roads to law enforcement of patents is funded by taxpayers.
Yet.
The cost of trails and approvals is not something that needs to be covered because these costs are optional (and i guess the processes can be paused arbitrarily). Profits allow you to invest in new drugs but there are other ways of financing those, like investors or loans.
The general point is, that large drug companies can leverage many things while pretending R&D _requires_ high margins.
Do you think investors just give money away?
The US blocked the treaty which would have prevented companies getting a meaningful benefit from profit shifting by agreeing a minimum corporate tax rate
https://www.business-standard.com/world-news/donald-trump-ef...
I hope this isn't true. I'm very upset reading this.
Why? Many are reporting losses. Do you expect them to pay taxes on something other than profit?
> reporting losses
"According to Lucasfilm, Return of the Jedi (1983) "has never gone into profit", despite having earned $475 million at the box office against a budget of $32.5 million." - https://en.wikipedia.org/wiki/Hollywood_accounting
All this while our country has already cut antiretrovirals for children in Africa with zero warning or opportunity for private org or another country to take over. Our legacy as a country is going to look pretty gross.
Yeah, pretty gross of the American taxpayer to not work harder to make you feel better about yourself being an American.
Your son is a sex tourist, your daughter has it from a hostel stay too and you got it frim agnes, the secretary. And yes, your dick may rot off, cause everyone in the world is 5 "IdontGiveAFucks" away from it.
Inability to deal with a complex world does not make it go away. Its like stopping to pay rent to saving up for a house.
America shouldn’t have been spending money on that in the first place. Our role in this world should be to put ourselves first, just like every country is already putting themselves first.
Never mind that spending small sums of money to help control disease in other countries is pretty beneficial to America, diseases don't respect imaginary border walls.
> diseases don't respect imaginary border walls
A non-imaginary border wall might work, then. Control the movement of the vectors of disease and you control the spread of the disease.
Yes, restrict global traffic and further fuck our economy for… the economy?
At this point, you lot aren’t advocating cutting funding because it will help us. You understand it won’t. You’re advocating it because you desire to hurt others.
The solution for that is years of therapy and potentially institutionalization, not politics.
Why do we keep giving money to that one country then? Because the political benefits pay off for the politicians. So those same benefits could apply from foreign medical aid, but we don't value helping others less fortunate?
I find it both hilarious and sad that people are afraid to say Israel these days.
Ugh I hate that as well! But unfortunately they have bought our politicians.
I’m hoping that after Trump both sides can bow up popular pressure to stop supporting them. In younger generations in both the left and right there is less star struck awe at the mention of that country, so I’m hopeful.
https://en.m.wikipedia.org/wiki/Soft_power
Also, it’s pretty clear we also don’t put our own citizens first either. So the reasons for doing it are clearly not altruistic.
The implications of this is that that money was never taxed which is likely untrue. Just because the money left Lucasfilm, doesn't mean it wasn't taxed.
There's a reason why the IRS isn't going after them. So called "Hollywood accounting" is a lot more about screwing actors out of royalties than it is about not paying taxes
The implication is that "reported losses" don't have anything to do with actual losses. Citing the corporations creative accounting results convinces no-one.
This is all just accounting nonsense and tax loopholes. Did you even read the article? FTA:
> Merck reported a loss of almost $2 billion in the U.S. while making $22 billion abroad. Johnson and Johnson reported losing just under $500 million in the U.S. while making $17 billion abroad. Pfizer reported U.S. losses of around $500 million while making $9 billion abroad. AbbVie apparently lost nearly $8 billion in the U.S. while making over $11 billion abroad (mostly in Bermuda) and Bristol Myers Squibb reported a loss of $15 billion in the U.S. (tied to the accounting of an acquisition) and $6.5 billion of foreign profits.
This is a well researched article, my main disagreement in this field is the hubris necessary to even think greater tax receipts are the goal, and this is reflected in the language choice.
I think this is a blind spot as it seems the only people interested would be those hoping for some kind of "tax justice" which taps into a popular sentiment: people choosing to wonder why we aren't being screwed equally, instead of wondering why we are being screwed at all.
I get it, your tax bill comes and is inconvenient, someone else in a seemingly higher tax bracket seems to leverage a card or chess move that you don't have the ability to pursue.
But this is all a red herring. To the Supreme Court, choosing to go to a gas station in a neighboring town for lower tax rates is just as valid as doing what some multinational does for lower tax rates by having a nominal structure in another country. (And that's from the Supreme Court you actually liked!)
The aggregate priority of the US government is velocity within the economy. The speed that money moves within the economy, not the revenue collection from [ostensibly] facilitating it.
And even detractors to this reality can never reach agreement on what a "fair share" is. A completely arbitrary and undefined sentiment, based on a misunderstanding of the world and that individual's own socioeconomic status or outright mediocrity.
What is the most interesting is that these multinationals are sometimes paying tax somewhere else. Like the article mentions about how they are currently paying Denmark at 22% and have an inability to deduct enough. Ultimately, the state needs to figure out their revenues, taxing earnings is not the only way to do that and its only controversial to say that because some states can't balance their budget without it, and yet, others can by providing a good or service people are willing to pay for.
Can you explain why you think wanting everyone to comply with the spirit of the (tax) law is "hubris"?
I wound say the reaction when people don’t meet an observer’s understanding of “spirit” is where the hubris arises
And I explained that earlier: people want others to suffer as much as them. But it doesn't make any sense. The government isn't entitled to your productivity, assuming otherwise is where the hubris arises.
I mean look at the name of the regulation that was passed for using offshore entities: GILTI (“guilty”). And now it is ironically being used to nullify tax receipts. But the United States isnt entitled to be the recipient of all capital and productivity. No state is. It doesn't matter that they offer some semblance of stability and infrastructure, that doesnt justify any particular percentage. Their funding problem doesnt justify any particular percentage. Thats where the hubris becomes apparent.
> And I explained that earlier: people want others to suffer as much as them.
Or perhaps they want others to also contribute to the shared government services that they benefit from. I.e. the free rider problem that taxes address.
Free riders are now destroying useful goverment services. They really don't care about anything like that.
a) inability to define an amount of percent undermines that desire
b) the employees, traders, financial intermediaries, do contribute to the state coffers via taxes
c) velocity of money and asset movement within the economy accomplishes that
the corporation itself is just a conduit
Corporations aren't taking nearly as much money from the government as the people they employ and your employer pays half if your social security tax already.
It's not like corporations are collecting social security and medicaid.
No, just hundreds of billions in grants, tax offsets, and other government largesse.
Those are things we, as people, choose to incentivize with our tax dollars. Why would we incentivize corporations to do a thing and then tax them on it too?
The spirit of the law is that corporations only pay taxes on profits.
The "fair share" crowd don't seem to ever consider that a corporate tax isn't a given. The money that passes through corporations gets taxed through many means. The economic activity they create creates tax revenue that would otherwise not be there, even without showing a profit.
Because of that, there's a very reasonable, non-corporatist argument that they could just not pay taxes at all and it would generate just as much tax revenue. It's not a given that they should.
Yeah -- if the government pays for individuals' food, housing, and health care, then that money also stimulates the economy and gives people a good base to stay out of trouble, get a job, raise their family, or whatever.
Likewise, if you invite a company to set up in a given town or region, then they're creating jobs, they're purchasing assets, goods and services, and their employees are eating lunch and shopping nearby, they're moving into town, and paying their income tax where they're at.
It was interesting for me to watch Downton Abbey and learn how a manor house operated, you know, like a corporation. It wasn't such rich snobs just living on a huge piece of land, they were really stewards of a huge workforce, and the farmers and animal husbrandry that went on were sources of income for the whole common good there.
Even McMansion owners need to command a cadre of service workers, handymen, repair pros, to keep the house running when they own it. Not everyone hangs out at the hardware store every weekend.
Um, yes?
My impression is that huge corporations in a wide variety of industries are using various dodges to more-or-less avoid paying US taxes.
(But they are paying their US lobbyists and politicians quite generously, so this situation isn't likely to change.)
Sometimes it seems like the only people who actually pay tax are middle class, full-time employees.
All my friends, even who have random part times businesses just seem like they have a lot more spare cash floating around than me. It's the only explanation I have, they're not being honest about the tax they pay and mostly getting away with it.
If I had 40% more income I'd be cruising pretty nicely too.
This is a keeping up with the joneses tale. People with flashier spending habits often have rotten savings habits. Never judge yourself by what other people show you.
In a way; but even 'savings' are easily manipulated with business vs w2 income. You can do mega 401k contributions (60k-100k+ per year dependent on circumstances), can roll to IRA, use a self-directed ira for further investments in family land or businesses ($millions per year).
Management companies in different states/countries work wonders to drop your tax and increase money you can spend. Even small guys $1mil rev are doing things like a Dubai management company nesting.
article hinted at it via the IP onshoring talk.
Personally I just think it's the reality. The bulk of busy tax payers are middle income earners who just do the honest thing and don't have the time available to workout how to rort the system.
Once you have enough disposable incoming, you can start to pay accountants to do money magic for you.