Last week, when the CEO of drugmaker Mylan was testifying before Congress, Rep. Jason Chafee of Utah spoke for the American people when he wondered whether the company actually earns only $52 profit per pen when the retail list price is $608 each. The company has now clarified its answer: that $104 per two-pack figure is Mylan’s profit after taxes. Before taxes, the profit is $88 per pen, or $166 per two-pack.
Only that figure doesn’t make a whole lot of sense, either. The Wall Street Journal looked over the revised figures, and noted that it’s not really accurate to take taxes off the top of Mylan’s EpiPen income in that way.
The $52 figure applies the maximum 37.5% corporate income tax rate to EpiPen earnings, while the company as a whole only paid 7.4% in taxes. It’s incorporated in the Netherlands for tax reasons, and in the United States, paid less in taxes than it received back from the government. So why include that tax rate when providing the amount in profits that the company earns per pen, if not to make the numbers look better?
Mylan’s profts in the United States have increased since the company acquired the EpiPen drug and delivery device in 2007: it earned $71 million in 2008, and $671 in 2016. During that time, the amount of EpiPens sold didn’t increase significantly, but their sticker price did.
One problem with figuring out how much a company earns from a drug is that pricing is opaque and depends on which combination of insurance, pharmacy, and copay assistance or coupon programs that particular patient used. It’s difficult to say how much a pen “sells for,” since one customer may pay $10 out of pocket for the devices, and another may have to pay over $1,200.
What we do know, however, is that Mylan’s profit per pen isn’t fifty bucks.
Mylan’s EpiPen Pretax Profits 60% Higher Than Number Told to Congress [Wall Street Journal]
by Laura Northrup via Consumerist