Sen. Manchin’s Daughter Downplays Profit Per EpiPen 66% In Congressional Hearing
Sen. Joe Manchin’s daughter and Mylan CEO Heather Bresch downplayed the profit margin per EpiPen by 66 percent at a congressional committee last week.
In front of the House Committee on Oversight and the American public, Bresch said the company made just $50 dollars per epinephrine injection device. That makes the profit for the two-pack of EpiPen just $100, despite the fact that the price to consumer is over $600. The price of the epinephrine inside the EpiPen is $1. (RELATED: One Fire Department EMT Has Already Outsmarted The Cost Of EpiPens)
Profit margins in the pharmaceutical industry are incredibly high, at least in recent years. Pfizer reported a 42 percent profit margin in 2013, and the industry averaged around an 18 percent profit margin that same year. In contrast, the average profit margin in the oil and natural gas industry was under 10 percent.
Bresch’s profit estimate given before Congress reportedly included a tax-related reduction.
Mylan said it calculated EpiPen profits by applying the U.S. corporate tax rate of 37.5 percent, a figure some five times higher than the effective tax rate the company paid overall in 2015, according to The Wall Street Journal.
By applying this tax rate, Mylan could receive an effective tax reduction. If you take out this tax reduction, Mylan’s reported profit on a two-pack of EpiPens is over 60 percent higher at $166, the Journal reports.
Mylan told the Daily Caller News Foundation that: “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.”
When Mylan acquired the device in 2007, the cost of the drug to consumers was just $56.64, according to CBS News. By 2015, the price spiked to $317.82.
In the first two years (2008 and 2009), the price rose 5 percent a year. At the end of 2009, it hiked 19 percent. For the next three years, the price rose at a steady rate of 10 percent a year, reports CBS News. EpiPen’s profit margins were 55 percent in 2014, up substantially from 9 percent in 2009, according to Bloomberg. EpiPen’s now account for around 40 percent of Mylan’s operating profit.
The full profitability analysis that Mylan released to Congress can be found here.
Update: This post has been updated to include statements Mylan has since released.
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