Situation: The IRS issued tax deficiency notices to GlaxoSmith Kline Holdings (Americas) Inc. that reflected a multi-billion dollar transfer pricing adjustment. The IRS investigated the profits, starting in 1989, of many of the company’s best-selling drugs, including Ceftin, Imitrex, Flonase, Flovent, Serevent, Ventolin, Zantac, and Zofran. This landmark case is one of the largest involving transfer pricing in US history.
CRA contribution: CRA provided an array of expert services to enable the tax court to understand many of the pharmaceutical industry’s key functions in the United States and Europe—R&D, manufacturing, marketing, sales, and distribution. Our analysis included an in-depth examination of the process of marketing pharmaceuticals, including an assessment of the commercial value delivered by the local operating companies of large pharmaceutical companies such as GSK.
Result: Following the submission of expert reports, the case was ultimately settled.
