Amgen Reaches $74 Million Settlement in Shareholder Case Linked to $10.7 Billion IRS Tax Dispute
Amgen has agreed to pay $74 million to settle a shareholder class action alleging that the biotechnology company failed to adequately inform investors about the financial risks arising from a long-running dispute with the U.S. Internal Revenue Service (IRS). The proposed settlement remains subject to court approval and does not include any admission of wrongdoing by the company.
Investors Alleged Delayed Disclosure
The lawsuit claimed that Amgen did not promptly disclose the scale of its potential tax exposure, despite the ongoing IRS examination. Shareholders argued that the company only revealed the full extent of the dispute after making public disclosures in 2021 and 2022, which were followed by notable declines in its share price.
The settlement covers investors who purchased or held Amgen shares between 29 July 2020 and 27 April 2022. A U.S. federal judge had previously allowed the case to proceed after rejecting Amgen’s motion to dismiss in 2024.
Transfer Pricing at the Heart of the Tax Dispute
The underlying tax controversy relates to IRS assessments covering the 2010–2015 tax years. The tax authority contends that Amgen improperly allocated a significant share of its profits to a manufacturing subsidiary in Puerto Rico through its transfer pricing arrangements, resulting in a substantial underpayment of U.S. taxes.
According to the IRS, the company owes approximately $8.7 billion in additional tax, together with around $2 billion in penalties, bringing the total disputed amount to $10.7 billion, before any additional interest is taken into account.
Amgen continues to dispute the IRS’s position and has stated that it expects the U.S. Tax Court to issue a decision on the matter.
Broader Significance for Multinationals
The case illustrates the significant financial and legal risks associated with transfer pricing disputes, particularly where multinational groups allocate profits across different tax jurisdictions.
It also highlights the importance of timely disclosure of material tax risks to investors. Even where the underlying tax matter has not yet been resolved, companies may face separate securities litigation if shareholders believe that potential exposures were not communicated transparently.
Tax Litigation Continues
While the shareholder litigation is expected to conclude through the proposed settlement, the much larger dispute between Amgen and the IRS remains unresolved.
The forthcoming Tax Court decision is likely to be closely watched by multinational businesses, tax professionals and investors, given the size of the assessment and its potential implications for transfer pricing practices involving intellectual property and manufacturing operations in Puerto Rico.