Amgen v. Commissioner: Functional Analysis Back at the Centre of Transfer Pricing Disputes

June 2026

An ongoing U.S. case is testing how far the IRS can go in restructuring a multinational's intercompany licence arrangements, and how much weight recent appellate reasoning should carry in that analysis.

The case, Amgen Inc. v. Commissioner, concerns the pricing of intercompany licences between the pharmaceutical group's U.S. parent and its Puerto Rican manufacturing affiliate. The IRS argues that the arrangement understated the return owed to the U.S. entity, which owns the underlying intangibles, and has reallocated profits accordingly.

Amgen contends that the adjustments are arbitrary and unreasonable, and that the method applied fails to reflect the actual functions performed, assets used and risks assumed by each entity . taxnotes The dispute has been sharpened by the Eighth Circuit's decision in Medtronic. The IRS has urged the Tax Court to treat that ruling as support for its position, arguing that the Comparable Profits Method remains viable even where the tested party performs a narrower set of functions than the comparables selected.  

The case reflects a wider shift in transfer pricing controversy, where outcomes increasingly turn on the quality of the functional analysis rather than the label attached to a method. Practitioners are watching whether the Tax Court treats Medtronic as a broad endorsement of profit-based methods or as a narrower, fact-specific ruling.

For multinational groups, the message is practical. Where intangibles sit with the parent and the affiliate performs routine manufacturing, the burden falls on the taxpayer to show, through contracts, conduct and data, that the allocation reflects economic reality rather than legal form. Full judgement in English: Amgen Files Pretrial Memo in Transfer Pricing Case | Tax Notes