What changed in this filing

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Item 1A. Risk Factors

2024-02-20 compared with 2023-02-17 · 50 added, 58 removed, 286 unchanged (27% of the section changed)

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In addition, past financial performance may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods.

| 2022 Form 10-K

If any of the following risks and uncertainties develops into actual events, these events could have a material adverse effect on AbbVie's business, results of operations, financial condition or cash flows.

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For example, Humira accounted for approximately 27% of AbbVie's total net revenues in 2023.

Humira is facing competition from biosimilar products in the United States beginning in 2023 due to the loss of exclusivity, which AbbVie anticipates will cause a significant decline in Humira's revenue and could adversely affect AbbVie’s revenues and operating earnings.

Humira is facing competition from biosimilar products in the United States following the loss of exclusivity in 2023, which AbbVie anticipates will continue to cause a significant decline in Humira's revenue and could adversely affect AbbVie’s revenues and operating earnings.

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AbbVie's principal patents and trademarks are described in greater detail in Item 1, "Business—Intellectual Property Protection and Regulatory Exclusivity" and Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations," and litigation regarding these patents is described in Item 3, "Legal Proceedings."

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Patent litigation, administrative proceedings and other challenges to AbbVie's patents are costly and unpredictable and may deprive AbbVie of market exclusivity for a patented product.

To the extent AbbVie's intellectual property is

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successfully challenged, circumvented or weakened, or to the extent such intellectual property does not allow AbbVie to compete effectively, AbbVie's business will suffer.

To the extent AbbVie's intellectual property is successfully challenged, circumvented or weakened, or to the extent such intellectual property does not allow AbbVie to compete effectively, AbbVie's business will suffer.

To the extent that countries do not enforce AbbVie's intellectual property rights or require compulsory licensing of AbbVie's intellectual property, AbbVie's revenues and operating earnings will be reduced.

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Products that appear promising in development may fail to reach the market for numerous reasons, including failure to demonstrate effectiveness, safety concerns, superior safety or efficacy of competing therapies, failure to achieve positive clinical or pre-clinical outcomes beyond the current standards of care, inability to obtain necessary regulatory approvals or delays in the approval of new products and new indications, limited scope of approved uses, excessive costs to manufacture or the failure to obtain or maintain intellectual property rights, or infringement of the intellectual property rights of others.

| 2023 Form 10-K

Decisions about research studies made early in the development process of a pharmaceutical product candidate can affect the marketing strategy once such candidate receives approval.

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In the United States, practices of managed care groups, and institutional and governmental purchasers, as well as federal laws and regulations related to Medicare and Medicaid, contribute to pricing pressures.

In particular, the Inflation Reduction Act of

| 2022 Form 10-K

2022 requires (i) the government to negotiate prices for select high expenditure Medicare Part D drugs (prices effective beginning in 2026) and Part B drugs (prices effective beginning in 2028), (ii) manufacturers to pay a rebate for Medicare Part B and Part D drugs when prices for those drugs increase faster than inflation beginning in 2022 for Part D and 2023 for Part B, and (iii) a Medicare Part D redesign replacing the current coverage gap provisions and establishing a $2,000 cap for out-of-pocket costs for Medicare beneficiaries beginning in 2025, with manufacturers being responsible for 10% of costs up to the $2,000 cap and 20% after that cap is reached.

The Inflation Reduction Act is to be implemented through forthcoming agency action, the outcome of which cannot be reasonably determined with certainty.

Additionally, changes to U.S.

tax laws now require (i) a 15% minimum tax generally applied to U.S.

corporations on adjusted financial statement income beginning in 2023 and (ii) a non-deductible 1% excise tax provision on net stock repurchases, to be applied to repurchases beginning in 2023.

AbbVie continues to evaluate the impact that the Inflation Reduction Act may have on the company.

In particular, the IRA will have the effect of reducing prices and reimbursements for certain of our products, which could significantly impact AbbVie’s results of operations.

Under the IRA, the U.S Department of Health and Human Services can effectively set prices for certain single-source drugs and biologics reimbursed under Medicare Part B and Part D.

Generally, these government prices can apply as soon as nine years (for small-molecule drugs) or 13 years (for biological products) from their FDA approval and will be capped at a statutory ceiling price that is likely to represent a significant discount from average prices to wholesalers and direct purchasers.

In August 2023, the U.S.

Department of Health and Human Services, through the CMS, selected Imbruvica as one of the first 10 medicines subject to government-set prices beginning in 2026.

The price-setting process will conclude by August 1, 2024, and on September 1, 2024, the CMS will publish prices that will be applicable to the 10 drugs in the Medicare program beginning January 1, 2026.

It is possible that more of our products, including products that generate substantial revenues, could be selected in future years, which could, among other things, accelerate revenue erosion prior to expiration of intellectual property protections.

In addition, beginning in January 2025, under the IRA, the 70% coverage gap discount program will be replaced by a 10% manufacturer discount for all Medicare Part D beneficiaries that have met their deductible and incurred out of pocket drug costs below a $2,000 threshold and a 20% discount for beneficiaries that have incurred out of pocket drug costs above the $2,000 threshold under the new Part D benefit redesign.

Manufacturers that fail to comply with the IRA may be subject to various penalties, including civil monetary penalties, which could be significant.

The IRA has and will continue to meaningfully impact AbbVie’s business strategies and those of others in the pharmaceutical industry.

The full impact of the IRA on AbbVie’s business and the pharmaceutical industry, including the implications to us of our or a competitor's product being selected for price setting, remains uncertain.

AbbVie continues to evaluate the impact that the IRA may have on the company.

The potential for continuing changes to the health care system in the United States and the increased purchasing power of entities that negotiate on behalf of Medicare, Medicaid and private sector beneficiaries may result in additional pricing pressures.

Additionally, changes to U.S.

tax laws now require (i) a 15% alternative minimum tax generally applied to U.S.

corporations on adjusted financial statement income beginning in 2023 and (ii) a non-deductible 1% excise tax provision on net stock repurchases.

In major markets worldwide, governments play a significant role in funding health care services and determining the pricing and reimbursement of pharmaceutical products.

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Rebates related to government programs, such as fee-for-service Medicaid or Medicaid managed care programs, arise from laws and regulations.

AbbVie cannot predict with certainty if additional government initiatives to contain health care costs or other factors could lead to new or modified regulatory requirements that include higher or incremental rebates or discounts.

AbbVie cannot predict with certainty if additional government initiatives to contain health care

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costs or other factors could lead to new or modified regulatory requirements that include higher or incremental rebates or discounts.

Other rebate and discount programs arise from contractual agreements with private payers.

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Biologics are also frequently costly to manufacture because production inputs are derived from living animal or plant material, and some biologics cannot be made synthetically.

Failure to successfully discover, develop, manufacture and sell biologics—including Humira and Skyrizi —could have a negative impact on AbbVie's business and results of operations.

Failure to successfully discover, develop, manufacture and sell biologics—including Humira, Skyrizi and Botox —could have a negative impact on AbbVie's business and results of operations.

New products and technological advances by AbbVie's competitors may negatively affect AbbVie's results of operations.

AbbVie competes with other research-based pharmaceutical and biotechnology companies that research, develop, manufacture, market and sell proprietary pharmaceutical products and biologics.

For example, Humira competes with anti-

2022 Form 10-K |

TNF products and other competitive products intended to treat a number of disease states and Mavyret/Maviret competes with other available hepatitis C treatment options.

For example, Humira competes with anti-TNF products and other competitive products intended to treat a number of disease states and Mavyret/Maviret competes with other available hepatitis C treatment options.

In addition, in the past few years, a number of other companies have started to develop, have successfully developed and/or are currently marketing products that are being positioned as competitors to Botox.

All of these competitors may introduce new products or develop technological advances that compete with AbbVie’s products in therapeutic areas such as immunology, hematologic oncology, aesthetics, neuroscience and eye care.

All of these competitors may introduce new products or develop technological advances that compete with AbbVie’s products in therapeutic areas such as immunology, oncology, aesthetics, neuroscience and eye care.

In addition, as AbbVie products lose exclusivity, competition surrounding such products will increase and generic and biosimilar products will increasingly penetrate the markets.

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Problems may arise during manufacturing for a variety of reasons, including equipment malfunction, failure to follow specific protocols and procedures, problems with raw materials, delays related to the construction of new facilities or the expansion of existing facilities, including those intended to support future demand for AbbVie's products, changes in manufacturing production sites and limits to manufacturing capacity due to regulatory requirements, changes in the types of products produced, physical limitations that could inhibit continuous supply, man-made or natural disasters and environmental factors.

If problems arise during the production of a batch of product, such batch of product may have to be discarded and AbbVie may experience product shortages or incur added expenses.

If problems arise during the production of a batch of product, such batch of product may have to be

| 2023 Form 10-K

discarded and AbbVie may experience product shortages or incur added expenses.

This could, among other things, lead to increased costs, lost revenue, damage to customer relations, time and expense spent investigating the cause and, depending on the cause, similar losses with respect to other batches or products.

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Additional, and perhaps more extensive, studies may also be conducted, which may be sponsored by AbbVie but could also be sponsored by competitors, insurance companies, government institutions, scientists, investigators or other interested parties.

If new safety or efficacy issues are reported or if new scientific information becomes available (including results of post-marketing Phase 4 trials), or if governments change standards regarding safety, efficacy or labeling, AbbVie may be required to amend

| 2022 Form 10-K

the conditions of use for a product.

For example, AbbVie may voluntarily provide or be required to provide updated information on a product's label or narrow its approved indication, either of which could reduce the product's market acceptance.

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Product liability claims and lawsuits and safety alerts or product recalls, regardless of their ultimate outcome, may have a material adverse effect on AbbVie's business, results of operations and reputation and on its ability to attract and retain customers.

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Consequences may also include additional costs, a decrease in market share for the product in question, lower revenue and exposure to other claims.

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Adverse outcomes in such claims, legal proceedings and investigations may also adversely affect AbbVie’s business, results of operations and reputation.

For example, Allergan was named as a defendant in approximately 3,000 matters relating to the promotion and sale of prescription opioid pain relievers.

Allergan recently agreed to a nationwide settlement to resolve such matters, which will provide for up to $2.02 billion to help support state and local efforts to address opioid-related issues in the United States, among other things.

However, AbbVie cannot guarantee that the conditions to such settlement will be satisfied, or that additional suits will not be filed.

See Note 15, "Legal Proceedings and Contingencies" to the Consolidated Financial Statements included under Item 8, "Financial Statements and Supplementary Data." AbbVie cannot predict with certainty the outcome of these proceedings.

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AbbVie cannot predict with certainty when additional changes in the healthcare industry in general, or the pharmaceutical industry in particular, will occur, or what the impact of such changes may be.

For example, the Inflation Reduction Act is to be implemented through forthcoming agency action, the outcome of which cannot be reasonably determined with certainty.

In addition, AbbVie cannot guarantee that it will remain compliant with applicable regulatory requirements once approval has been obtained for a product.

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AbbVie must incur expense and spend time and effort to ensure compliance with these complex regulations.

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Possible regulatory actions could result in substantial modifications to AbbVie's business practices and operations;

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In addition, violations of these laws and regulations, or allegations of such violations, could impose new obligations on AbbVie, require it to change its business practices and restrict its operations.

| 2023 Form 10-K

Public health outbreaks, epidemics or pandemics, such as the coronavirus (COVID-19), have had, and could in the future have, an adverse impact on AbbVie’s operations and financial condition.

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The COVID-19 pandemic caused AbbVie to modify certain of its business practices, and AbbVie may take further actions as may be required by government authorities or as AbbVie determines are in the best interests of AbbVie’s employees, patients, customers and business partners.

While the impact of COVID-19 on AbbVie’s operations, including, among others, its manufacturing and supply chain, sales and marketing, commercial and clinical trial operations, to date was not material, AbbVie experienced lower new patient starts in certain products and markets.

The impact of COVID-19 and other public health outbreaks on AbbVie over the long-term is uncertain and cannot be predicted with confidence.

The extent of the adverse impact of COVID-19 or any other public health outbreak on AbbVie’s operations will depend on the extent and severity of the continued spread of the disease globally, the timing and nature of actions taken to respond to it and the resulting economic consequences.

Ultimately, efforts to mitigate the impact of COVID-19 or any other public health outbreak may not completely prevent AbbVie's business from being adversely affected and future impacts remain uncertain.

The international nature of AbbVie's business subjects it to additional business risks that may cause its revenue and profitability to decline.

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• trade protection measures and import or export licensing requirements;

| 2022 Form 10-K

• international trade disruptions or disputes;

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• potentially negative consequences from changes in or interpretations of tax laws;

• political and economic instability, including as a result of the COVID-19 pandemic;

• political and economic instability;

• sovereign debt issues;

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• potential penalties or other adverse consequences for violations of anti-corruption, anti-bribery and other similar laws and regulations, including the United States Foreign Corrupt Practices Act and the United Kingdom Bribery Act.

In particular, in February 2022, armed conflict escalated between Russia and Ukraine.

In response thereto, the United States and other North Atlantic Treaty Organizations member states, as well as certain non-member states, announced targeted economic sanctions, embargoes and export controls on Russia and Belarus.

Although AbbVie is continuing to supply essential pharmaceutical products in Russia for humanitarian reasons while working to maintain compliance with evolving international sanctions, it has suspended operations for all aesthetics products in Russia.

AbbVie's operations in Russia, Belarus and Ukraine are not significant.

However, it is not possible to predict with certainty the continued consequences of this conflict, which, in addition to sanctions, have included regional instability, geopolitical shifts and adverse effects on macroeconomic conditions, currency exchange rates and financial markets.

Any such consequences could have an adverse impact on AbbVie's business and results of operations .

If AbbVie does not effectively and profitably commercialize its products, AbbVie's revenues and financial condition could be adversely affected.

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If the commercialization of AbbVie's principal products is unsuccessful, AbbVie's revenues and financial condition could be adversely affected.

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AbbVie may acquire other businesses, license rights to technologies or products, form alliances, or dispose of assets, which could cause it to incur significant expenses and could negatively affect profitability.

AbbVie may pursue acquisitions, technology licensing arrangements, joint ventures and strategic alliances, or dispose of some of its assets, as part of its business strategy.

AbbVie from time to time pursues acquisitions, technology licensing arrangements, joint ventures and strategic alliances, and/or disposes of some of its assets, as part of its business strategy.

AbbVie may not complete these transactions in a timely manner, on a cost-effective basis, or at all, and may not realize the expected benefits.

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These effects could cause a deterioration of AbbVie's credit rating and result in increased borrowing costs and interest expense.

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greater than expected costs, may take longer than expected to complete or encounter other difficulties, including the need for regulatory approval where appropriate.

Additionally, changes in AbbVie's structure, operations, revenues, costs, or efficiency resulting from major transactions such as acquisitions, divestitures, mergers, alliances, joint ventures, restructurings or other strategic initiatives, may result in greater than expected costs, may take longer than expected to complete or encounter other difficulties, including the need for regulatory approval where appropriate.

AbbVie is dependent on wholesale distributors for distribution of its products in the United States and, accordingly, its business and results of operations could be adversely affected if they encounter financial or other difficulties.

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AbbVie depends on information technology and a failure of, or significant disruption to, those systems could have a material adverse effect on AbbVie's business.

AbbVie relies on sophisticated software applications and complex information technology systems to operate its business, which may be vulnerable to malicious intrusion, random attack, loss of data privacy, disruption, degradation or breakdown.

Data privacy or security breaches by employees or others may in the future result in the failure of critical business operations.

AbbVie relies on sophisticated software applications and complex information technology systems (including cloud services) to operate its business, which are inherently vulnerable to malicious intrusion, random attack, loss of data privacy, disruption, degradation or breakdown.

Certain of these applications and systems are managed, hosted, provided or used by third parties.

Data privacy or security breaches of our internal systems or those of our information technology vendors may in the future result in the failure of critical business operations.

Such breaches may cause sensitive data, including intellectual property, trade secrets or personal information belonging to AbbVie, its patients, customers or business partners, to be exposed to unauthorized persons or to the public.

To date, neither AbbVie’s business nor operations have been materially impacted by such incidents.

Although AbbVie has invested in the protection of its data and information technology and monitors its systems on an ongoing basis, there can be no assurance that such efforts will prevent material breakdowns or breaches in AbbVie's information technology systems that could have a material adverse effect on AbbVie's business.

Such adverse consequences could include loss of revenue or the loss of critical or sensitive information from AbbVie’s or third-party providers’ databases or IT systems and could also result in legal, financial, reputational or business harm to AbbVie and potentially substantial remediation costs.

In addition, while AbbVie maintains cyber insurance, it cannot guarantee that such insurance will be sufficient to cover the financial, legal, business or reputational losses that may result from an interruption or breach of AbbVie systems.

To date, neither AbbVie’s business nor operations have been materially impacted by such incidents, however, the healthcare industry remains a target of cyber-attacks.

Cybersecurity attacks and incidents are increasing in their frequency, sophistication and intensity and, due to the nature of some of these attacks, there

| 2023 Form 10-K

is a risk that they may remain undetected for a period of time.

AbbVie’s investments in the protection of its data and information technology and its efforts to monitor its systems on an ongoing basis may be insufficient to prevent compromises in AbbVie's information technology systems that could have a material adverse effect on AbbVie's business.

Such adverse consequences could include loss of revenue or the loss of critical or sensitive information from AbbVie’s or third-party providers’ databases or information technology systems and could also result in legal, financial, reputational or business harm to AbbVie and potentially substantial remediation costs.

In addition, AbbVie’s cyber insurance may not be sufficient to cover the financial, legal, business or reputational losses that may result from an interruption or breach of AbbVie systems or those of our third-party vendors.

AbbVie’s balances of intangible assets, including developed product rights and goodwill acquired, are subject to impairment testing and may result in impairment charges, which may adversely affect AbbVie’s results of operations and financial condition.

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AbbVie’s developed product rights are stated at cost, less accumulated amortization.

AbbVie determines original fair value and amortization periods for developed product rights based on its assessment of various factors impacting estimated

| 2022 Form 10-K

useful lives and cash flows of the acquired products.

AbbVie determines original fair value and amortization periods for developed product rights based on its assessment of various factors impacting estimated useful lives and cash flows of the acquired products.

Significant adverse changes to any of these factors require AbbVie to perform an impairment test on the affected asset and, if evidence of impairment exists, require AbbVie to take an impairment charge with respect to the asset.

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This can expose patients to greater risks as the internet is a preferred vehicle for dangerous counterfeit/diverted product offers and scams because of the anonymity it affords.

AbbVie's reputation and business could suffer harm as a result of counterfeit or diverted drugs sold under its brand name which may also result in reduced revenues that could negatively affect our results of operation.

AbbVie's reputation and business could suffer harm as a result of counterfeit

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or diverted drugs sold under its brand name which may also result in reduced revenues that could negatively affect our results of operation.

Other factors can have a material adverse effect on AbbVie's profitability and financial condition.

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• environmental liabilities in connection with AbbVie’s manufacturing processes and distribution logistics, including the handling of hazardous materials;

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• changes in the ability of third parties that provide information technology, accounting, human resources, payroll and other outsourced services to AbbVie to meet their contractual obligations to AbbVie;

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In the future, a stockholder's percentage ownership in AbbVie may be diluted because of equity issuances for capital market transactions, equity awards that AbbVie will be granting to AbbVie's directors, officers and employees, acquisitions or other purposes.

AbbVie's employees have options to purchase shares of its common stock as a result of conversion of their Abbott stock options (in whole or in part) to AbbVie stock options.

AbbVie anticipates its compensation committee will grant additional stock options or other stock-based awards to its employees.

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From time to time, AbbVie will issue additional options or other stock-based awards to its employees under AbbVie's employee benefits plans.

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In addition, AbbVie's amended and restated certificate of incorporation authorizes AbbVie to issue, without the approval of AbbVie's stockholders, one or more classes or series of preferred stock having such designation, powers, preferences and relative, participating, optional and other special rights, including preferences over AbbVie's common stock respecting dividends and distributions, as AbbVie's board of directors generally may determine.

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• the division of AbbVie's board of directors into three classes of directors, with each class serving a staggered three-year term;

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• a provision that stockholders may only remove directors for cause;

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Factors that could cause actual results or events to differ materially from those anticipated include, but are not limited to, the matters described under Item 1A, "Risk Factors" and Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations." AbbVie does not undertake, and specifically declines, any obligation to update the forward-looking statements included in this Annual Report on Form 10-K to reflect events or circumstances after the date hereof, unless AbbVie is required by applicable securities law to do so.

UNRESOLVED STAFF COMMENTS

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors