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August 23, 2021

US: Amgen intends to challenge $3.6b tax deficiency

According to an Amgen Inc. (Amgen) executive, the pharma company plans to dispute a US$3.6b1 tax deficiency assessed by the Internal Revenue Service (IRS) for tax years 2010, 2011 and 2012.2 Amgen manufactures and markets the autoimmune disorder drug Enbrel, as well as the osteoporosis treatment sold as Prolia and Xgeva.

Amgen disclosed in its Form 10-Q that the IRS issued a notice of deficiency of $3.6b plus interest for tax years 2010, 2011 and 2012. The IRS also proposed significant adjustments to 2013, 2014 and 2015 tax years for similar issues. Amgen stated in the Form 10-Q that any additional tax that could be imposed would be reduced by up to $900m of repatriation tax previously accrued on foreign earnings.

Amgen filed a petition in the United States (US) Tax Court to contest the notice but has not disclosed the specific legal issues in dispute. The Tax Court petition has not been made publicly available yet.

In a Q2 2021 earnings call on 3 August 2021, Amgen’s executive vice-president and CFO Peter F. Griffith noted that the IRS notices are related to a transfer pricing dispute concerning the level of risk and functional complexity of the company’s Puerto Rican office.According to Griffith, the dispute focuses on how the company allocates profits between the US and Amgen’s manufacturing operations.

The case appears similar to Medtronic, Inc. v. Commissioner, T.C. Memo 2016-112, which concerned cost-sharing arrangements between Medtronic and its Puerto Rican subsidiary. In 2016, the Tax Court held that aggregation is not the most reliable means of determining arm's-length consideration for controlled transactions if those transactions can exist independently; however, the Tax Court opinion was vacated by 8th Circuit Court of Appeals and remanded for further proceedings in the Tax Court.


The issuance of the deficiency notices in this case indicates that the IRS is not shying away from large and complex cross-border tax disputes. Given the recent increase in cross-border tax disputes, taxpayers may be well served by performing a health check on their transfer pricing. This includes examining their value chain, identifying areas of risk with respect to their current transfer pricing positions and being well prepared in the event of an IRS audit.


For additional information with respect to this Alert, please contact the following:

Ernst & Young LLP (United States), International Tax and Transaction Services – Transfer Pricing, Washington, DC

Ernst & Young LLP (United States), Tax Policy and Controversy, Seattle



  1. Currency references in this Alert are to the US$.
  2. Ryan Finley, “Amgen Disputes 3.6 Billion Deficiency in Transfer Pricing Case,” Tax Notes Today (5 August 2021).
  3. Id.

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