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Hedging Activities and Fair Value Measurements (Tables)
 3 Months Ended
Mar. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of Notional Amounts of Outstanding Derivative Positions
The following table presents the contractual amounts of our hedging instruments outstanding:
(in millions)FASB ASC Topic 815 DesignationAs of
March 31, 2024December 31, 2023
Forward currency contractsCash flow hedge$2,242 $2,284 
Forward currency contractsNet investment hedge645 333 
Foreign currency-denominated debt(1)
Net investment hedge997 997 
Forward currency contractsNon-designated3,070 3,282 
Total Notional Outstanding$6,954 $6,896 
(1) Foreign currency-denominated debt is the €900 million debt principal associated with our 2027 Notes designated as a net investment hedge.
Derivative Instruments, Gain (Loss)
Effect of Hedging Relationships on Accumulated Other Comprehensive Income
Amount Recognized in OCI on Hedges
Unaudited Consolidated Statements of Operations(1)
Amount Reclassified from AOCI into Earnings
(in millions)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
Three Months Ended March 31, 2024
Forward currency contracts
Cash flow hedges$76 $(17)$59 Cost of products sold$1,209 $(49)$11 $(38)
Net investment hedges(2)
27 (6)21 Interest expense69 (4)1 (3)
Foreign currency-denominated debt
Net investment hedges(3)
23 (5)18 Other, net(2)— — — 
Interest rate derivative contracts
Cash flow hedges— — — Interest expense69 1 (0)0 

Effect of Hedging Relationships on Accumulated Other Comprehensive Income
Amount Recognized in OCI on Hedges
Unaudited Consolidated Statements of Operations(1)
Amount Reclassified from AOCI into Earnings
(in millions)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
Three Months Ended March 31, 2023
Forward currency contracts
Cash flow hedges$13 $(3)$10 Cost of products sold$1,040 $(69)$16 $(54)
Net investment hedges(2)
6 (1)4 Interest expense65 (3)1 (2)
Foreign currency-denominated debt
Net investment hedges(3)
(19)4 (14)Other, net43 — — — 
Interest rate derivative contracts
Cash flow hedges— — — Interest Expense65 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.
(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 and prior periods, 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 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
As of March 31, 2024, 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):
FASB ASC Topic 815 DesignationLocation on Unaudited Consolidated Statements of OperationsAmount of Pre-Tax Gain (Loss) that may be Reclassified to Earnings
Designated Hedging Instrument
Forward currency contractsCash flow hedgeCost of products sold$173 
Forward currency contractsNet investment hedgeInterest expense15 
Interest rate derivative contractsCash flow hedgeInterest expense(1)
Derivatives Not Designated as Hedging
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:
Location on Unaudited Consolidated Statements of OperationsThree Months Ended March 31,
(in millions)20242023
Net gain (loss) on currency hedge contractsOther, net$15 $(8)
Net gain (loss) on currency transaction exposuresOther, net(20)(6)
Net currency exchange gain (loss)$(5)$(14)
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value The following are the balances of our derivative and nonderivative assets and liabilities:
 
Location on Unaudited Consolidated Balance Sheets(1)
As of
(in millions)March 31, 2024December 31, 2023
Derivative and Nonderivative Assets:   
Designated Hedging Instruments  
Forward currency contractsOther current assets$160 $140 
Forward currency contractsOther long-term assets125 107 
  285 246 
Non-Designated Hedging Instruments   
Forward currency contractsOther current assets17 20 
Total Derivative and Nonderivative Assets $302 $266 
Derivative and Nonderivative Liabilities:   
Designated Hedging Instruments  
Forward currency contractsOther current liabilities$3 $15 
Forward currency contractsOther long-term liabilities1 9 
Foreign currency-denominated debt(2)
Long-term debt966 988 
  969 1,012 
Non-Designated Hedging Instruments   
Forward currency contractsOther current liabilities17 38 
Total Derivative and Nonderivative Liabilities $986 $1,050 
(1) We classify derivative and nonderivative assets and liabilities as current when the settlement date of the contract is one year or less.
(2) Foreign currency-denominated debt is the €900 million debt principal associated with our 2027 Notes designated as a net investment hedge. A portion of this notional is subject to de-designation and re-designation based on changes in the underlying hedged item.
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis
Assets and liabilities measured at fair value on a recurring basis consist of the following:
As of
 March 31, 2024December 31, 2023
(in millions)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets        
Money market funds and time deposits$1,979 $— $— $1,979 $454 $— $— $454 
Publicly-held equity securities20 — — 20 18 — — 18 
Hedging instruments— 302 — 302 — 266 — 266 
Licensing arrangements— — 66 66 — — 77 77 
 $1,999 $302 $66 $2,367 $472 $266 $77 $816 
Liabilities        
Hedging instruments$— $986 $— $986 $— $1,050 $— $1,050 
Contingent consideration liability— — 273 273 — — 404 404 
Licensing arrangements— — 71 71 — — 90 90 
 $— $986 $344 $1,330 $— $1,050 $494 $1,545 
The recurring Level 3 fair value measurements of our licensing arrangements recognized within our accompanying unaudited consolidated balance sheets as of March 31, 2024 include the following significant unobservable inputs:
Licensing ArrangementsFair Value as of March 31, 2024Valuation TechniqueUnobservable InputRange
Weighted Average (1)
Financial Asset$66 millionDiscounted Cash FlowDiscount Rate15%15%
Projected Year of Payment2024-20252025
Financial Liability$71 millionDiscounted Cash FlowDiscount Rate12 %-15%13%
Projected Year of Payment2024-20262025
(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, 2023$77 
Proceeds from royalty rights(14)
Fair value adjustment (expense) benefit2 
Balance as of March 31, 2024$66 

Changes in the fair value of our licensing arrangements' financial liability were as follows:
(in millions)
Balance as of December 31, 2023$90 
Payments for royalty rights(22)
Fair value adjustment expense (benefit)2 
Balance as of March 31, 2024$71