Photo/Illutration Nobel Prize winner Tasuku Honjo in 2019 (Asahi Shimbun file photo)

Nobel laureate Tasuku Honjo has been hit with a charge of hundreds of millions of yen in back taxes for failing to declare 2.2 billion yen ($21 million) in taxable income.

The amount of undeclared income accumulated over the course of four years, until 2018.

The issue stems from a longstanding dispute over patent royalties that escalated into a legal battle this summer, according to sources.

The Osaka Regional Taxation Bureau charged Honjo about 700 million yen in total. The amount included an additional tax for deficient returns.

But the tax authority apparently decided Honjo’s undeclared income was not a case of intentional tax evasion so it appeared not to charge a heavy additional tax.

“Rules are rules, and I am not an exception,” Honjo told The Asahi Shimbun on Sept. 9, saying he is rectifying the situation.

He said he amended the tax return after consulting with his accountants and lawyers.

Honjo, 78, was awarded the 2018 Nobel Prize in Physiology or Medicine for his research into immune system cells that led to the discovery of a new kind of cancer therapy and the development of Opdivo, a cancer treatment drug.

Honjo in 2006 signed a license agreement to receive patent royalties from the development of Opdivo from the Osaka-based company Ono Pharmaceutical Co., which manufactures and sells the drug.

The agreement was over the patent of a molecule called PD-1, a base component of Opdivo. Honjo and the company filed a joint patent application.

Under the agreement, the pharmaceutical company is supposed to pay part of the sales turnover as patent royalties to Honjo when the drug is sold.

The company did so, but Honjo refused to receive the payment, claiming the compensation was too low.

The company then deposited the money with a legal affairs bureau.

The taxation bureau appears to have concluded the deposited money was based on a valid agreement, therefore taxable income.

Honjo told the pharmaceutical company he signed the agreement, but also that he misunderstood the drug’s economic value and the compensation amount. The company then offered to change some of the agreement’s conditions. But it was never revised. Sales of Opdivo then started in 2014.

Honjo filed a lawsuit at the Osaka District Court in June, suing the company for about 22.6 billion yen. The amount stems from patent royalties U.S. drug maker Merck & Co. paid to Ono Pharmaceutical for manufacturing and selling a drug similar to Opdivo.

The pharmaceutical company published a statement on its website in July that said, “We signed an agreement with Tasuku Honjo in 2006 and have paid patent royalties properly based on the agreement.”

According to the company’s financial documents, domestic sales of Opdivo in the fiscal period ending March this year totaled 87.3 billion yen.

Related News