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(The article featured below is a selection from SEC Filings Insight, which is available to subscribers of that publication.)

Pharmaceutical Company Asked to Disclose Drug Co-Pay Subsidies and Patient Assistance Programs

  • Amgen Inc.

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.