Amgen 2010 Annual Report Download - page 34

below. Certain information with respect to these distributors for the years ended December 31, 2010, 2009 and 2008
is as follows (dollar amounts in millions):
2010 2009 2008
AmerisourceBergen Corporation:
Gross product sales .............................................. $7,678 $7,179 $7,099
% of total gross revenues .......................................... 38% 37% 37%
% of U.S. gross product sales ...................................... 47% 46% 46%
McKesson Corporation:
Gross product sales .............................................. $3,913 $3,694 $3,594
% of total gross revenues .......................................... 19% 19% 19%
% of U.S. gross product sales ...................................... 24% 24% 23%
Cardinal Health, Inc.:
Gross product sales .............................................. $2,813 $2,841 $2,823
% of total gross revenues .......................................... 14% 15% 15%
% of U.S. gross product sales ...................................... 17% 18% 18%
Reimbursement
Sales of all of our principal products are dependent in large part on the availability and extent of coverage and
reimbursement from third-party payers, including government and private insurance plans. Most patients receiving
our products are covered by government healthcare programs or private insurers. Governments may regulate
coverage, reimbursement and/or pricing of our products to control costs or to affect levels of use of our products,
and private insurers may adopt or be influenced by government coverage and reimbursement methodologies.
Worldwide use of our products may be affected by cost containment pressures and cost shifting from governments
and private insurers to healthcare providers or patients in response to ongoing initiatives to reduce or reallocate
healthcare expenditures. An increasing worldwide focus on patient access controls and cost containment by public
and private insurers has resulted, and may continue to result, in reduced reimbursement rates for our products. In
addition, recent healthcare reform efforts enacted in the United States have made substantial long-term changes to
the reimbursement of our products, and those changes have had, and are expected to continue to have, a significant
impact on our business.
U.S. Reimbursement System
Our principal products are sold primarily in the United States and healthcare providers, including doctors,
hospitals and other healthcare professionals and providers, are reimbursed for their services by the government
through Medicare, Medicaid and other government healthcare programs as well as through private payers.
Government healthcare programs are funded primarily through the payment of taxes by individuals and businesses.
The public and private components of this multi-payer system are described below.
Medicare and Other Forms of Public Health Insurance
Medicare is a federal program administered by the federal government that covers individuals age 65 and over
as well as those with certain disabilities and end stage renal disease (“ESRD”), regardless of their age. The primary
Medicare programs that affect reimbursement for our products are Medicare Part B, which covers physician
services and outpatient care, and Medicare Part D, which provides a voluntary outpatient prescription drug benefit.
CMS is the federal agency responsible for administering Medicare (as well as Medicaid, described below) and,
among its responsibilities, has authority to issue Medicare NCDs which are national policy statements granting,
limiting or excluding Medicare coverage for specific medical items or services. In addition, CMS has authority to
issue manual policy issuances and updates as well as reimbursement codes for drugs and other items, which
determine how products and services are reimbursed. Medicare Administrative Contractors have authority to issue
local coverage determinations. CMS sometimes uses advisory committees of external experts in order to obtain
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