
Mylan's EpiPen profit was 60% higher than what the CEO told Congress - phonon
http://www.latimes.com/business/la-fi-mylan-epipen-profit-20160926-snap-story.html
======
helloworld
_The profit CEO Heather Bresch told Congress about was calculated after
factoring in the 37.5% U.S. tax rate, according to a filing with the
Securities and Exchange Commission first reported by the Wall Street Journal.
That tax rate is more than five times the overall tax rate the company
actually paid last year and is much higher than its actual U.S. tax rate,
which tax specialists have pegged at close to zero._

Is Bresch now at risk of prosecution for making false or misleading statements
in her Congressional testimony?[1]

[1] [http://www.cnbc.com/2016/07/07/what-happens-if-you-lie-to-
co...](http://www.cnbc.com/2016/07/07/what-happens-if-you-lie-to-
congress.html)

~~~
MrZongle2
I wouldn't hold my breath. Bresch is the daughter of a senator.

America's Ruling Class is held to a different standard than you or I.

~~~
mevile
On the contrary, the FBI would love to prosecute a senator or their family.

~~~
errantspark
Can you back this claim up with some evidence?

~~~
cafard
I suspect a hint at the Clintons. I have no evidence for the hint or the
desire.

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j2kun
Why does everyone (including the director of the NSA) get away with lying to
Congress?

~~~
bitJericho
Because America is completely corrupt.

~~~
RodericDay
I wish people who downvoted you gave an explanation. I don't understand how
this statement is controversial.

edit: The pedantry below is incredible. I hope you guys are at least
consistent in it.

~~~
rayiner
Because "completely corrupt" is hyperbole. If the U.S. government is
"completely corrupt," what do you call the government of places like India or
Bangladesh where you have to bribe a police officer to be allowed to pay a
ticket?

~~~
bitJericho
Every section of government I've had the pleasure of dealing with is corrupt.
Every branch, every service. Frankly, I think the entire American system is
corrupt. Ergo, completely corrupt.

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rayiner
The Wall Street Journal article has substantially more details about what
happened and how the numbers were calculated:
[http://www.wsj.com/articles/mylan-clarifies-epipen-profit-
fi...](http://www.wsj.com/articles/mylan-clarifies-epipen-profit-figures-it-
provided-to-congress-last-week-1474902801).

------
asdfologist
_" It also is important to note that use of a statutory tax rate for the
jurisdiction being analyzed (in this instance, the U.S.) is standard."_

Is this true?

~~~
zippy
"The amount we don't pay justifies the amount a consumer does pay"

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Normal_gaussian
So do they pay tax on those units sold in the US?

~~~
charlesdm
They pay tax on the profit left, after all expenses have been deducted. Given
there's a myriad of "loopholes" one can use (i.e. earning stripping through
loans, certain consulting or production fees that flow to lower tax foreign
entities, etc), that's probably not much.

~~~
gnicholas
The largest line-item is likely IP licensing or co-development fees. The US
entity will pay large licensing fees to foreign entities for the right to sell
EpiPens in the US. Despite being located elsewhere, the foreign entity will
own these rights. As pointed out elsewhere, these "earnings stripping"
techniques can substantially reduce the income of the domestic affiliate. It
has to maintain "routine returns" for its contributions, but this is nothing
compared to the IP profits that flow elsewhere. There are laws explicitly
blessing these sort of arrangements (IRC § 482), but the IRS and corporate
taxpayers argue endlessly about precisely how much value should flow where.

------
gizmo
The LA Times article didn't refer to CEO Bresch's testimony, so I'm including
the relevant pieces here. Apologies for all caps, I'm copying as-is. Rep
Coleman asking questions to Bresch.

[https://www.c-span.org/video/?415549-1/mylan-inc-ceo-
heather...](https://www.c-span.org/video/?415549-1/mylan-inc-ceo-heather-
bresch-testifies-epipen-price-increases)

WE KNOW YOU PROFITED FROM INCREASING THE PRICE OF EPIPEN. HE OF -- THE COMPANY
HAS ALSO INCREASED PROFITS BY TAKING ADVANTAGE OF THE TAX LOOPHOLE. THE TEXAN
VERSION WHICH INVOLVES A COMPANY MOVING ITS OFFICIAL HEADQUARTERS ABROAD TO A
LOWER -- TO LOWER THE TAXES PAID. IN 2014, MYLAN MOVED TO THE NETHERLANDS.

>> THAT IS TRUE.

YOU WRITE TO SHAREHOLDERS ABOUT THE TEXAN VERSION AND I QUOTE, THE TRANSACTION
ALSO IS EXPECTED TO LOWER MY LINK TAX RATE -- MYLAN'S TAX RATE. LOWER TO 20-20
1% IN THE FIRST FULL YEAR AFTER THE CONSUMMATION OF THE TRANSACTION. WHAT WAS
THE COMPANYWIDE EXPECTED TAX RATE IN 2014?

>> I BELIEVE IT WAS IN THE MID-20'S BEFORE WE INVERTED.

WHAT IS IT TODAY?

>> BETWEEN 15-17%

...

DO YOU THINK IT IS FAIR THAT YOU DON'T HAVE TO PAY THE TAXES AS A U.S.
COMPANY?

>> WE DO PAY TAXES HERE IN THE UNITED STATES FOR ALL OF THE SALES AND REVENUE
THAT WE RECEIVE IN THE UNITED STATES. WE ARE PAYING OUR TAXES. FOR EVERYTHING
WE SELL.

...

DID YOU LOWER THE COST OF THE EPIPEN EXPENSE THEY WOULD BE SAVING BY THIS
MOVE?

>> 15-17% IS OUR GLOBAL TAX RATE. THAT IS AFTER AVERAGING EVERYTHING UP. IN
THE UNITED STATES, WE ARE PAYING HIGHER TAXES ON EVERYTHING THAT WE SELL.

I can only conclude her testimony is directly contradicted by the LA times
article.

~~~
vijayk
I believe "Texan Version" should be "Tax Inversion" :)

~~~
gizmo
Stenography is wickedly hard. All is forgiven.

