Amgen AMGN

A substantial proportion of our U.S. business relies on reimbursement from federal government healthcare programs and commercial insurance plans regulated by federal and state governments. See Item 1. Business—Reimbursement. Our business has been, and will continue to be, affected by legislative actions changing U.S. federal reimbursement policy. For example, the IRA includes provisions requiring mandatory pricing in Medicare for certain drugs under Parts B and D (starting with 10 drugs effective January 1, 2026, adding 15 in 2027 and 2028, and adding 20 in 2029 and subsequent years such that, by 2031, approximately 100 drugs could would be subject to such set prices). The Medicare price setting process for the first 10 drugs subject to Medicare price setting in Part D began in 2023 , which includes ENBREL, our product that currently generates considerable revenues. In 2024, CMS has set a price for ENBREL under Medicare Part D that is significantly lower than currently applicable, beginning on prices for ENBREL, effective January 1, 2026, which we expect will and Otezla, effective January 2027, in each case at significantly lower prices that are expected to negatively impact its their profitability in Medicare. See Part I, II, Item 2. 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of operations—Product sales—ENBREL. In January 2025, sales. Further, CMS announced has issued guidance that allows for the next 15 re-setting of prices for drugs for Medicare price setting that will be applicable beginning on January 1, 2027, which includes Otezla. it previously set a price. Depending on the growth and success of our medicines, other of our medicines may also be subject to selection by CMS in the next, or in a future, cycle of mandatory Medicare price setting. If other of our medicines are selected by CMS for Medicare price setting, we may be required to accept a price set by the government for Medicare similar to using the process that was applied to ENBREL. ENBREL and Otezla. On April 15, 2025, the Administration issued an executive order (the April 2025 EO) that, among other directives, directs HHS to work with Congress to align the treatment of small molecule drugs and biologics in the Medicare price setting program under the IRA. It is currently unclear how such modifications would affect the timeframe in which Medicare price setting becomes applicable for selected drugs or biologics. Also under the IRA, Medicare Part D was redesigned to cap beneficiary out-of-pocket costs and, beginning January 1, 2025, and reduce Federal reinsurance will be reduced in the catastrophic phase (resulting in a shift and increase of such costs to phase; increasing cost-sharing obligations for Part D plans and manufacturers, including by requiring manufacturer discounts on certain drugs). discounts. Further, the IRA inflation penalties allows allow CMS to collect rebates from manufacturers if Medicare price increases outpace inflation. Such rebate obligations began to accrue October 1, 2022 for Medicare Part D and January 1, 2023 for Medicare Part B, but CMS has not yet issued invoices and has some discretion as to when to issue such invoices to manufacturers. We expect that several of our products will be subject to IRA inflation penalties, inflation, and several of our products have been on lists that are issued and updated on a quarterly basis by CMS under a related program under which Medicare beneficiaries are charged reduced coinsurance if price increases exceed inflation. subject to such IRA inflation rebates. The IRA’s Medicare price setting and Medicare redesign have had, and are likely to have a material have, an adverse effect on our sales, our business and our results of operations, and such impact is expected to increase through the end of the decade and will depend on factors including the extent of our portfolio’s exposure to Medicare reimbursement, the rate of inflation over time, the number of our products selected for Medicare price setting and the timing of market entry of generic or biosimilar competition. Further, following the enactment of the IRA, the environment remains dynamic dynamic, and U.S. policymakers continue to demonstrate interest in health care and drug pricing changes. changes as well as potential changes affecting intellectual property. For example, in April 2024, CMS finalized policy changes that will give Part D plans more flexibility to substitute biosimilars for innovator products on formularies in 2025. Additionally, various government agencies have taken actions designed Implementation of OB3 also may impact access to reduce expenditures on prescription drugs. and reimbursement of our products. For example, the Congressional Budget Office has projected that the OB3 will result in significant reductions in federal Medicaid spending over the next decade and an increase in the number of people without health insurance. These developments would place greater stress on state budgets and hospital finances, and could result in reduced access to medicines, additional pressure to further discount medicines and further growth of 340B Program utilization. The MFN EO directs HHS released a report with to pursue pricing policies that align U.S. drug pricing proposals that seek to promote competition. The USPTO has also taken steps to strengthen coordination prices with the FDA prices available in certain comparably developed countries and directs a range of actions to advance that objective, including through regulatory, trade and other policy measures. In July 2025, the Administration delivered the July MFN Letter to us and a number of other manufacturers that called for drug manufacturers to: 1) extend MFN pricing to Medicaid; 2) guarantee MFN pricing to Medicaid, Medicare and commercial payers on all newly launched drugs; 3) use future increased revenues from outside the U.S. to lower U.S. drug prices; and 4) participate in direct-to-patient models to provide MFN pricing for certain drugs. Since the issuance of the July MFN Letter, most recipients have announced that they have reached agreement with the Administration to address perceived impediments to generic drug the matters described in the letter. In December 2025, we announced that we are taking actions that satisfy the components outlined in the July MFN Letter, including the Administration’s MFN pricing requests. We also announced the expansion of our direct-to-patient program. While this development reflects ongoing engagement on pricing policy, the ultimate effects on our pricing, reimbursement, net sales and biosimilar competition. Other CMS profitability remain uncertain in light of evolving regulatory and policy changes and demonstration projects to test new care, delivery and payment models can also significantly affect how drugs, including our products, are covered and reimbursed. expectations.

On May 28, 2024, Amgen Inc. and Amgen Manufacturing Limited LLC filed a lawsuit in the U.S. District Court for the District of New Jersey (New Jersey District Court) against Celltrion Inc. and Celltrion USA, Inc. (collectively, Celltrion) based on the submission to the FDA of a BLA seeking approval to market and sell a biosimilar version of Amgen’s Prolia and XGEVA products. The complaint asserts infringement of the following 29 patents: U.S. Patent Nos. 7,364,736; 7,427,659; 7,928,205; 8,053,236; 8,460,896; 8,680,248; 9,012,178; 9,228,168; 9,320,816; 9,328,134; 9,359,435; 10,106,829; 10,167,492; 10,227,627; 10,513,723; 10,583,397; 10,822,630; 10,894,972; 11,077,404; 11,098,079; 11,130,980; 11,254,963; 11,299,760; 11,319,568; 11,434,514; 11,459,595; 11,486,883; 11,946,085; and 11,952,605 (collectively, the Asserted Patents against Celltrion). Amgen seeks a judgment from the New Jersey District Court that Celltrion has Defendants have infringed or will infringe one or more claims of each of the Asserted Patents against Celltrion the Amneal and Mabxience Defendants and based on that judgment, a permanent injunction prohibiting the commercial manufacture, use, offer to sell, or sale within the United States or importation into the United States of Celltrion’s proposed the accused denosumab biosimilar by the Amneal and Mabxience Defendants before expiration of each of the Asserted Patents against Celltrion patents found to be infringed. Amgen also seeks monetary remedies for any past acts of infringement. Celltrion On January 9, 2026 and January 23, 2026, respectively, the Amneal and Mabxience Defendants responded to the complaint on July 11, 2024, denying infringement and asserting affirmative defenses including invalidity and non-infringement. On November 25, 2024, the New Jersey District Court issued a Scheduling Order including a hearing on claim construction scheduled for February 14, 2025 and trial beginning on April 7, 2025. On January 23, 2025, the New Jersey District Court issued a consent judgment and injunction finding the Asserted Patents against Celltrion valid, enforceable and infringed by the Celltrion biosimilar denosumab products in the United States. The injunction prohibits Celltrion, its affiliates and any third party acting on behalf of or in active concert with Celltrion from making using, offering to sell, selling or importing Celltrion’s denosumab biosimilar products into the United States before June 1, 2025, except as specifically authorized by a confidential binding settlement term sheet and 35 U.S.C. 271. Specific financial terms remain confidential. The parties’ remaining claims and counterclaims were dismissed with prejudice. defenses.

Our operations are subject In 2021, the OECD reached an initial agreement to align countries on a minimum corporate tax rate and an expansion of the taxing rights of market countries. Select individual countries, including the United Kingdom, EU member countries and Singapore, have enacted the global minimum tax agreement that took effect starting in 2024. Singapore’s enactment of the agreement, effective 2025, applies irrespective of the Company’s incentive grant. On January 5, 2026, the OECD issued additional administrative guidance related to the global minimum tax laws, regulations and administrative practices agreement that exempts U.S. companies from extra territorial minimum taxes effective January 1, 2026. The new guidance did not impact our 2025 results. We are monitoring the potential 2026 impact of the United States, guidance as jurisdictions may enact the U.S. territory of Puerto Rico, U.S. state jurisdictions and other countries in which we do business. Significant changes in these rules could have a material adverse effect on our results of operations. new rules. See Part I, Item 1A. Risk Factors—We could be subject to additional tax liabilities, including from an adverse outcome in our ongoing tax dispute with the IRS and other tax examinations, enactment of the OECD minimum corporate tax rate agreement and the adoption and interpretation of new tax legislation, and we anticipate additional tax liabilities from certain provisions of the 2017 Tax Act that will go into effect in 2026; such including OB3. Such tax liabilities could adversely affect our profitability and results of operations.

In November 2023, September 2025, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to Reportable Segment Disclosures, the Accounting for Internal-Use Software, to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses modernize the accounting for software costs, including updating guidance on the recognition and additional interim segment reporting disclosures, including for companies measurement of costs incurred in connection with a single reportable segment. development and implementation activities related to internal-use software. The standard is effective for public business all entities such as Amgen for annual periods beginning after December 15, 2023, 2027, and interim periods beginning after December 15, 2024, with retrospective application required for all prior periods presented. within those annual periods. Early adoption is permitted, and entities may apply the standard prospectively or retrospectively. We adopted evaluated the impact of adopting this new standard in fiscal year 2024, which resulted in incremental segment disclosures. See Note 2, Segment on our consolidated financial statements and other information. related disclosures and do not expect the adoption to have a material impact.