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Abbott faces Senate probe linking formula deficit to tax cut, buyback


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Laura Davison

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(Bloomberg) – Senate Finance Committee chairman Ron Wyden examines the low tax rates of controversial drug maker and formula maker Abbott Laboratories and claims the company’s investments in share buybacks have fueled the nationwide baby food shortage.

Wyden, in a letter to Abbott Chief Executive Officer Robert Ford, highlighted the company’s tax rate — which has averaged 12% for the past three years — and $8 billion in share repurchases in recent years.

“I have long been concerned that windfall gains from sweeping tax cuts for mega-corporations enacted by the Republican tax law of 2017 would be used to line the pockets of corporate executives and wealthy shareholders,” Wyden said in the letter, obtained by Bloomberg. news. † “It seems my concerns have been validated in this case, as Abbott chose to spend billions on buying back its own stock rather than investing in critical upgrades to a factory essential to feeding our infants.” nation.”

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An Abbott spokesperson did not immediately respond to a request for comment.

Abbott’s factory was closed in February after four children who were given the formula made there fell ill with cronobacter bacteria and two died. Since then, no further cases of children who have become ill from bottle-feeding have been reported, according to the Centers for Disease Control and Prevention, which closed its investigation into the outbreak last week.

Abbott said its products are not responsible for the illnesses and deaths. Top FDA officials said during a conversation with reporters Monday evening that it was too early to say.

The closure exacerbated the existing baby food shortage and the crisis has intensified with stores seeing their stocks run out due to panic buying.

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Wyden’s announcement comes a day after the House Energy and Commerce Committee announced a May 25 hearing with Abbott Senior Vice President Christopher Calamari. Also next week, FDA Commissioner Robert Califf, as well as Nestle SA’ Gerber Vice President Scott Fitz and Reckitt Benckiser Group Plc Senior Vice President Robert Cleveland, will testify. Califf is also scheduled to testify at a credit committee hearing on Thursday.

Wyden’s investigation, which asks Abbott to provide details about their tax strategy and what investments have been made at the Michigan plant, is the latest step in a broader investigation into how major drug companies are using the tax code to lower their tax rates. In January, Wyden asked Bristol-Myers Squibb Co. for details of an offshore tax scheme that allowed them to get a refund from the IRS.

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This post Abbott faces Senate probe linking formula deficit to tax cut, buyback

was original published at “https://financialpost.com/pmn/business-pmn/abbott-faces-senate-probe-tying-formula-shortage-to-tax-cut-buybacks”

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