Amgen 2011 Annual Report Download - page 57

Item 1A. RISK FACTORS
This report and other documents we file with the SEC contain forward-looking statements that are based on
current expectations, estimates, forecasts and projections about us, our future performance, our business or others
on our behalf, our beliefs and our management’s assumptions. These statements are not guarantees of future
performance and involve certain risks, uncertainties and assumptions that are difficult to predict. You should
carefully consider the risks and uncertainties facing our business. The risks described below are not the only ones
facing us. Our business is also subject to the risks that affect many other companies, such as employment
relations, general economic conditions, geopolitical events and international operations. Further, additional risks
not currently known to us or that we currently believe are immaterial may in the future materially and adversely
affect our business, operations, liquidity and stock price.
Our sales depend on coverage and reimbursement from third-party payers.
Sales of all of our principal products are dependent on the availability and extent of coverage and
reimbursement from third-party payers, including government healthcare programs and private insurance plans.
Governments and private payers may regulate prices, reimbursement levels and/or access to our products to
control costs or to affect levels of use of our products. We rely in large part on the reimbursement of our
principal products through government programs such as Medicare and Medicaid in the United States and similar
programs in foreign countries and a reduction in the coverage and/or reimbursement for our products could have
a material adverse effect on our product sales, business and results of operations.
In the United States, there is an increased focus by the federal government and others on analyzing the
impact of various regulatory programs on the federal deficit, which could result in increased pressure on federal
programs to reduce costs. For example, the Budget Control Act of 2011, signed into law in the United States in
August 2011, mandated a two percent reduction in government payments for all Medicare services (including the
administration of separately-billable drugs and payment for drugs in all Medicare programs) for federal fiscal
years 2013 through 2021, unless a subsequent deficit reduction law was passed before January 2012. As no
additional deficit reduction law was enacted by January 2012, the payment “sequestration” will likely start in
January 2013 and continue until December 2021. The sequestration remains subject to administrative
implementation of the Budget Control Act or future statutory revision by Congress, who could block, limit or
otherwise modify the automatic spending cuts. Several alternative deficit reduction proposals have been put forth
by President Obama and/or Congressional committees, including proposals designed to further limit federal
healthcare expenditures. While we cannot predict whether any deficit reduction actions will be approved by
Congress and/or whether a budget sequestration will ultimately occur for Medicare services, a reduction in the
availability or extent of reimbursement from U.S. government programs as a result of changes such as those that
have been proposed or from other changes designed to achieve similar federal budget savings could have a
material adverse effect on the sales of our products, our business and results of operations.
In March 2010 the United States adopted significant healthcare reform through the enactment of the
PPACA and the Healthcare and Education Reconciliation Act (See Item 1. Business — Reimbursement — U.S.
Healthcare Reform.) A major goal of the healthcare reform law is to provide greater access to healthcare
coverage for more Americans. Accordingly, the healthcare reform law requires individual U.S. citizens and legal
residents to maintain qualifying health coverage, imposes certain requirements on employers with respect to
offering health coverage to employees, amends insurance regulations regarding when coverage can be provided
and denied to individuals, and expands existing government healthcare coverage programs to more individuals in
more situations, with most of these changes going into effect by January 2014. We do not expect a significant
increase in sales of our products as a result of the 2014 expansions in healthcare coverage. While we cannot fully
predict the ultimate impact the healthcare reform law will have on us, or how the law may change due to
statutory revision or judicial review, we expect that the new law will continue to have a material adverse effect
on our business and results of operations.
Public and private insurers have pursued, and continue to pursue, aggressive cost containment initiatives,
including increased focus on comparing the effectiveness, benefits and costs of similar treatments, which could
result in lower reimbursement rates for our products. A substantial portion of our U.S. business relies on
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