Amgen has agreed to a $74 million settlement to resolve a class action lawsuit alleging the biotechnology giant withheld critical tax liability information from investors for far too long.
The preliminary settlement was filed late Monday in Manhattan federal court and still requires approval from a federal judge before it can take effect.
Amgen denied any wrongdoing and on Tuesday maintained that the claims brought against the company lacked merit, despite agreeing to the substantial payout.
The IRS accused Amgen of underpaying taxes between 2010 and 2015, primarily by improperly shifting profits to a Puerto Rico manufacturing unit that produced many of its drugs.
Puerto Rico is treated as a foreign country for corporate tax purposes despite being a United States territory, a classification central to Amgen’s alleged transfer pricing strategy.
The IRS sought $8.7 billion in back taxes plus interest, along with an additional $2 billion in penalties stemming from those transfer pricing practices.
Amgen first disclosed outstanding tax liabilities on August 3, 2021, revealing it had received an IRS Notice of Deficiency seeking $3.1 billion in back taxes plus interest for tax years 2010, 2011, and 2012.
Following that disclosure, Amgen’s stock price fell $15.77, or 6.5%, to close at $228.31 per share on August 4, 2021, causing significant harm to investors holding shares at the time.
Then on April 27, 2022, Amgen disclosed a further IRS Notice of Deficiency seeking $5.1 billion in back taxes plus interest for tax years 2013, 2014, and 2015, along with a proposed $2 billion penalty, pushing the total owed beyond $10 billion.
Amgen’s stock dropped a further $10.66, or 4.3%, to close at $238.13 per share on April 28, 2022, dealing another blow to shareholders already reeling from the prior disclosure.
Shareholders led by the Asbestos Workers Philadelphia Pension Fund alleged that the Thousand Oaks, California-based company deliberately delayed disclosing its tax risks until those two damaging announcements.
The suit names CEO Robert Bradway and Chief Financial Officer Peter Griffith alongside the company itself, alleging their conduct allowed shares to trade at artificially inflated levels.
The settlement covers Amgen shareholders who held stock between July 29, 2020, and April 27, 2022, capturing those most affected by the alleged period of non-disclosure.
A federal judge rejected Amgen’s attempt to have the case dismissed entirely back in September 2024, clearing the path toward the negotiated settlement now before the court.
Amgen’s top-selling products include the osteoporosis treatment Prolia and Repatha, which is used to reduce cardiovascular events and treat hyperlipidemia.