AbbVie 2014 Annual Report Download - page 17

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requirements have also been enacted on the state level in the United States, and an increasing number of
countries worldwide either have adopted or are considering similar laws requiring disclosure of interactions
with health care professionals. Failure to report appropriate data may result in civil or criminal fines and/or
penalties.
AbbVie expects debate to continue during 2015 at all government levels worldwide over the
marketing, availability, method of delivery, and payment for health care products and services. AbbVie
believes that future legislation and regulation in the markets it serves could affect access to health care
products and services, increase rebates, reduce prices or the rate of price increases for health care
products and services, change health care delivery systems, create new fees and obligations for the
pharmaceuticals industry, or require additional reporting and disclosure. It is not possible to predict the
extent to which AbbVie or the health care industry in general might be affected by the matters discussed
above.
AbbVie is subject to a Corporate Integrity Agreement (CIA) entered into by Abbott on May 7, 2012
that requires enhancements to AbbVie’s compliance program and contains reporting obligations, including
disclosure of financial payments to doctors. If AbbVie fails to comply with the CIA, the Office of Inspector
General for the United States Department of Health and Human Services may impose monetary penalties
or exclude AbbVie from federal health care programs, including Medicare and Medicaid.
European Union. The European Union has adopted directives and other legislation governing labeling,
advertising, distribution, supply, pharmacovigilance, and marketing of pharmaceutical products. Such
legislation provides mandatory standards throughout the European Union and permits member states to
supplement these standards with additional regulations. European governments also regulate
pharmaceutical product prices through their control of national health care systems that fund a large part
of the cost of such products to consumers. As a result, patients are unlikely to use a pharmaceutical
product that is not reimbursed by the government. In many European countries, the government either
regulates the pricing of a new product at launch or subsequent to launch through direct price controls or
reference pricing. In recent years, many countries have also imposed new or additional cost containment
measures on pharmaceutical products. Differences between national pricing regimes create price
differentials within the European Union that can lead to significant parallel trade in pharmaceutical
products.
Most governments also promote generic substitution by mandating or permitting a pharmacist to
substitute a different manufacturer’s generic version of a pharmaceutical product for the one prescribed
and by permitting or mandating that health care professionals prescribe generic versions in certain
circumstances. In addition, governments use reimbursement lists to limit the pharmaceutical products that
are eligible for reimbursement by national health care systems.
Japan. In Japan, the National Health Insurance system maintains a Drug Price List specifying which
pharmaceutical products are eligible for reimbursement, and the Ministry of Health, Labour and Welfare
sets the prices of the products on this list. The government generally introduces price cut rounds every
other year and also mandates price decreases for specific products. New products judged innovative or
useful, that are indicated for pediatric use, or that target orphan or small population diseases, however,
may be eligible for a pricing premium. The government has also promoted the use of generics, where
available.
Emerging Markets. Many emerging markets take steps to reduce pharmaceutical product prices, in
some cases through direct price controls and in others through the promotion of generic alternatives to
branded pharmaceuticals.
Since AbbVie markets its products worldwide, certain products of a local nature and variations of
product lines must also meet other local regulatory requirements. Certain additional risks are inherent in
conducting business outside the United States, including price and currency exchange controls, changes in
2014 Form 10-K 11