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Express Scripts, Novartis subsidiary probed in NJ amid fight over tax credit program

Anjalee Khemlani
Senior Reporter
New Jersey Governor Phil Murphy speaks after taking the oath of office in Trenton, New Jersey, U.S., January 16, 2018. REUTERS/Lucas Jackson

Tax breaks for two major health care companies are under scrutiny by New Jersey’s economic development agency, as part of an ongoing investigation into the state’s recently expired tax programs meant to spur job creation.

The “Grow New Jersey” program, which awards tax incentives to companies based on jobs retained or created in the Garden State, expired on June 30.

However, Express Scripts—a part of Cigna ($CI)— and Sandoz, a part of Novartis ($NVS), were both asked for additional information on Thursday related to their award applications.

The general line of inquiries from the EDA has been related to a lack of follow-up, or lax oversight of prior award approvals, an EDA representative told Yahoo Finance on Friday. After being approved, the EDA reserves the right to modify awards throughout the disbursement period.

Back in 2016, Sandoz was awarded a $9.18 million,10-year incentive, and has already received disbursements. Sandoz received this award to retain and create dozens of jobs in the Garden State.

However, the company has been named in the ongoing multi-state lawsuit of alleged price-fixing by generic drug companies, and New Jersey is a plaintiff.

In a statement, Novartis, the parent company of Sandoz, responded top Yahoo Finance. “We can confirm that we received a letter from the NJ EDA and we have responded to their letter. The letter did not raise any discrepancies,” a spokesperson added.

For Express Scripts, the reason for the inquiry is unclear. Back in 2013, the company received a grant for $40 million over 10 years for retaining and creating a total of 713 New Jersey jobs. Instead the company only has a total of 524, EDA officials say.

In an emailed statement, the company said it anticipates the issue being resolved quickly.

“Express Scripts has been working closely with the NJ EDA to provide them with the information they need to certify our participation in the NJ GROW project,” the statement said. “We look forward to that certification happening soon.”

There was supposed to be a modification to Express Scripts award, which would have resulted in a cut of $10 million from the original amount, according to an EDA spokesperson.

That item was pulled from the EDA’s agenda at a planned meeting, yet it was unclear if Thursday’s action was related to that.

Teva Pharmaceuticals, which recently announced a consolidation of its U.S. headquarters to New Jersey, was also recently questioned about its incentive application. In 2018, the company received a $40 million, 10-year award.

The Grow NJ program is one of two created about six years ago, but has been mired in politics amid an ongoing intra-party political battle that links the administration of Gov. Phil Murphy, the governor himself and Democrats to the former Republican rein of Gov. Chris Christie.

The governor launched a task force late last year, which continues to probe the award of incentives under Christie’s administration.