MSD ‘could face $5.5 billion tax bill’

Merck Sharp & Dohme (MSD) could be forced to pay a tax bill amounting to over $5.5 billion (2.87 billion pounds) to US and Canadian authorities.

The announcement recalls a previous tax settlement paid out by GlaxoSmithKline, amounting to $3.1 billion.

Like its British rival, MSD has said that it is confident in its legal position against a request to pay more tax. Although GSK eventually settled after considering that the risk of losing its court case could result in a far greater tax bill, MSD has said it plans to contest any tax claims.

The company has said that any tax charge that might have to be paid “will not have a material adverse effect” on the company’s financial situation, although it could impact upon the MSD’s quarterly results immediately afterwards.

MSD’s chief executive officer, Richard Clark, dismissed fears over the company’s liabilities, which include thousands of lawsuits over health concerns arising from the use of Vioxx, the now-withdrawn drug used to treat pain associated with rheumatoid arthritis.

Commenting on these liabilities, Mr Clark told the Wall Street Journal: “I don’t lose any sleep over that.”

He added that the company was “very conservative” in the way it conducts its taxation affairs.

The newspaper also quotes a statement from an MSD spokesman, who said that the company was in “full compliance” with the US government’s tax rules.