The post-hearing dead cat bounce in Mylan stock is over. The “blood in the streets” buyers are in trouble as the stock is tumbling following WSJ reports that Mylan is admitting its pre-tax profits for EpiPen are actually 60% higher than they told Congress.
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.
And the stock is slipping…
It seems congress had a hunch that something was up… (as Reuters reported 2 weeks ago)
The chairman of the U.S. Senate Judiciary Committee probing Mylan NV’s EpiPen price hike on Friday said its response to his query was “incomplete,” and called on the drugmaker to give more details over how much government health insurance programs pay for the allergy treatment.
“It’s an incomplete response and wouldn’t satisfy my constituents who are upset about the EpiPen price increases. It doesn’t provide the full picture that I requested, and it doesn’t answer all of my questions,” U.S. Senator Chuck Grassley said in a statement. He added that it is still unclear how many patients will benefit from Mylan’s expanded assistance programme.
But then again in this consequence-less world, what difference does it make?
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