Amgen 2007 Annual Report Download - page 45

FDA Regulation of Manufacturing Standards. The FDA regulates and inspects equipment, facilities, labo-
ratories and processes used in the manufacturing and testing of products prior to providing approval to market a
product. If after receiving clearance from the FDA, we make a material change in manufacturing equipment,
location or process, additional regulatory review may be required. We also must adhere to current Good Manu-
facturing Practice (“GMP”) regulations and product-specific regulations enforced by the FDA through its
facilities inspection program. The FDA also conducts regular, periodic visits to re-inspect our equipment, facili-
ties, laboratories and processes following the initial approval. If, as a result of these inspections, the FDA
determines that our equipment, facilities, laboratories or processes do not comply with applicable FDA regu-
lations and conditions of product approval, the FDA may seek civil, criminal or administrative sanctions and/or
remedies against us, including the suspension of our manufacturing operations.
Approval and Post-Approval Regulation Ex-US. In the EU countries, Canada and Australia, regulatory re-
quirements and approval processes are similar in principle to those in the United States. Additionally, depending
on the type of drug for which approval is sought, there are currently several potential tracks for marketing appro-
val in the EU, including a centralized procedure. In the centralized procedure, a company submits a single
marketing authorization application to the EMEA who conducts a thorough evaluation, drawing from its scien-
tific resources across Europe. If the drug product is proven to fulfill the requirements for quality, safety and
efficacy, the CHMP adopts a positive opinion, which is transmitted to the European Commission for the market-
ing authorization to be granted. Although not all medicines have to undergo the centralized procedure, it is
required of products derived from biotechnology. After evaluation and marketing authorization, various parties,
including the national competent authorities, the EMEA, the European Commission and the marketing author-
ization holders share responsibilities for the detection, assessment and prevention of adverse effects and other
medicine-related problems in a process known as pharmacovigilance. This process includes the collection of ad-
verse drug reaction reports as part of the follow-up on any side effects of a product, and upon assessment, the
authorities can decide to demand that the product labels be updated with safety data or warnings, that safety data
or warnings be provided to healthcare professionals, or recommend the temporary suspension or complete with-
drawal of a product from the market.
Other. We are also subject to various federal and state laws, as well as foreign laws, pertaining to healthcare
“fraud and abuse,” including anti-kickback laws and false claims laws. Anti-kickback laws make it illegal to solicit, of-
fer, receive or pay any remuneration in exchange for, or to induce, the referral of business, including the purchase or
prescription of a particular drug that is reimbursed by a state or federal program. The federal government has published
regulations that identify “safe harbors” or exemptions for certain arrangements that do not violate the anti-kickback
statute. We seek to comply with the safe harbors where possible. Due to the breadth of the statutory provisions and the
absence of guidance in the form of regulations or court decisions addressing some of our practices, it is possible that
our practices might be challenged under anti-kickback or similar laws. False claims laws prohibit anyone from know-
ingly and willingly presenting, or causing to be presented for payment to third-party payers (including Medicare and
Medicaid), claims for reimbursed drugs or services that are false or fraudulent, claims for items or services not pro-
vided as claimed or claims for medically unnecessary items or services. Our activities relating to the sale and
marketing of our products may be subject to scrutiny under these laws. Violations of fraud and abuse laws may be
punishable by criminal and/or civil sanctions, including fines and civil monetary penalties, as well as the possibility of
exclusion from federal healthcare programs (including Medicare and Medicaid). If the government were to allege
against or convict us of violating these laws, there could be a material adverse effect on us, including our stock price.
Our activities could be subject to challenge for the reasons discussed above and due to the broad scope of these laws
and the increasing attention being given to them by law enforcement authorities.
Since 1991, we have participated in the Medicaid rebate program established in Section 1927 of the Social
Security Act by the Omnibus Budget Reconciliation Act of 1990 and subsequent amendments of that law. Re-
lated to our participation in this program is a requirement that we extend comparable discounts under the Public
Health Service (“PHS”) pharmaceutical pricing program. Under the Medicaid rebate program, we pay a rebate
for each unit of our product reimbursed by Medicaid. The amount of the rebate for each of our products is set by
law as a minimum 15.1% of the Average Manufacturer Price (“AMP”) of that product, or if it is greater, the dif-
ference between AMP and the best price available from us to any non-exempt customer. The rebate amount also
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