Mylan (MYL) CEO Bresch Will Have to Explain EpiPen Profits, WSJ's Baker Says - TheStreet

NEW YORK (TheStreet) -- Mylan (MYL) - Get Report CEO Heather Bresch is going to have to answer for why she included a tax-related reduction in the company's profit estimate from EpiPens in a hearing with Congress last week, the Wall Street Journal's Editor-in-Chief Gerry Baker said on Fox Business' "Mornings with Maria Bartiromo" on Tuesday.

Bresh told Congress that the pharma company's EpiPen 2-Pak only brought in $100 in profits, even though the list price was $608. But Mylan's SEC filing revealed that she was accounting for a 37.5% U.S. tax rate and the profits were closer to $166, the Journal reported on Monday. 

"There clearly was a gap between what she told Congress just very recently and what we've been able to discover," Baker said. 

"What consequences should Heather Bresch face now for misstating the profits in front of Congress?" Fox Business' Maria Bartiromo asked Baker. 

"We will see. Of course the question is whether or not she will correct the record or whether she will be called back before Congress," he answered. 

Mylan's dramatic price hike on EpiPens since 2007 is just one example of drug companies hiking prices on drugs that people need in order to stay healthy, Baker pointed out. Democratic presidential candidate Hillary Clinton has made this a "central issue" in her campaign and it "resonates" with a lot of people, meaning Bresch will probably have to answer for this claim, he said. 

"She's clearly going to have to answer again for what seems to have been information that was at least, at minimum, we can say was mistaken when she spoke," Baker concluded. 

Mylan sent the following statement to The Street on Tuesday morning: 

"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. 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. Just as we did not use a blended global tax rate, we also did not allocate corporate expenses associated with running the business, which would have further reduced its profitability. We believe it is most appropriate, and conservative, to focus entirely on EpiPen® Auto-Injector specific costs and associated taxes."

Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

TheStreet Ratings team rates Mylan as a Buy with a ratings score of B-. This is driven by multiple strengths, which the team believes should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks the team covers.

You can view the full analysis from the report here: MYL

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