Amgen 2012 Annual Report Download - page 44

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list has included the category of thrombopoiesis stimulating agents (platelet growth factors), the category of drugs that includes
Nplate®.
In the dialysis setting, the reimbursement rates for our products are also subject to downward pressure. In the United States,
dialysis providers are reimbursed for EPOGEN® primarily by the federal government through Medicare's ESRD Program. (See
Item 1. Business — Reimbursement — Reimbursement of Our Principal Products — Dialysis Reimbursement.) Until January 1,
2011, Medicare reimbursed for separately billable dialysis drugs (including Aranesp® and EPOGEN®) administered in both
freestanding and hospital-based dialysis centers at ASP +6%, using the same ASP payment amount methodology used in the
physician clinic setting under Part B. On January 1, 2011, CMS's bundled-payment system went into effect for dialysis providers
which provides a single payment for all dialysis services including drugs, supplies, and non-routine laboratory tests that were
previously reimbursed separately. On November 1, 2011, following our June 2011 announcement of changes to the labels for the
use of ESAs in patients with CKD (See Item 1. Business — Marketed Products — ESAs), CMS finalized a rule to update various
provisions of its bundled-payment system for dialysis services and the related ESRD QIP. The final rule eliminated for payment
year 2013 and beyond one of the QIP's measures which tracks the percent of a provider's Medicare patients with an Hb level below
10 g/dL. (See Item 1. Business — Reimbursement - Reimbursement of Our Principal Products — Dialysis Reimbursement.) CMS
indicated that removal of this quality measure from the QIP was being done in response to the June 2011 ESA label changes. We
believe that the implementation of these various changes in the dialysis setting has resulted and may continue to result in a material
adverse impact on the reimbursement, use and sales of EPOGEN® and on our business and results of operations. Under the ATRA
enacted in January 2013, CMS was directed to reduce the ESRD payment bundle amount effective January 1, 2014 to account for
changes in the utilization of drugs and biologics (including Aranesp® and EPOGEN®) since the bundle was first implemented in
2011. Oral drugs without intravenous equivalents, such as Sensipar® and phosphate binders, will continue to be reimbursed
separately under the Medicare Part D benefit until they are included in the bundled-payment system in 2016. However, efforts are
underway to get Congress to repeal the provision of the ATRA that postponed the entry of these oral-only drugs into the bundled-
payment system; if such efforts are successful, these oral drugs could enter into the bundled-payment system before 2016. Inclusion
in the bundled-payment system may reduce utilization of these oral drugs and have an adverse impact on our sales.
The government-sponsored healthcare systems in Europe and many other foreign countries are the primary payers for
healthcare expenditures, including payment for drugs and biologics, in those regions. Mandatory price controls continue to be a
significant aspect of business for the pharmaceutical and biotechnology industries outside the United States. Healthcare reform
and related legislative proposals in France, Germany and Poland, as well as austerity plans in a number of countries, including
Spain, Italy, Greece, Ireland and Portugal, have targeted the pharmaceutical sector with multiple mechanisms to reduce government
healthcare expenditures. We expect that countries will continue to take aggressive actions to reduce expenditures on drugs and
biologics, including mandatory price reductions, clawbacks of payments made to companies when drug spending thresholds are
exceeded, preferences for biosimilars, changes in international price referencing, price transparency to achieve prices similar to
those in lower-priced countries, and reductions in the amount of reimbursement, sometimes with the imposition of patient
copayments. Similarly, fiscal constraints may also impact the extent to which countries are willing to reward new innovative
therapies and/or allow access to new technologies or the speed with which they make approval or reimbursement decisions. The
proliferation of HTA organizations (e.g., NICE in the UK and IQWiG in Germany) has led to determinations of coverage and
reimbursement based on both the clinical as well as the economic value of a product; these agencies are also increasingly setting
the maximum price at which products will be reimbursed. While we cannot fully predict the extent of further price reductions and/
or reimbursement restrictions taken by governmental payers outside the United States or the impact such actions will have on our
business, such reductions in price and/or the coverage and reimbursement for our products could have a material adverse effect
on the sales of our products, our business and results of operations.
Additional initiatives addressing the coverage or reimbursement of our products could result in less extensive coverage or
lower reimbursement, which could negatively affect sales of our products. If, for any of these or other reasons, reimbursement
rates are reduced, or if healthcare providers anticipate reimbursement being reduced, providers may narrow the circumstances in
which they prescribe or administer our products, which could reduce the use and/or sales of our products. A reduction in the use
and sales of our products could have a material adverse effect on our business and results of operations.
Our current products and products in development cannot be sold if we do not maintain or gain regulatory approval.
Our business is subject to extensive regulation by numerous state and federal governmental authorities in the United States,
including the FDA, and by foreign regulatory authorities, including the EMA. We are required in the United States and in foreign
countries to obtain approval from regulatory authorities before we can manufacture, market and sell our products. Once approved,
the FDA and other U.S. and foreign regulatory agencies have substantial authority to require additional testing, perform inspections,
change product labeling or mandate withdrawals of our products. Also, legislative bodies or regulatory agencies could enact new
laws or regulations or change existing laws or regulations at any time, which could affect our ability to obtain or maintain approval
of our products. For example, the 2007 creation of the Food and Drug Administration Amendments Act of 2007 (FDAAA)