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Mylan Understated Its Profit Margin: Included Taxes When Giving Figures to Congress

Mylan included taxes in the profit margin it claimed on Capital Hill last week, but its actual pretax profits are 60 percent higher than stated.
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Mylan said on Monday the auto-injector EpiPen's pretax profits were 60 percent higher than it told Congress, according to sources close to the matter.

Without a tax-related reduction, the pharmaceutical company's profits on the EpiPen two-pack would be about $160, higher than the $100 figure the company gave Congress. The company said any lack of clarity was not intentional.

"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," Mylan said in a statement.

The company added, "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."

Related: Lawmakers Accuse Mylan of 'Rope-a-Doping' on EpiPen Prices

Shares of Mylan dropped more than 1 percent in intraday trading Monday after the news.

Last week, Mylan CEO Heather Bresch testified before a congressional committee about steep price increases on the lifesaving anti-allergic-reaction drug.

House members asked Bresch to provide more evidence for the company's claim that its profits were just $100 for a two-pack of the injectors, despite a $608 list price, according to Dow Jones.

In August, Mylan was scrutinized after consumers saw a five-fold price increase for the EpiPen since 2008.