INCOME TAXES

The following table summarizes our effective tax rate and income tax (benefit) expense for the three and nine months ended September 30, 2017 and 2016 (in thousands except for percentages):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Effective tax rate	43		%	24		%	41		%	32		%
Income tax (benefit) expense	$	(114,343	)	$	5,069		$	(143,521	)	$	3,725

For the three and nine months ended September 30, 2017, we recognized an income tax benefit of $114.3 million and $143.5 million, respectively, representing an effective tax rate of 43% and 41%, respectively. The difference between the expected statutory federal tax rate of 35% and the effective tax rates for the three and nine months ended September 30, 2017, was primarily attributable to the impact of state income taxes, federal research and development and orphan drug tax credits, and contingent consideration associated with Lumara Health, partially offset by the establishment of a valuation allowance related to certain deferred tax assets. During the three months ended September 30, 2017, we entered into a three-year cumulative loss position and established a valuation allowance on certain deferred tax assets to the extent that our existing taxable temporary differences would not be available as a source of income to realize the benefits of those deferred tax assets.

For the three and nine months ended September 30, 2016, we recognized an income tax expense of $5.1 million and $3.7 million, respectively, representing an effective tax rate of 24% and 32%, respectively. The difference between the expected statutory federal tax rate of 35% and the effective tax rates for the three and nine months ended September 30, 2016, was primarily attributable to contingent consideration associated with Lumara Health, including the tax deductible portion of the then anticipated 2016 milestone payment, and federal research and development and orphan drug tax credits, partially offset by the impact of state income taxes, non-deductible stock compensation, and other non-deductible expenses.