In the Black

When the call went out for aid in ransoming Bay of Pigs prisoners from Castro's Cuba last December, more than 60 U.S. drug and medical equipment companies contributed some $50 million worth of products. On the corporate balance sheets, the donations have turned out quite well.

Last week Merck & Co. of Rahway, N.J., which committed $2,500,000 worth of its goods to the ransom, announced that it figured to come out ahead after taking its tax deductions. Just how much ahead, Merck did not say; in any event, the company said that it plans to turn over the profits to charity, on behalf of medical research.

Asked by newsmen, three other big Castro contributors said that they too stood to make money. Johnson & Johnson of New Brunswick, N.J., which gave $1,011,000, and Hoffmann-La Roche, Inc. of Nutley, N.J., a $1,132,000 donor, also plan to give their tax profits to charities. The Warner-Lambert Pharmaceutical Co. of Morris Plains, N.J., which contributed $1,500,000, intends to plow its tax profits back into basic research.

Other contributing companies either declined to comment or said that they would not know the outcome until later this year, when they close their books.

In treating their Castro contributions as charity, the companies base their deductions not on the actual production costs of the goods but on wholesale prices, which include a markup of 100% or more on many items. These, when applied in deductions against the 52% corporate income tax rate, create a situation best explained by one drug company executive: "We couldn't help doing better than break even."

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