American firms regularly seek to minimize their tax liabilities through any and all available means. But Mylan Pharmaceuticals, maker of the popular life-saving EpiPen device (and recent biopharma black sheep for its massive price hikes on said device), has taken a particularly unusual tax-cutting approach, according to a Reuters investigation: investments in coal refining firms which ultimately earn the drug maker massive tax credits.
“Since 2011, Mylan has bought 99 percent stakes in five companies across the U.S. That own plants which process coal to reduce smog-causing emissions. It then sells the coal at a loss to power plants to generate the real benefit for the drug company: credits that allow Mylan to lower its own tax bill,” writes Reuters.
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Just how much have these investments saved Mylan? Something to the tune of more than $100 million, according to the wire service. That’s more than a quarter of its 2016 tax benefit.
None of this is remotely illegal. The coal-refining tax credits were approved by Congress and, seeing as the energy industry is completely orthogonal to Mylan’s business, there’s no reason the company can’t snatch up stakes in this business arena. It’s simply capitalizing on existing tax relief laws and some creative accounting metrics to lower its financial burden.
Mylan CEO Heather Bresch does, however, does have some close connections to coal country. Her father, Joe Manchin, is a Democratic U.S. Senator from West Virginia, the second biggest coal producing state in the country. Manchin has consistently said that he doesn’t discuss business operations with his daughter over the course of the EpiPen pricing scandal.
