Pharmaceutical Company Asked to
Disclose Drug Co-Pay Subsidies and Patient Assistance Programs
Date: 7/28/10; 8/10/10; 8/11/10
SIC No.: 2836
Subject Filing: 10-Q
State: DE
Accession No. (Staff Letter):
0000000000-10-042726; 0000000000-10-045857
Accession No. (Co. Letter): 0001193125-10-184707
The staff, upon reviewing Amgen Inc.’s Form
10-Q, asked the company why it did not include disclosure regarding
drug co-pay assistance and other patient assistance programs. The
staff noted that a Wall Street Journal article (July 20,
2009) had mentioned several drug companies, including Amgen, in
connection with criticism of patient assistance programs offered by
these companies. Amgen replied that it provides direct support to
eligible patients regarding drug co-pays and co-insurance
obligations. The company accounts for the costs of these programs
under ASC 605-50. The company noted that for Q1 2010 and 2009, the
company incurred costs of $35 million and $14 million, respectively.
Amgen observed that the cost of these programs amounted to at most
one percent of its total product sales. In addition, Amgen makes
non-refundable cash donations to third-party patient assistance
foundations, which establish their own eligibility criteria for
making grants to patients. Amgen also irrevocably donates products
to private non-profit foundations, supported by Amgen, that assist
uninsured patients. The foundations are tax-exempt organizations
under Section 501(c)(3) of the Internal Revenue Code. The costs of
the company’s patient assistance programs are accounted for under
ASC 720-25. The company stated that the costs of these programs for
Q1 2010 and 2009 were $7 million and $4 million, respectively, and
did not exceed one percent of total selling, general and
administrative expense. Amgen further noted that it has not included
the disclosure of costs incurred by its various programs in its
periodic reports because the amounts involved are not qualitatively
or quantitatively material. The company stated that it would make
the required disclosures if the costs become material. The staff
subsequently indicated that it had no further comments.