Amgen 2009 Annual Report Download - page 33

Enbrel®Reimbursement. The majority of prescription claims for ENBREL are paid through private in-
surance companies. Under Medicare, ENBREL is reimbursed through the Part D program, although less then
10% of all ENBREL U.S. prescriptions are reimbursed by Medicare.
Healthcare Reform. Healthcare reform, focused on expanding healthcare coverage to millions of uninsured
Americans and reducing the rate of increase in the costs of healthcare, remains a priority for President Obama,
U.S. Congress and a number of states. Developments in this area have been highly dynamic and difficult to pre-
dict. As recently as February 23, 2010, President Obama released a new proposal for healthcare reform which
includes a combination of provisions from both the Senate and House of Representatives bills passed in late
2009. Certain healthcare reform proposals being considered, which may or may not be adopted into law, could:
• restrict the coverage and reimbursement of our products by Medicare, Medicaid and other government
programs
• reduce the number of years of data exclusivity for innovative biological products potentially leading to
earlier biosimilar competition and/or
• require additional healthcare reform costs to be borne by pharmaceutical and biotechnology companies.
At this time, we cannot predict which or whether any reform measures will be adopted into law.
Reimbursement Outside the United States
Generally, in Europe and other countries outside the United States, the government-sponsored healthcare sys-
tem has traditionally been the primary payer for all healthcare costs, including payment for drugs and biologicals.
Over the past several years, the reimbursement environment in Europe has become very challenging, with the
advent of Health Technology Assessment (“HTA”) organizations (e.g., National Institute for Health and Clinical
Excellence (“NICE”) in the United Kingdom) that make recommendations and/or determinations of coverage and
reimbursement based upon both the clinical as well as the economic value of a product. Although the methods
employed by different HTA agencies differ from country to country, the use of formal economic metrics has
been increasing across Europe as well as in several emerging markets throughout the world.
With increased budgetary constraints, payers in many countries employ a variety of measures to exert down-
ward price pressure. In some countries, international price referencing is the primary mechanism for price control
in which the ceiling price of a pharmaceutical or biological product is set based to the price in particular bench-
mark countries. These price referencing rules are increasing in complexity as prices are more transparent and
payers seek lower-price benchmarks against which to compare themselves. Additional cost-containment meas-
ures can include therapeutic reference pricing, including setting the reimbursement rate for a given class of
agents at the lowest price within the class, generic substitution and government-mandated price cuts. In many
countries, the influence of regional and hospital payers also contributes to whether patients have access to certain
products. For example, a product may be successfully listed on a national formulary, but may also be subject to
further evaluations or competitive bidding by payers at a regional or hospital level. Finally, payers in some coun-
tries are beginning to experiment with alternative pricing mechanisms (e.g., payment caps) that facilitate greater
predictability of payer budgets and require manufacturers to assume some financial risk.
Manufacturing, Distribution and Raw Materials
Manufacturing
Biotechnology products, which are produced in living systems, are inherently complex due to naturally-
occurring molecular variations. Highly specialized knowledge and extensive process and product characterization
are required to transform laboratory scale processes into reproducible commercial manufacturing processes. Our
manufacturing operations consist of bulk manufacturing, formulation, fill and finish and distribution activities for
Aranesp®, Epoetin alfa, Neulasta®, NEUPOGEN®, ENBREL, Vectibix®, Nplate®and other products and prod-
uct candidates, including denosumab, for both commercial and clinical purposes. Bulk manufacturing includes
fermentation and cell culture, which are the processes by which our proteins are produced. The proteins are puri-
fied to a high quality and then formulated into a stable form. The fill process dispenses the formulated bulk
protein into vials or syringes. Finally, in the finish process, our products are packaged for distribution.
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