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Billion-Dollar Covid Tax Breaks For Opioid Settlements? House Committee Probes Drug Companies On Plans

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Updated Mar 5, 2021, 03:40pm EST

Topline

Congressional lawmakers have escalated a probe into whether four drug companies sued for their roles in the opioid epidemic plan to use a pandemic-related tax break to reduce their legal fees by the billions.  

Key Facts

The House Oversight and Reform Committee raised concerns in letters released Friday that four companies intend to misuse a tax break provision of the CARES Act, an economic package passed last year in response to Covid-19, to deduct opioid settlement payments.

States have proposed the companies Johnson & Johnson, Cardinal Health, McKesson Corporation and AmerisourceBergen together pay $26 billion to settle lawsuits brought against them for the production and distribution of opioids that have devastated communities for decades. 

In separate statements to Forbes, Johnson & Johnson and AmerisourceBergen denied any plans to use the CARES Act tax provision for settlement costs.

Cardinal Health declined to comment on the letter and McKesson Corporation did not respond to emailed questions.

Key Background

In February, the Washington Post reported that Johnson & Johnson, Cardinal Health, McKesson Corporation and AmerisourceBergen updated their financial projections to include tax deductions from the opioid settlement payments that would save them roughly $1 billion each. The Post found that Cardinal Health planned to collect a $974 million refund because it claimed opioid lawsuit costs as losses under a CARES Act provision. In an effort to help companies hammered by the coronavirus recession, the provision increased the limit on losses companies could apply toward past returns. 

Crucial Quote

“The American people should not be on the hook for hundreds of millions of dollars for your company’s role in fueling the opioid crisis,” the letter said. “Any attempt to reduce your settlement costs by taking advantage of a tax provision intended for businesses suffering coronavirus-related losses is an insult to every community suffering from the opioid crisis and the pandemic.” 

What To Watch For

Lisa Cannellos, the director of global corporate media relations at Johnson & Johnson, said the company would reply to the House Oversight and Reform Committee letter by March 18. Lauren Esposito, the vice president of external communications at AmerisourceBergen, said the company would share information with the committee “as appropriate.”

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