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Ten of the biggest US pharmaceutical and biotech companies cut at least $5bn from their federal tax bills last year by booking income in low-tax jurisdictions, according to new financial disclosures that corporate America had sought to keep private.
The new mandatory tax information in annual reports also shows that several drugmakers paid more to overseas governments than to the US Treasury, despite the US being the world’s largest pharmaceutical market.
In its annual report published in February, Eli Lilly disclosed it paid $6.6bn in income tax in Ireland last year, double the $3.3bn it paid in the US. Merck, which makes cancer treatment Keytruda, the world’s best-selling drug, paid $2.1bn of taxes in Switzerland in 2025, compared with $1.6bn in the US.
Eli Lilly said its tax bill in Ireland increased last year because of “significantly higher” manufacturing in the EU. “Our capital investments will generate increased US taxable income and higher US tax payments in future years.”
Merck said in a statement it “has paid additional foreign taxes” in part due to global minimum tax rules. The company paid more than $4.8bn in US taxes from 2023 to 2025, a spokesperson added.
New accounting rules, which apply to annual reports for the year ending December 2025 onwards, require listed US companies to disclose more about where they pay tax, including itemising the amount paid in a given year in countries where they have the largest tax bills.
If their global tax rate falls below the US corporate income tax rate of 21 per cent, companies must disclose which countries contributed to significantly lowering their bill and by how much.
The disclosures mark a new phase in the decades-long political debate over whether multinational companies pay their fair share of tax. Drugmakers in particular have faced scrutiny for locating manufacturing or intellectual property in lower-tax jurisdictions such as Ireland.
“Now we are seeing how much these companies’ tax rates are lower because of the income they have in other countries,” said Jeffrey Hoopes, a professor of accounting at the University of North Carolina.
The new disclosures could provide insights into companies’ overseas operations that were previously unavailable to investors, he added.
Fact Coalition, a Washington-based tax transparency group, analysed disclosures from 40 of the biggest companies and calculated they collectively saved more than $11bn in 2025 by booking profits in lower-tax jurisdictions. The coalition said about half of those savings were attributable to just 10 pharmaceutical and biotech companies.
They are Eli Lilly, Merck, Pfizer, AbbVie, Johnson & Johnson, Biogen, Bristol Myers Squibb, Gilead, Regeneron and Thermo Fisher Scientific.
The disclosures exclude territories below a certain threshold and therefore understate the total savings, Fact Coalition said.
The US Chamber of Commerce business lobby had pressured the Securities and Exchange Commission to scrap the new tax disclosures. In a letter to the SEC chair in December, it said the changes had been pushed by “activists” who wanted to “shame or otherwise vilify companies”.
Pfizer paid $1bn in taxes in Ireland in 2025, compared with $2.7bn to the US Treasury. Last year, an investigation of the company’s taxes by Democratic members of the US Senate Finance Committee reported that in 2019, Pfizer reduced its US taxable profit figure to zero by booking all of its income offshore.
Democratic senator Ron Wyden said his office based its findings on Pfizer’s 2019 tax return, which is not public.
Pfizer said Wyden’s analysis “is not accurate”. In a statement to the FT about its tax disclosures for 2025, Pfizer said it paid more in income tax in the US last year than in all of its overseas jurisdictions combined, adding that over the past five years it had paid $15.7bn in US income tax.
AbbVie cut $1.6bn from its US federal tax bill, benefiting from tax savings linked to its operations in Puerto Rico.
Income booked by Johnson & Johnson in Ireland and Switzerland shaved $808mn, or 2 percentage points, off its US corporate tax rate last year, for an effective rate of 17.7 per cent.
AbbVie, Johnson & Johnson and Thermo Fisher declined to comment. Biogen, BMS, Gilead and Regeneron did not immediately respond to a request for comment.
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