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The pharmaceutical industry is using a large portion of its windfall from Republicans' corporate tax cuts to boost its stock prices. Nine drug companies are spending a combined $50 billion on new share buyback programs, a sum that towers over investments in employees or drug research and development.

The bottom line: All of those buybacks were announced during or after the passage of the Republican tax bill. That money is enriching hedge funds, other Wall Street investors and top drug company executives, but it isn't necessarily helping patients.

Expand chart
Data: Company documents; Chart: Andrew Witherspoon / Axios

That's not all: Some drug companies also increased quarterly dividends following the tax overhaul. For example, AbbVie increased its cash dividend by 35% while at the same time committing to a new $10 billion share repurchase program.

  • Dividends dole out cash to existing investors, and share buybacks boost a company's stock price by making shares scarcer.
  • The new tax law, which slashed the corporate tax rate and made it easier for companies to repatriate overseas cash, has made dividends and share buybacks quick and appealing options.
  • Several drug company buybacks are a lot larger than prior share repurchase programs.
  • Stock returns help people with 401k retirement accounts, but they mostly benefit wealthy investors and executives. And half of U.S. households don't own any stock.

The big picture: The large buyback programs are rolling out while the same pharmaceutical companies raise drug prices and while Americans struggle to afford their prescriptions.

Pharmaceutical Research and Manufacturers of America, the main drug industry trade group, referred share buyback questions to employer groups.

Go deeper

Kendall Baker, author of Sports
1 hour ago - Sports

European soccer is at war

Liverpool celebrating its 2019 Champions League victory. Photo: Nigel Roddis/Getty Images

Europe's biggest soccer clubs have established The Super League, a new midweek tournament that would compete with — and threaten the very existence of — the Champions League.

Why it matters: This new league, set to start in 2023, "would bring about the most significant restructuring of elite European soccer since the 1950s, and could herald the largest transfer of wealth to a small set of teams in modern sports history," writes NYT's Tariq Panja.

Dion Rabouin, author of Markets
2 hours ago - Economy & Business

2021's expected earnings blowout begins

JPMorgan CEO Jamie Dimon. Photo: Mark Kauzlarich/Bloomberg via Getty Images

First-quarter earnings so far have been very strong, outpacing even the rosy expectations from Wall Street and that's a trend that's expected to continue for all of 2021. S&P 500 companies are on pace for one of the best quarters of positive earnings surprises on record, according to FactSet.

Why it matters: The results show that not only has the earnings recession ended for U.S. companies, but firms are performing better than expected and the economy may be justifying all the hype.

2 hours ago - Science

NASA's Mars helicopter takes flight as first aircraft piloted on another planet

Ingenuity on the surface of Mars, filmed by NASA's Perseverance rover. Photo: NASA Jet Propulsion Laboratory

NASA successfully piloted the Ingenuity Mars helicopter for its first experimental flight on Monday, briefly hovering the aircraft as NASA's Perseverance rover collected data.

Why it matters: Ingenuity's short flight marks the first time a human-built aircraft has flown on a world other than Earth, opening the door to new means of exploring planets far from our own.

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