A New York federal judge has denied Amgen’s motion to dismiss a class action lawsuit alleging the company misled investors about a potential $10.7 billion tax liability.
Plaintiffs, led by a Detroit pension fund, accused Amgen last March of making “false and misleading” statements about the extent of its tax dispute with the IRS. The company allegedly shifted income from the US to Puerto Rico between 2010 and 2015 to take advantage of a lower corporate income tax rate. The IRS asked for $8.7 billion in back taxes and $2 billion in penalties, according to court documents.
Amgen said the IRS’ positions are “without merit” in its most recent quarterly filing. The company has also argued that it did not keep the dispute a secret. Upon filing for dismissal of the class action suit, Amgen said it disclosed that it was under audit and that the IRS’ requests were “significant” and “could have a material impact” on financial results. The company revealed the precise amount later, after receiving a notice communicating the IRS’ final position.
Judge John Cronan disagreed on Monday, writing in an opinion that Amgen’s disclosures were “plausibly misleading” and used “a wall of opaque adjectives.”
“Given the sheer size of the potential liability, investors were entitled to a greater degree of clarity once Defendants chose to speak on the matter,” Cronan wrote.
The case has not been decided, and Cronan noted that “discovery may very well turn up an innocent explanation.” Amgen and lawyers representing plaintiffs did not respond to requests for comment at press time.
According to a Senate Finance Committee report on Amgen and other biopharma companies’ taxes, Amgen’s lawyers told the committee, “While the litigation currently involves Amgen’s 2010-2015 tax years, many of the same core issues remain in the post-TCJA years (2018 and beyond).”
According to public data compiled by the committee, the US spent $27.3 billion between 2018 and 2021 through Medicare Parts B and D to help patients cover the cost of Amgen’s Enbrel, Prolia, Otezla, Xgeva, Neulasta, Aranesp, Repatha and Kyprolis.