Johnson & Johnson Offsets Opioid Settlement Payouts By Exploiting Pandemic Relief Tax Writeoffs


According to a report by National Public Radio (NPR), Johnson & Johnson (J&J) and three of the nation’s largest healthcare companies may benefit from corporate tax breaks that would offset settlement money allocated to the opioid epidemic.

Public filings reveal that J&J and AmerisourceBergen, Cardinal Health, and McKesson plan to write off future opioid payouts as operating losses. By doing so, this would enable the companies to pay much less in corporate income taxes.

All four companies have played prominent roles in manufacturing and distributing opioid prescription drugs. These highly-addictive pain medications are often abused and led to nearly 50,000 overdose deaths in the U.S. in 2019. 

Collectively, the four companies were on the record to settling for $26 billion for their roles in the opioid epidemic. 

Writing off the settlement money is akin to British Petroleum (BP) writing off penalties for its role in the devastating Gulf oil spill in 2010. Critics are outraged that the four corporations may be able to get away with this scheme, which would “mean less money going into the treasury [and] less money for programs that would help deal with the fallout for the opioid crisis,” said Rep. Jimmy Gomez (D-CA) to NPR.

How much less? NPR reports that the corporate tax breaks would reduce the settlement payout by roughly $4 billion. 

Unlike regular citizens, who can’t, say, write off paying bail or a parking fine, corporations can write off criminal penalties. 

A new corporate tax break, introduced as part of last year’s COVID-relief package, the CARES Act, will be exploited by Cardinal Health. NPR reports that during a call with investors, Cardinal’s Chief Financial Officer, Jason Hollar, estimated the provision would allow the firm to recoup roughly $420 million in taxes paid as far back as 2015.

NPR reached out to Cardinal, which through a spokesperson, issued this response via email: “The plan to make use of the CARES Act tax provision complies with current federal law” which allows the firm to “recover previously paid federal taxes.”

Some lawmakers, outraged by the loophole, sent a letter to Cardinal Health, which, in part, read, [Cardinal] doesn’t appear to need financial relief  [and]

is seeking to exploit the CARES Act provision despite being fiscally healthy during the pandemic,” lawmakers on the House Committee on Oversight and Reform wrote.

The aforementioned Rep. Gomez told NPR that he didn’t foresee the exploitation of the CARES Act loophole being used to offset opioid payouts.

“I never thought it would get to the point where they would try to skirt their responsibility to pay…for an opioid crisis that they caused,” he said.

All four companies have been contacted by the House Committee about the tax strategies, which expects to receive answers from them no later than March 18. 

If J&J goes through with the tax write off, the company would recoup over $1 billion from the settlement money. 

Should the settlement deal go through as planned, none of the four companies would have to admit to any wrongdoing for their role in the opioid epidemic. 

In 2019, J&J was ordered by a judge to pay the state of Oklahoma $465 million to compensate the state for expenses related to the opioid crisis. J&J appealed the decision. Late last year, Oklahoma’s Attorney General, Mike Hunter, requested that Oklahoma’s Supreme Court order J&J to pay over $9 billion to cover opioid-related expenses. 

Several other states and municipalities have filed opioid-related lawsuits against drugmakers.

J&J faces over 20,000 talc cancer lawsuits and recently disclosed in a public filing that it was setting aside nearly $4 billion for litigation expenses.

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