Mylan Clarifies EpiPen Profit Figures it Provided to Congress Last Week

When Mylan NV's chief executive testified before a congressional committee last week about steep price increases on its lifesaving EpiPen drug, House members badgered her 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.

The committee members left unsatisfied. Now it appears they were right to seek clarity.

In response to questions from The Wall Street Journal, Mylan now says the $100 figure presented by CEO Heather Bresch included something the company didn't clearly convey to Congress—taxes. The company substantially reduced its calculation of EpiPen profits by applying the statutory U.S. tax rate of 37.5%.

Without the tax-related reduction, Mylan's profits on the EpiPen two-pack would be closer to $160, or 60% higher than the figure the company gave Congress. The company sells about 4.1 million EpiPen two-packs in the U.S., analysts said.

Mylan said it provided the House Government Oversight Committee early Monday morning more detailed figures on its EpiPen profits, clarifying that the numbers were after taxes. The company called the inclusion of taxes standard for a product-line profitability analysis like the one Congress asked for.

Mylan's explanation left some analysts scratching their heads.

The 37.5% tax rate Mylan applied to EpiPen "has nothing to do with reality," said Ryan Baum, an analyst with SSR Health LLC, a health care investment-research firm in Stamford, Conn., because the company didn't pay that much tax on the product. Mylan had a low 7.4% overall tax rate last year, he said, and a negative effective tax rate in the U.S. where the EpiPens were sold.

"That implies this notional ($100) profit figure also has nothing to do with reality," Mr. Baum said. He added that Mylan executives have the discretion to present financial figures any way they want, but "good behavior would be to document your figures in a more transparent manner."

Mylan said applying an overall effective tax rate wouldn't be correct, because that figure takes into account other countries' rates and companywide tax strategies. The company also said any lack of clarity wasn't intentional.

Write to Mark Maremont at [e-mail]

(END) Dow Jones Newswires

September 26, 2016 11:35 ET (15:35 GMT)

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