Amgen 2010 Annual Report Download - page 71

In recent years, policymakers have proposed reforming U.S. patent laws and regulations. For example, patent
reform legislation was introduced in both the House and the Senate during the 111th Congress in 2009 but was not
adopted into law. Legislation was again introduced in the Senate and passed the Senate Judiciary Committee on
February 3, 2011. In general, the proposed legislation attempts to address issues surrounding the increase in patent
litigation by, among other things, establishing new procedures for challenging patents. While we cannot predict
what form any new patent reform laws or regulations may ultimately take, final legislation could introduce new
substantive rules and procedures for challenging patents, and certain reforms that make it easier for competitors to
challenge our patents could have a material adverse effect on our business.
Our business may be affected by litigation and government investigations.
We and certain of our subsidiaries are involved in legal proceedings. (See Note 19, Contingencies and
commitments in the notes to our consolidated financial statements in our annual report.) Civil and criminal
litigation is inherently unpredictable, and the outcome can result in excessive verdicts, fines, penalties, exclusion
from the federal healthcare programs and/or injunctive relief that affect how we operate our business. Defense of
litigation claims can be expensive, time-consuming and distracting and it is possible that we could incur judgments
or enter into settlements of claims for monetary damages or change the way we operate our business, which could
have a material adverse effect on our results of operations, financial position or cash flows. In addition, product
liability is a major risk in testing and marketing biotechnology and pharmaceutical products. We may face
substantial product liability exposure in human clinical trials and for products that we sell after regulatory approval.
Product liability claims, regardless of their merits, could be costly and divert management’s attention, and adversely
affect our reputation and the demand for our products. Amgen and Immunex have previously been named as
defendants in product liability actions for certain of our products.
We are also involved in government investigations that arise in the ordinary course of our business. We have
received subpoenas from a number of government entities, including the U.S. Attorney’s Offices for the Eastern
District of New York and the Western District of Washington, as well as the Attorneys General of New York and
New Jersey. The federal subpoenas have been issued pursuant to the Health Insurance Portability and Account-
ability Act of 1996 (18 U.S.C. 3486), and by a federal grand jury, while the Attorneys General subpoenas have been
issued pursuant to state specific statutes relating to consumer fraud laws and state false claims acts. The government
is allowed to use materials produced in response to a section 3486 administrative subpoena in both criminal and civil
investigations. In general, the subpoenas request documents relating to the sales and marketing of our products, and
our collection and dissemination of information reflecting clinical research as to the safety and efficacy of our
ESAs. Based on representations in a U.S. government filing, that became public in May 2009 relating to the
Massachusetts Qui Tam Action, we now believe the subpoenas we received from the U.S. Attorney’s Offices for the
Eastern District of New York and the Western District of Washington also relate to nine additional Qui Tam Actions
which are purportedly pending against Amgen, including eight pending in the U.S. District Court for the Eastern
District of New York and one pending in the U.S. District Court for the Western District of Washington. The
U.S. government filing further alleges that a large number of states are involved in the Qui Tam investigations, led
by the State of New York. These investigations are represented to be joint criminal and civil investigations.
Throughout these investigations, and in litigation, the government entities are asserting that we violated
various state and federal laws. These investigations are very burdensome, expensive and time-consuming for us to
explain and defend to these entities. Although we cannot predict whether additional proceedings may be initiated
against us, or predict when these matters may be resolved, it is not unusual for investigations such as these to
continue for a considerable period of time and to require management’s attention and significant legal expense. A
determination that we are in violation of the various federal and state laws that govern the sales and marketing of our
products could result in federal criminal liability and/or federal or state civil or administrative liability, and thus
could result in substantial financial damages or criminal penalties and possible exclusion from future participation
in the Medicare and Medicaid programs. In addition, we may see new governmental investigations of or actions
against us citing novel theories of recovery. Any of these results could have a material adverse effect on our results
of operations, financial position or cash flows in the period in which such liabilities are incurred.
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