Contingencies and commitments

6 Months Ended

Jun. 30, 2011

Contingencies and commitments [Abstract]

Contingencies and commitments

12. Contingencies and commitments

In the ordinary course of business, we are involved in various legal proceedings and other matters, including those discussed in this Note, that are complex in nature and have outcomes that are difficult to predict. See Note 19, Contingencies and commitments to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2010, and Note 12, Contingencies and commitments to our condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the period ended March 31, 2011, for further discussion of certain of our legal proceedings and other matters.

We record accruals for such contingencies to the extent that we conclude that it is probable that a liability will be incurred and the amount of the related loss can be reasonably estimated. We evaluate, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of the liability that has been accrued previously. Our legal proceedings range from cases brought by a single plaintiff to a class action with thousands of putative class members. These legal proceedings, as well as other matters, involve various aspects of our business and a variety of claims (including but not limited to patent infringement, marketing, pricing and trade practices and securities law), some of which present novel factual allegations and/or unique legal theories. In each of the matters currently pending against us, plaintiffs seek a not-yet-quantified amount of damages. In addition, a number of the matters pending against us are at very early stages of the legal process (which in complex proceedings of the sort faced by us often extend for several years). As a result, none of these pending matters has yet progressed sufficiently through discovery and/or development of important factual information and legal issues to enable us to estimate a range of possible loss. While it is not possible to accurately predict or determine the eventual outcomes of these items, one or more of these items currently pending could have a material adverse effect on our consolidated results of operations, financial position or cash flows.

Certain of our legal proceedings and other matters are discussed below:

Teva Matters

Teva v. Amgen, the ‘603 Patent Litigation

On June 29, 2011, Amgen filed a motion for summary judgment requesting entry of judgment of non-infringement of Teva’s U.S. Patent No. 7,449,603 and dismissal of the claims of Teva Pharmaceutical Industries Ltd. (Teva Ltd.) with prejudice. On July 18, 2011, in response to the parties’ joint request for a stipulated dismissal, the U.S. District Court for the Eastern District of Pennsylvania (the Pennsylvania District Court) dismissed Teva Ltd.’s claims with prejudice and dismissed Amgen’s claims without prejudice.

Teva v. Amgen, the G-CSF Patent Litigation

On July 15, 2011, pursuant to a joint stipulation and settlement agreement between the parties, the Pennsylvania District Court entered final judgment and a permanent injunction against Teva Ltd. and Teva Pharmaceuticals USA, Inc. (Teva USA and, together with Teva Ltd., Teva) prohibiting them from infringing Amgen’s U.S. Patent Nos. 5,580,755 and 5,582,823 relating to human G-CSF and methods for its use. The judgment was accompanied by Teva’s admission and an order from the Pennsylvania District Court that Neutroval^™ (a recombinant form of human G-CSF) infringes the two Amgen patents at issue in the litigation and that those patents are valid and enforceable. The Pennsylvania District Court’s injunction extends until November 10, 2013, after which date Teva may sell Neutroval^™ in the United States. Teva has also agreed not to sell another of its G-CSF product candidates, Neugranin, until November 10, 2013, unless Teva first obtains a final court decision that Amgen’s patents are not infringed by Neugranin. Pursuant to the parties’ agreement, the launch date for either product could be sooner if certain unexpected events occur: if a third party launches a similar G-CSF product and Amgen fails to file suit against that third party or if the patents are held invalid or unenforceable in a final court decision in an action brought by a third party. The settlement terms do not include any financial payments between the parties. The two patents at issue expire in early December 2013.

Average Wholesale Price Litigation

In re: Pharmaceutical Industry Average Wholesale Price Litigation MDL No. 1456

Approval hearings on a proposed settlement were held in the U.S. District Court for the District of Massachusetts (Massachusetts District Court) on June 13, 2011, and again on July 7, 2011. However, following the July 7 hearing the Massachusetts District Court did not grant approval to the settlement but instead scheduled another final approval hearing for August 8, 2011.

State of Louisiana v. Abbott Laboratories, Inc., et al.

On May 12, 2011, Amgen and the other defendants filed joint exceptions seeking to dismiss the complaint.

Birch v. Sharer, et al.

The briefing schedule for the appeal has been set by the California State Appellate Court and plaintiff’s opening brief is due August 19, 2011. No date has been set for oral argument.

Qui Tam Actions

U.S. ex rel. Westmoreland v. Amgen, et al.

On July 22, 2011, the U.S. Court of Appeals for the First Circuit issued a written decision reversing the Massachusetts District Court’s dismissal of the claims of the states of California, Illinois, Indiana, Massachusetts, New Mexico, and New York and affirming the dismissal of the claims of Georgia.

U.S. ex rel. Streck v. Allergan, et al.

A complaint filed in the Pennsylvania District Court against Amgen and numerous other pharmaceutical manufacturers, pursuant to the Qui Tam provisions of the Federal Civil False Claims Act and on behalf of 24 named states and the District of Columbia under their respective State False Claims Acts, was unsealed and became public on or about June 6, 2011. The plaintiff, Ronald Streck, alleges that from 2004 to the present, defendants failed to report accurate pricing data to Medicare and Medicaid, including data used to calculate average sales price and average manufacturer’s price, thereby causing the federal and state governments to reimburse defendants at inflated rates and causing the manufacturers to underpay Medicaid rebates. The federal government has declined to intervene in the matter.

Warren General Hospital v. Amgen

On June 14, 2011, the U.S. Court of Appeals for the Third Circuit (Third Circuit Court) affirmed the U.S. District Court for the District of New Jersey’s decision to grant Amgen’s motion to dismiss. The plaintiffs have until September 12, 2011, to appeal the Third Circuit Court’s decision.