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Hedging Activities and Fair Value Measurements (Tables)
 12 Months Ended
Dec. 31, 2020
Derivative [Line Items]  
Schedule of Notional Amounts of Outstanding Derivative Positions (Table Text Block)
The following table presents the contractual amounts of our hedging instruments outstanding:
(in millions)FASB ASC Topic 815 DesignationAs of December 31,
20202019
Forward currency contractsCash flow hedge$4,531 $3,891 
Forward currency contractsNet investment hedge1,004 953 
Foreign currency-denominated debt(1)
Net investment hedge868 997 
Forward currency contractsNon-designated4,946 4,377 
Total Notional Outstanding$11,349 $10,218 
Derivative Instruments, Gain (Loss) [Table Text Block]
The following presents the effect of our derivative and nonderivative instruments designated as cash flow and net investment hedges under FASB ASC Topic 815 in our accompanying consolidated statements of operations. Refer to Note Q – Changes in Other Comprehensive Income for the total amounts relating to derivative and nonderivative instruments presented within our consolidated statements of comprehensive income (loss).
Effect of Hedging Relationships on Accumulated Other Comprehensive Income
Amount Recognized in OCI on Hedges
Consolidated Statements of Operations(1)
Amount Reclassified from AOCI into Earnings
Pre-Tax Gain (Loss)Tax Benefit (Expense)Gain (Loss) Net of TaxLocation of Amount Reclassified and Total Amount of Line ItemPre-Tax (Gain) LossTax (Benefit) Expense(Gain) Loss Net of Tax
Year Ended December 31, 2020
Forward currency contracts
Cash flow hedges$(99)$22 $(77)Cost of products sold$3,465 $(83)$19 $(64)
Net investment hedges(2)
(37)8 (29)Interest expense361 (24)5 (19)
Foreign currency-denominated debt
Net investment hedges(3)
(89)21 (68)Other, net(362)— — — 
Interest rate derivative contracts
Cash flow hedges— — — Interest expense361 5 (1)4 
Year Ended December 31, 2019
Forward currency contracts
Cash flow hedges$150 $(34)$117 Cost of products sold$3,116 $(73)$16 $(56)
Net investment hedges(2)
68 (15)53 Interest expense473 (43)10 (33)
Foreign currency-denominated debt
Net investment hedges(3)
(14)3 (11)Other, net358 — — — 
Interest rate derivative contracts
Cash flow hedges— — — Interest expense473 3 (1)2 
Year Ended December 31, 2018
Forward currency contracts
Cash flow hedges$167 $(38)$130 Cost of products sold$2,813 $19 $(4)$15 
Net investment hedges(2)
56 (13)43 Interest expense241 (27)6 (21)
Interest rate derivative contracts
Cash flow hedges(44)10 (34)Interest expense241 (1)— (1)
(1)    In all periods presented in the table above, the pre-tax (gain) loss amounts reclassified from AOCI to earnings represent the effect of the hedging relationships on earnings. All other amounts included in earnings related to hedging relationships were immaterial.
(2)    For our outstanding forward currency contracts designated as net investment hedges, the net gain or loss reclassified from AOCI to earnings as a reduction of Interest expense represents the straight-line amortization of the excluded component as calculated at the date of designation. This initial value of the excluded component has been excluded from the assessment of effectiveness in accordance with FASB ASC Topic 815. In the current period, we did not recognize any gains or losses on the components included in the assessment of hedge effectiveness in earnings.
(3)    For our outstanding euro-denominated debt principal designated as a net investment hedge, the change in fair value attributable to changes in the spot rate is recorded in the Foreign currency translation adjustment (CTA) component of OCI. No amounts were reclassified from AOCI to current period earnings.
Derivative Instruments, Gain (Loss) that may be Reclassified from AOCI to Earnings within Twelve Months [Table Text Block]
As of December 31, 2020, pre-tax net gains or losses for our derivative instruments designated, or previously designated, as cash flow and net investment hedges under FASB ASC Topic 815 that may be reclassified from AOCI to earnings within the next twelve months are presented below (in millions):
Designated Hedging InstrumentFASB ASC Topic 815 DesignationLocation on Consolidated Statements of OperationsAmount of Pre-Tax Gain (Loss) that may be Reclassified to Earnings
Forward currency contractsCash flow hedgeCost of products sold$21 
Forward currency contractsNet investment hedgeInterest expense13 
Interest rate derivative contractsCash flow hedgeInterest expense(5)
Derivatives Not Designated as Hedging Instruments (Table Text Block)
Net gains and losses on currency hedge contracts not designated as hedging instruments offset by net gains and losses from currency transaction exposures are presented below:
(in millions)Location on Consolidated Statements of OperationsYear Ended December 31,
202020192018
Net gain (loss) on currency hedge contractsOther, net$73 $(343)$41 
Net gain (loss) on currency transaction exposuresOther, net(105)(15)(30)
Net currency exchange gain (loss)$(32)$(358)$11 
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value (Table Text Block) The following are the balances of our derivative and nonderivative assets and liabilities:
(in millions)
Location on Consolidated Balance Sheets(1)
As of December 31,
20202019
Derivative and Nonderivative Assets:   
Designated Hedging Instruments  
Forward currency contractsOther current assets$53 $72 
Forward currency contractsOther long-term assets109 216 
  162 288 
Non-Designated Hedging Instruments   
Forward currency contractsOther current assets79 33 
Total Derivative and Nonderivative Assets $242 $321 
Derivative and Nonderivative Liabilities:   
Designated Hedging Instruments  
Forward currency contractsOther current liabilities$44 $3 
Forward currency contractsOther long-term liabilities54 8 
Foreign currency-denominated debt(2)
Other long-term liabilities1,094 998 
  1,191 1,009 
Non-Designated Hedging Instruments   
Forward currency contractsOther current liabilities71 29 
Total Derivative and Nonderivative Liabilities$1,262 $1,037 
(1)We classify derivative and nonderivative assets and liabilities as current when the settlement date of the contract is one year or less.
(2)The €900 million (approximately $1.000 billion) debt principal is a nonderivative instrument designated as a net investment hedge of our net investments in certain of our euro functional subsidiaries. We dedesignated a portion of the net investment hedges in 2020.
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]  
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]
Assets and liabilities measured at fair value on a recurring basis consist of the following:
As of
 December 31, 2020December 31, 2019
(in millions)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets        
Money market funds and time deposits$1,584 $— $— $1,584 $50 $— $— $50 
Publicly-held securities414 — — 414 1 — — 1 
Hedging instruments— 242 — 242 — 321 — 321 
Licensing arrangements— — 365 365 — — 518 518 
 $1,998 $242 $365 $2,605 $51 $321 $518 $890 
Liabilities        
Hedging instruments$— $1,262 $— $1,262 $— $1,037 $— $1,037 
Contingent consideration liability— — 196 196 — — 354 354 
Licensing arrangements— — 407 407 — — 571 571 
 $— $1,262 $603 $1,865 $— $1,037 $925 $1,963 
The recurring Level 3 fair value measurements of our licensing arrangements recognized in our consolidated balance sheets as of December 31, 2020 include the following significant unobservable inputs:
Licensing ArrangementsFair Value as of December 31, 2020Valuation TechniqueUnobservable InputRange
Weighted Average(1)
Financial Asset$365 millionDiscounted Cash FlowDiscount Rate15%15%
Projected Year of Payment2021-20252023
Financial Liability$407 millionDiscounted Cash FlowDiscount Rate12%-15%13%
Projected Year of Payment2021-20272024
(1)    Unobservable inputs relate to a single financial asset and liability. As such, unobservable inputs were not weighted by the relative fair value of the instruments. For projected year of payment, the amount represents the median of the inputs and is not a weighted average.
Changes in the fair value of our licensing arrangements' financial asset were as follows:
(in millions)
Balance as of December 31, 2018$— 
Amounts recorded related to current year acquisition567 
Proceeds from royalty rights(52)
Fair value adjustment (expense) benefit3 
Balance as of December 31, 2019$518 
Proceeds from royalty rights(175)
Fair value adjustment (expense) benefit22 
Balance as of December 31, 2020$365 

Changes in the fair value of our licensing arrangements' financial liability were as follows:
(in millions)
Balance as of December 31, 2018$— 
Amounts recorded related to current year acquisition315 
Proceeds from royalty rights transfer256 
Balance as of December 31, 2019$571 
Payments for royalty rights(186)
Fair value adjustment expense (benefit)22 
Balance as of December 31, 2020$407