Lowey Questions EpiPen Profit Figure Given to Congress by Mylan

Mylan's pretax profit on the EpiPen is reportedly $160, however CEO Heather Bresch testified in front of Congress last week that the company makes a $100 profit on the product and did not mention the tax-related reduction, the Wall Street Journal reported.

Testifying in front of Congress Sept. 21, Bresch said the company's profit for a two-pack of injectors was just $100. Bresch accounted for the price, citing a cost of goods and and "EpiPen-related" costs. At the hearing Bresch did not mention tax costs. Lawmakers were skeptical of the $100 profit figure at the hearing.

“I am deeply concerned about reports that Mylan inaccurately represented its EpiPen profits to Congress,” said Congresswoman Nita M. Lowey (D-Rockland/Westchester). “A substantial increase in the price of EpiPens as well as misinformation appearing to distort Mylan’s profit margins are irresponsible actions as millions of Americans rely on these critical, life-saving devices to prevent severe allergic reactions. It is essential that Mylan provide all information requested by Congress and fully disclose its profits from EpiPen immediately and transparently.”

Lowey is concerned about the nearly 550 percent increase in the price of the lifesaving product over eight years.

In August, Lowey, the senior Democrat on the House Appropriations Committee, sent a letter to Mylan Chief Executive Officer Heather Bresch, expressing concern over the skyrocketing cost of EpiPens.

“Such a dramatic increase in the cost of life-saving medication is of tremendous concern,” wrote Lowey. “Food allergies, which often require immediate medical intervention, affect an estimated 15 million Americans, including one in every 13 children.”

In the letter, Lowey appealed directly to CEO Bresch urging Mylan to take immediate steps to lower the cost of these life-saving devices.

In a statement, Mylan said the Wall Street Journal story was "misleading" and the headline, "Mylan’s EpiPen Profit 60% Higher Than Told to Congress," was inaccurate.

"Tax is typically included in a standard profitability analysis and the information provided to Congress has made clear that tax was part of the EpiPen Auto-Injector profitability analysis. In fact, Mylan has provided Congress with a detailed analysis of EpiPen Auto-Injector profitability," the Mylan statement said.

"It also is important to note that use of a statutory tax rate for the jurisdiction being analyzed (in this instance, the U.S.) is standard. Just as we did not use a blended global tax rate, we also did not allocate corporate expenses associated with running the business, which would have further reduced its profitability. We believe it is most appropriate, and conservative, to focus entirely on EpiPen Auto-Injector specific costs and associated taxes.”

The report in the Wall Street Journal said Mylan reduced its calculation of the profit by applying the statutory U.S. tax rate of 37.5 percent.

Ryan Baum, an analyst with a health care investment research firm, told the Wall Street Journal the 37.5 percent tax rate Mylan applied to EpiPen “has nothing to do with reality.”

Edward Kleinbard, a professor of law and business at the University of Southern California's Gould School of Law, told the Los Angeles Times including tax provisions for U.S. taxes that aren't due, and that the company does not in fact anticipate ever having to pay, is intellectually dishonest.

Amid criticism from lawmakers and consumers of the whopping price of the EpiPen, Mylan announced that it would would launch a generic alternative at a 50 percent discount of the list price. The generic EpiPen will cost $300 per two-pack carton and will be identical to the branded medicine. In addition, Mylan has said it will offer financial help to customers and will expand the number of low-income patients eligible to receive company subsidies.

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