Less than a week past, Mylan CEO Heather Bresch spoke before the House Oversight Committee on Capitol Hill in Washington, where she defended the cost for EpiPens—infuriating unconvinced lawmakers for the company’s reason behind the more than 500 percent price increase since 2007.
According to AP: “[i]n almost four hours of questioning, the soft-spoken CEO at times seemed unsure, or declined to answer directly, when asked questions about the company’s finances and profits, angering lawmakers.”
“We never intended this,” said Bresch, referring to the price increase of the EpiPen. However, she insisted that her company doesn’t make a significant profit from each allergy shot and further added that the company has no plans to lower prices.
The list price of EpiPens is now reportedly at $608 for a two-pack, with Mylan reaping only $100 in profit. Or is it?
The Wall Street Journal asked Mylan follow up questions on Bresch’s profit figure, which included taxes. Not clearly conveyed to Congress, the company accordingly reduced its calculation if EpiPen profits “by applying the statutory U.S. corporate tax rate of 37.5%—five times Mylan’s overall tax rate last year.”
According to The Wall Street Journal: “[w]ithout the tax-related reduction, Mylan’s profits on the EpiPen two-pack were about 60% higher than the figure given to Congress, or $166, it said in a new regulatory filing to the Securities and Exchange Commission Monday.”
“Specifically, the company noted that it grosses $160 on the sale of each two-pack of the therapy, compared to the figure of $100 provided to the House Government Oversight Committee,” reported FirstWord Pharma.
Ars Technica sums the miscalculation up nicely:
It turns out that the $100 profit figure was calculated by applying a 37.5 percent tax rate, which the company likely doesn’t pay. And the post-tax product was actually incorrect—it should have been $104 per two pack. So, the real, pre-tax profit from an EpiPen two pack is $166, a 66 percent increase from what Bresch told Congress.
Under constant waves of criticism, Mylan has attempted to mollify lawmakers and the general public. During the hearing, Bresch introduced an identical generic version of the EpiPen, which is priced at $300 for a two-pack.