It’s not time to leave America just yet, say two top U.S. drug company chief executive officers faced with their biggest domestic competitors fleeing abroad for more competitive business tax rates.

Merck & Co., the second-biggest maker of U.S. brand drugs, and Mylan Inc., the biggest U.S. generic-drugs company, don’t want leave if it can be helped, their CEOs said. Congress, though, needs to act and level the tax playing field with the rest of the world, said the increasingly frustrated executives.

“The loser in this is our country — no one seems to care about that,” Heather Bresch, CEO of Canonsburg, Pennsylvania-based Mylan said during an interview in New York. “It’s unfortunate that corporate America leaves because Congress couldn’t find it within themselves to make our country competitive.” Mylan is the biggest remaining U.S. drugmaker after Actavis Plc set up Irish residence while keeping its executive offices in New Jersey.

As competitors head to tax-friendly countries and cut their bills to the federal government, they typically keep their operations in the U.S. Their operations don’t change, though it gives them an edge in raising after-tax profits and more cash to use for deals to buy assets or pay dividends. Those left behind are at a competitive disadvantage in Wall Street’s eyes.

Before getting an Irish address, Actavis was Mylan’s biggest U.S.-based rival. Now New York-based Pfizer Inc., the biggest U.S. maker of brand drugs, has proposed a $106 billion takeover of London’s AstraZeneca Plc that would re-domicile the drugmaker in the U.K., making Merck the biggest remaining U.S. brand drugmaker. AstraZeneca has so far rejected the offer.

Merck’s View

The solution for Whitehouse Station, New Jersey-based Merck isn’t to leave, said CEO Ken Frazier. It’s to lower the U.S. corporate tax rate of 35 percent to be in line with the rest of the world, like the U.K.’s 21 percent.

“I continue to be optimistic, because we’re a rational country of rational people,” Frazier said in an interview in Boston. “People will see some companies -- not Merck -- seeking to be domiciled outside the United States.” He said lawmakers need to see that “the tax code is driving very strong U.S. companies to seek to be domiciled elsewhere.”

So far there’s been little progress. The law requires U.S.- based companies to pay taxes of 35 percent, no matter where the income is made. Other countries use what’s called a territorial tax system, where companies pay taxes where income is earned, not where they’re headquartered.

‘Even’ Field

“Merck has always paid its fair share of taxes and we’re proud of being an American company, but we’d like to compete on an even playing field with our European and Japanese competitors,” Frazier said.

On the other hand, the remaining American drugmakers aren’t sure they’ll like the reform they get. U.S. Senator Ron Wyden, the Oregon Democrat who heads the Senate’s tax committee, has proposed a bill to make it much more difficult for U.S. companies to use foreign mergers as a way to change legal residence.

“I’m torn by that,” Mylan’s Bresch said. “If everyone in my sector has left and Pfizer goes, and Congress wakes up and says, ’We better do something to stop it, now I’m penalized if I go, and yet they’re at a huge advantage for already leaving,” she said. “They’ve already let it go too far.”

Bresch has considered moving Mylan, though says that won’t be the main driver of any business deal the company does. Mylan in April proposed a merger with Swedish drugmaker Meda AB that might have been used as a way to move abroad.

Meda Rejection

“That could have potentially been a byproduct of that deal,” she said in the interview. Meda has rejected Mylan’s 43.8 billion kronor ($6.67 billion) proposal, and Bresch said the drugmaker is looking at other potential targets.

“Nothing’s ever dead until it’s dead,” she said. “There’s always a point where everything becomes too expensive, it’s all the art of the negotiation and we’ll certainly comment when it’s appropriate. But I try to stress that we’re looking at a lot of assets and feel confident we’ll execute on something before the year’s end.”

The irony is that Bresch and Mylan may be at a disadvantage, even then. The foreign companies that they might like to buy will be cheaper for their lower-tax rivals, like Actavis and Valeant Pharmaceuticals International Inc., said Bresch. “We’re the only ones left.”