Mylan profits 60% higher than disclosed to US Congress

Days after US House of representatives called Mylan's CEO Heather Bresch to justify the device's steep price increases, the company yesterday clarified that the profit it made from its lifesaving EpiPen drug was $100 for a two-pack of the injectors, after it raised the price to $608.

But in response to questions from The Wall Street Journal, Mylan said yesterday that the profit figure presented by Bresch included taxes, which the company did not clearly  convey to Congress.

The company substantially scaled down its calculation of EpiPen profits by applying the statutory US corporate tax rate of 37.5 per cent - five times Mylan's overall tax rate last year.

Lawmakers found it difficult to believe what Bresch told Congress.  The taxes were calculated after factoring in the 37.5-per cent US tax rate, according to a filing with the Securities and Exchange Commission first reported by The Wall Street Journal.

That tax rate was over five times the overall tax rate the company actually paid last year and much higher than its actual US tax rate, which tax specialists had pegged to almost zero.

Before taxes, the EpiPen profit was actually $160 for a two-pack. Bresch claimed at the hearing that the company sold about 4 million two-packs a year.

"It is intellectually dishonest to include tax provisions for US taxes that aren't due, and that the company does not in fact anticipate ever having to pay," The Washington Post quoted Edward Kleinbard, a professor of law and business at the University of Southern California's Gould School of Law.

The Washington Post had reported that Mylan had reduced its effective tax rate through an inversion by relocating its headquarters to the Netherlands. The company's overall tax rate was much lower that the US tax rate, at 7 per cent in 2015, according to a previous SEC filing.