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Collaborations
6 Months Ended
Jun. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Collaborations
Collaborations
A collaborative arrangement is a contractual arrangement that involves a joint operating activity. These arrangements involve two or more parties that are both: (i) active participants in the activity and (ii) exposed to significant risks and rewards dependent on the commercial success of the activity.
From time to time, we enter into collaborative arrangements for the research and development (R&D), manufacture and/or commercialization of products and/or product candidates. These collaborations generally provide for non-refundable up-front license fees, development and commercial performance milestone payments, cost sharing, royalty payments and/or profit sharing. Our collaboration arrangements are performed with no guarantee of either technological or commercial success and each is unique in nature. Below is a significant arrangement that had a material change since the filing of our Annual Report on Form 10-K for the year ended December 31, 2016.
Novartis Pharma AG
In April 2017, we expanded our existing collaboration with Novartis Pharma AG (Novartis), a wholly owned subsidiary of Novartis AG, in the area of migraine. In the United States, Amgen and Novartis will jointly develop and collaborate on the commercialization of Aimovig(erenumab). Amgen, as the principal, will recognize product sales of Aimovig in the United States, and will share U.S. commercialization costs with Novartis and pay Novartis a significant royalty on net sales in the United States. Novartis holds global co-development rights and exclusive commercial rights outside the United States and Japan. Novartis will pay Amgen double-digit royalties on net sales of the products in the Novartis exclusive territories. Novartis will fund a portion of global R&D expenses. Novartis will also make payments to Amgen that could collectively exceed $400 million if certain regulatory events occur and commercial thresholds are achieved. Amgen will manufacture and supply Aimovig worldwide.
The migraine collaboration will continue for the commercial life of the products unless terminated in accordance with its terms.
During the three months ended June 30, 2017 and 2016, costs recovered from Novartis for the migraine products were $31 million and $11 million, respectively. During the six months ended June 30, 2017 and 2016, costs recovered from Novartis for the migraine products were $57 million and $20 million, respectively. Costs recovered are included primarily in Research and development expense in the Condensed Consolidated Statements of Income.