Risk Factors - AMGN

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$AMGN Risk Factor changes from 00/02/09/23/2023 to 00/02/14/25/2025

Item 1A. Risk Factors—Our products face substantial competition and our product candidates are also likely to face substantial competition and Item 1A. Risk Factors—We currently face competition from biosimilars and generics and expect to face increasing competition from biosimilars and generics in the future.8The following table reflects our significant competitors for our principal products and is not exhaustive.8The following table reflects our significant competitors and is not exhaustive. (1)Approved biosimilars available for Prolia and XGEVA in Asia Pacific only. Other biosimilars under regulatory review in the United States, Europe and Asia Pacific.(2)Approved biosimilars for HUMIRA available.(3)A subsidiary of Johnson & Johnson.9(4)A subsidiary of Bristol-Myers Squibb Company.(5)A subsidiary of Bristol Myers Squibb Company. (5)REVLIMID also includes generics.(6)A subsidiary of Takeda Pharmaceutical Co.(4)A subsidiary of Takeda Pharmaceutical Company Limited. , Ltd.(7)PROCRIT competes with Aranesp in supportive cancer care and predialysis settings.TEPEZZA and KRYSTEXXA currently do not face any direct competitors in the United States or Europe. TEPEZZA faces competition from other therapies, such as corticosteroids, which have been used on an off-label basis to alleviate some of the symptoms of TED. TEPEZZA and KRYSTEXXA may face competition from competitor medicines currently in clinical trials. See TEPEZZA and KRYSTEXXA sections above and Government Regulation—Regulation of Orphan Medicines.Reimbursement Sales of our products are dependent on the availability and extent of coverage and reimbursement from third-party payers. In many markets around the world, these payers, including government health systems, private health insurers and other organizations, remain focused on reducing the cost of healthcare; and their efforts have intensified, in part, as a result of uncertain macroeconomic conditions, rising healthcare costs and pressures on healthcare budgets. In many markets around the world, these payers, including government health systems, private health insurers and other organizations, remain focused on reducing the cost of healthcare; and their efforts have intensified as a result of rising healthcare costs, economic pressures and broader challenges generated by the COVID-19 pandemic. Drugs remain heavily scrutinized for cost containment. As a result, payers have been and continue to be more restrictive regarding the use of biopharmaceutical products and are scrutinizing the prices of these products while requiring a higher level of clinical evidence to support the benefits such products bring to patients and the broader healthcare system. As a result, payers are becoming more restrictive regarding the use of biopharmaceutical products and are scrutinizing the prices of these products while requiring a higher level of clinical evidence to support the benefits such products bring to patients and the broader healthcare system. For example, as discussed below, payers are increasingly using stricter utilization management criteria, such as prior authorization and step therapy, to contain or reduce costs. These pressures become intensified when our products become subject to competition, including from biosimilars.In the United States, healthcare providers and other entities such as pharmacies and PBMs are reimbursed for covered services and products they deliver through both private-payer and government healthcare programs such as Medicare and Medicaid. We provide negotiated rebates or discounts to healthcare providers, private payers, government payers and PBMs. We provide negotiated rebates to healthcare providers, private payers, government payers and PBMs. In addition, we are required to (i) provide rebates or discounts on our products that are reimbursed through certain government programs, including Medicare and Medicaid, and (ii) provide discounts to qualifying healthcare providers under the 340B Program. Further, inappropriate expanded utilization of the 340B Program has had a negative impact on the Company’s financial performance.Both private and some government payers use formularies to manage access to and utilization of drugs. Both private and some government payers use formularies to manage access to and utilization of drugs. A drug’s inclusion and favorable positioning on a formulary are essential to ensure patients have full access to a particular drug. Even when access is available, some patients abandon their prescriptions for economic reasons. Payers continue to institute cost reduction and containment measures that lower drug utilization and/or spending altogether and/or shift a greater portion of the costs to patients. Such measures include, but are not limited to, more-limited benefit plan designs, higher patient co-pays or coinsurance obligations, limitations on patients’ use of commercial manufacturer co-pay payment assistance programs (including through co-pay accumulator adjustment or maximization programs), stricter utilization management criteria (such as prior authorization and step therapy) before a patient may get access to a drug, higher-tier formulary placement that increases the level of patient out-of-pocket costs and formulary exclusion, which effectively encourages patients and providers to seek alternative treatments or pay 100% of the cost of a drug. Such measures include, but are not limited to, more-limited benefit plan designs, higher patient co-pays or coinsurance obligations, limitations on patients’ use of commercial manufacturer co-pay payment assistance programs (including through co-pay accumulator adjustment or maximization programs), stricter utilization management criteria before a patient may get access to a drug, higher-tier formulary placement that increases the level of patient out-of-pocket costs and formulary exclusion, which effectively encourages patients and providers to seek alternative treatments or pay 100% of the cost of a drug. The use of such measures by PBMs and insurers has continued to intensify and has thereby limited Amgen product usage and sales. Furthermore, in the United States, the top six integrated health plans and PBMs controlled about 94% of all pharmacy prescriptions. As a result, PBMs and insurers have greater market power and negotiating leverage to mandate stricter utilization criteria and/or exclude drugs from their formularies in favor of competitor drugs or alternative treatments. In highly competitive treatment markets such as the markets for ENBREL, Otezla, Repatha and Aimovig, PBMs are also able to exert negotiating leverage by requiring incremental rebates from manufacturers in order for them to gain and/or maintain their formulary position.In addition to market actions taken by private and government payers in the United States, policy makers in both of the major U.S. political parties have supported policies to lower drug costs. See Item 1A. Risk Factors—Our sales depend on coverage and reimbursement from government and commercial third-party payers, and pricing and reimbursement pressures have affected, and are likely to continue to affect, our profitability. For example, in 2022, the IRA was enacted and includes provisions requiring that beginning in 2026, mandatory price setting be introduced in Medicare for certain drugs paid for under Parts B and D, whereby manufacturers must accept a price established by the government or face penalties on all U. In August 2022, the Inflation Reduction Act (IRA) was enacted and includes provisions requiring that (1) beginning in 2026, mandatory price setting be introduced in Medicare for certain drugs paid for under Parts B and D, whereby manufacturers must accept a price established by the government or face penalties on all U. S. sales (starting with 10 drugs in 2026, adding 15 in 2027 and 2028, and adding 20 in 2029 and subsequent years such that by 2031 approximately 100 drugs could be subject to such set prices). The Medicare price setting process began in August 2023 when CMS announced the first 10 drugs for Medicare price setting, which includes ENBREL, currently a product that generates considerable revenue for the Company. On July 30, 2024, CMS set a price for ENBREL in Medicare Part D that is significantly lower than the currently applicable price, effective beginning on January 1, 2026. We expect this will negatively impact 10ENBREL’s profitability in Medicare. In January 2025, CMS announced the next 15 drugs for Medicare price setting that will be applicable beginning on January 1, 2027, which includes Otezla. Also under the IRA, starting on January 1, 2024, Medicare Part D was redesigned to cap beneficiary out-of-pocket costs and, beginning on January 1, 2025, Federal reinsurance will become reduced in the catastrophic phase (resulting in a shift and increase of such costs to Part D plans and manufacturers, including by requiring manufacturer discounts on certain drugs). Further, the IRA created a mechanism for CMS to collect rebates from manufacturers if price increases outpace inflation. We began to accrue for rebate obligations on October 1, 2022 for Medicare Part D and on January 1, 2023 for Medicare Part B.Other potential policies cover a wide range of areas, including allowing the importation of drugs from other countries; increasing transparency in drug pricing; using third-party value assessments to determine drug prices; referencing foreign prices; and changes to government rebate programs.Other potential policies cover a wide range of areas, including allowing the importation of drugs from other countries; increasing transparency in drug pricing; and using third-party value assessments to determine drug prices. For example, on January 5, 2024, the FDA authorized Florida to move forward with its importation program proposal, which excludes biologics. CMS also issued a proposed Medicaid Drug Rebate Program rule that would have required manufacturers to aggregate or “stack” all rebates, discounts or other price concessions made to separate, unrelated entities across the pharmaceutical supply chain on a given unit of product to determine the “Best Price,” a metric that is used to determine Medicaid rebates and 340B statutory rates. This proposal was not finalized but remains a policy that could be reconsidered in the future. Further, at the state level, eight states (Colorado, Maine, Maryland, Minnesota, New Hampshire, New Jersey, Oregon and Washington) have enacted laws that establish PDABs to identify drugs that pose affordability challenges, and in four states (Colorado, Maryland, Minnesota and Washington) include authority for the state PDAB to set upper payment limits on certain drugs for in-state patients, payers and providers.In many countries other than the United States, government-sponsored healthcare systems are the primary payers for drugs and biologics. In many countries other than the United States, government-sponsored healthcare systems are the primary payers for drugs and biologics. With increasing budgetary constraints and/or difficulty in understanding the value of medicines, governments and payers in many countries are applying a variety of measures to exert downward price pressure. These measures can include mandatory price controls, price referencing, therapeutic-reference pricing, increases in rebates, incentives for generic substitution and biosimilar usage and government-mandated price cuts. These measures can include mandatory price controls, price referencing, therapeutic-reference pricing, increases in mandates, incentives for generic substitution and biosimilar usage and government-mandated price cuts. In this regard, many governments use health technology assessment organizations to judge the added benefit of new treatments over existing ones, metrics which are then used to set reimbursement prices and/or set coverage limits. Many countries also limit coverage to populations narrower than those specified on our product labels or impose volume caps to limit utilization. We expect that governments will continue taking aggressive actions to seek to reduce expenditures on drugs and biologics. We expect that countries will continue taking aggressive actions to seek to reduce expenditures on drugs and biologics. Similarly, fiscal constraints may also affect the extent to which countries are willing to approve new and innovative therapies and/or allow access to new technologies. The EU is currently undergoing a review and revision of its pharmaceutical legislation. Various proposals are under consideration with the EU Council, followed by a negotiation among the EU government to agree to a final law. Full implementation is not expected until 2027 or later. The new legislation, if implemented, will likely have a significant impact on the landscape for access and pricing decisions within EU Member States.The dynamics and developments discussed above create pressures on the pricing and potential usage of our products and on the industry. Given the diverse interests in play between payers, biopharmaceutical manufacturers, policy makers, healthcare providers and independent organizations, if and whether the parties involved can achieve alignment on the matters discussed above remain unclear, and the outcome of any such alignment is difficult to predict. We remain focused on pricing our products responsibly and delivering breakthrough treatments for unmet medical needs. Amgen is committed to working with the entire healthcare community to ensure continued innovation and to facilitate patient access to needed medicines. We do this by:•investing billions of dollars annually in R&D;•pricing our medicines to reflect the value they provide;•developing more affordable therapeutic choices in the form of high-quality and reliably supplied biosimilars;•partnering with payers to share risk and accountability for health outcomes;•providing patient support and education programs; •helping patients in financial need access our medicines; and•working with policy makers, patients and other stakeholders to establish a sustainable healthcare system with access to affordable care and in which patients and their healthcare professionals are the primary decision makers.See Item 1A. Risk Factors—Our sales depend on coverage and reimbursement from government and commercial third-party payers, and pricing and reimbursement pressures have affected, and are likely to continue to affect, our profitability and Item 1A. Risk Factors—Guidelines and recommendations published by various organizations can reduce the use of our products.11Manufacturing, Distribution and Raw MaterialsManufacturingWe believe we are a leader in the manufacture of biologics and that our manufacturing capabilities represent a competitive advantage. The products we manufacture consist of both biologics and small molecule drugs. The majority of our products are biologics that are produced in living cells and that are inherently complex due to naturally occurring molecular variations. Highly specialized knowledge and extensive process and product characterization are required to transform laboratory-scale processes into reproducible commercial manufacturing processes. Further, our expertise in the manufacture of biologics has positioned us well for leadership in the global biosimilars market. Further, our expertise in the manufacture of biologics positions us well for leadership in the global biosimilars market. For additional information regarding manufacturing facilities, see .