The Democratic lawmakers alleged that pharmaceutical companies avoided paying U.S. tax bills by shifting their profits to offshore subsidiaries in jurisdictions with significantly lower tax rates, such as Ireland and Bermuda, according to CNBC.

Democratic lawmakers Sen. Elizabeth Warren, D-Mass., and Rep. Jan Schakowsky, D-Ill., on Tuesday reportedly questioned five pharmaceutical companies about paying little federal tax despite earning billions of dollars annually.

The two Democratic lawmakers sent letters to Pfizer (PFE), Merck (MRK), Johnson & Johnson (JNJ), AbbVie (ABBV), and Amgen (AMGN), criticizing them for paying little to no federal taxes on profits earned in 2024 and previous years, CNBC reported.

They alleged that the pharmaceutical companies avoided paying U.S. tax bills by shifting their profits to offshore subsidiaries in jurisdictions with much lower tax rates, such as Ireland and Bermuda.

Warren and Schakowsky said the practice illustrates “just one of the ways in which our tax code has been skewed to benefit wealthy pharmaceutical corporations,” according to the report.

The practice of moving profits to offshore subsidiaries is enabled by President Trump’s 2017 Tax Cuts and Jobs Act, which created incentives for U.S. multinational firms to shift profits overseas, CNBC noted.

The two lawmakers on Tuesday also pressed the companies on whether the money they spent towards lobbying efforts went toward efforts to maintain the tax loophole in the GOP reconciliation bill passed by the House in late May and now in the Senate.  

Warren said in a statement to CNBC that the pharmaceutical companies must be held ‘accountable’ and further opined that that “it’d be a slap in the face” for Congress to expand tax loopholes for big pharma companies.

The letters also urged the companies to answer questions about their role in lobbying for a tax break extension and estimated federal tax liabilities.

The lawmakers told the drug makers to respond to the letter by July 1.

Shares of all five companies traded lower on Tuesday morning.

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