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The Pfizer-Allergan Pharmaceutical Monopoly: Tax Inversions and Potential Drug Price Hike

Variety of MedicineThe ink is not yet dry on Martin Shkreli’s widely panned decision to raise Daraprim’s price by 5,000%, then comes the news about the Pfizer-Allergan merger. It’s the largest of its kind in history, in more ways than one. This is because of something called inversion, which involves a company’s headquarters transferring to a country with lower corporate taxes. This is what experts say the driving force of the consolidation is, with a total worth of $150 billion.

Politicians, economists and other luminaries call this deal a disgrace, primarily because “Pfallergan” won’t have to pay even a penny in taxes to the US government. Instead, they will pay much less in Ireland, where they are transferring the corporation. The main issue is that US taxpayers will have to shoulder the burden they left—all $21 billion of it.

Yet, there is an underlying issue here: these two companies have the potential to create a pharmaceutical monopoly. As a result, they could solely decide drug prices. No, it’s not good news.

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A Solution

Consider that this new mega-pharma company raises the prices of certain drugs, which is entirely possible. A regular customer at a drug store has no choice but to pay up. It’s a nightmare scenario, especially given that they are also paying slightly higher taxes. The one thing that could save people could be PBMs, such as Crystal Clear RX, who can negotiate drug prices.

A big part of a PBM’s job is to find solutions to drive the costs of pharmaceuticals. In the event of a hike, they can decrease the costs by 15%. It’s hard to argue with this kind of savings, and it certainly won’t end in the near future. Drug prices will increase further, making PBMs more important.

Looking at the Positives

The presence of PBMs is one piece of good news regarding pharmaceuticals, but there could be benefits that could come from the merger. Most importantly, two companies mean more research ventures. That means they could find solutions to certain illnesses, something certainly welcome to the public.

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If the deal goes through, then people just need to be ready. Hiring a more competent PBM is a good way of countering the potential effects of a monopoly. The goal is to save money on drugs, and if they do what experts expect them to do, it’s better to come prepared.

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