Amgen 2009 Annual Report Download - page 41

Approval and Post-Approval Regulation Outside the United States. In the EU countries, Switzerland, Cana-
da and Australia, regulatory requirements 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 two potential
tracks for marketing approval in the EU, including a centralized procedure. The specific requirements of each
track differ depending upon the type of drug being reviewed. In the centralized procedure, a company submits a
single marketing authorization application to the EMA who conducts a thorough evaluation, drawing from its
scientific 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 final appro-
val of the marketing authorization. While the European Commission generally follows the CHMP’s opinion, it is
not bound to do so. Although not all medicines have to undergo the centralized procedure, it is required of prod-
ucts derived from biotechnology. After evaluation and marketing authorization, various parties, including the
national competent authorities, the EMA, the European Commission and the marketing authorization holders
share responsibilities for the detection, assessment and prevention of adverse effects and other medicine-related
problems in a process known as pharmacovigilance. Healthcare professionals and patients are also encouraged to
report adverse effects and other medicine-related problems. This process includes the collection of adverse 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 withdrawal of a prod-
uct 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,
offer, 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 and the
states have 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 wherever 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 knowingly 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 provided as claimed or claims for medically unnecessary items or serv-
ices. 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 was to allege against or convict us of violating these laws or we entered into a set-
tlement with the government, there could be a material adverse effect on our business, 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 drug 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.
Related to our participation in this program is a requirement that we extend comparable discounts under the Pub-
lic Health Service (“PHS”) drug pricing program. Under the Medicaid drug 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 currently
set by law as a minimum 15.1% of the Average Manufacturer Price (“AMP”) of that product, or if it is greater,
the difference between AMP and the best price available from us to any non-exempt customer. The rebate
amount also includes an inflation adjustment if AMP increases faster than inflation. The PHS pricing program
requires that we extend discounts comparable to the Medicaid rebate to a variety of community health clinics and
other entities that receive health services grants from the PHS, as well as hospitals that serve a disproportionate
share of Medicare and Medicaid beneficiaries. The rebate amount is determined for each quarter based on our
reports to CMS of the quarter’s AMP and best price for each of our products. The terms of our participation in
the Medicaid drug rebate program impose an obligation to correct the prices reported in previous quarters, as
may be necessary. Any such corrections could result in an overage or underage in our rebate liability for past
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