Mr. Setser's testimony focuses on three points:
1. America currently has a large and growing trade deficit in pharmaceutical products.
2. The Tax Cuts and Jobs Act created new incentives for the offshoring of pharmaceutical production and other high technology manufacturing jobs. As I will discuss later, the biggest sources of pharmaceutical imports are not countries known for low wages, but rather countries known for their high tolerance of transfer pricing games and generous tax treatment of multinational firms.
3. The Tax Cut and Jobs Act provided a large windfall to the shareholders of pharmaceutical firms who had shifted their profits and often production abroad to reduce their U.S. tax burden—but it hasn’t generated lower prices for American consumers or a significant increase in investment in pharmaceutical research and development. The work of the Ways and Means committee staff1 has illustrated that Americans pay by far the world’s highest prices for drugs. Yet today, Americans are getting far too little back from our biggest pharmaceutical companies.