AbbVie 2012 Annual Report Download - page 16

Medicines Agency. After the agency evaluates the application, it makes a recommendation to the
European Commission, which then makes the final determination on whether to approve the
application. The decentralized procedure provides for mutual recognition of national approval decisions
and is available for products that are not subject to the centralized procedure.
In Japan, applications for approval of a new product are made through the Pharmaceutical and
Medical Devices Agency (PMDA). Bridging studies to demonstrate that the foreign clinical data applies
to Japanese patients may be required. After completing a comprehensive review, the PMDA reports to
the Ministry of Health, Labour and Welfare, which then approves or denies the application.
The regulatory process in many emerging markets continues to evolve. Many emerging markets,
including those in Asia, generally require regulatory approval to have been obtained in a large
developed market (such as the United States) before the country will begin or complete its regulatory
review process. Some countries also require that local clinical studies be conducted in order to obtain
regulatory approval in the country.
The requirements governing the conduct of clinical trials and product licensing also vary. In
addition, post-approval regulatory obligations such as adverse event reporting and cGMP compliance
generally apply and may vary by country. For example, after a marketing authorization has been
granted in the EU, periodic safety reports must be submitted and other pharmacovigilance measures
must be implemented.
Regulation—Commercialization, Distribution, and Manufacturing
The manufacture, marketing, sale, promotion, and distribution of AbbVie’s products are subject to
comprehensive government regulation. Government regulation by various national, regional, federal,
state, and local agencies, both in the United States and other countries, addresses (among other
matters) inspection of, and controls over, research and laboratory procedures, clinical investigations,
product approvals and manufacturing, labeling, packaging, marketing and promotion, pricing and
reimbursement, sampling, distribution, quality control, post-marketing surveillance, record keeping,
storage, and disposal practices. AbbVie’s operations are also affected by trade regulations in many
countries that limit the import of raw materials and finished products and by laws and regulations that
seek to prevent corruption and bribery in the marketplace (including the United States Foreign Corrupt
Practices Act and the United Kingdom Bribery Act, which provide guidance on corporate interactions
with government officials) and require safeguards for the protection of personal data. In addition,
AbbVie is subject to laws and regulations pertaining to health care fraud and abuse, including state and
federal anti-kickback and false claims laws in the United States. Prescription drug manufacturers such
as AbbVie are also subject to taxes, as well as application, product, user, establishment, and other fees.
Compliance with these laws and regulations is costly and materially affects AbbVie’s business.
Among other effects, health care regulations substantially increase the time, difficulty, and costs
incurred in obtaining and maintaining approval to market newly developed and existing products.
AbbVie expects compliance with these regulations to continue to require significant technical expertise
and capital investment to ensure compliance. Failure to comply can delay the release of a new product
or result in regulatory and enforcement actions, the seizure or recall of a product, the suspension or
revocation of the authority necessary for a product’s production and sale, and other civil or criminal
sanctions, including fines and penalties.
In addition to regulatory initiatives, AbbVie’s business can be affected by ongoing studies of the
utilization, safety, efficacy, and outcomes of health care products and their components that are
regularly conducted by industry participants, government agencies, and others. These studies can call
into question the utilization, safety, and efficacy of previously marketed products. In some cases, these
studies have resulted, and may in the future result, in the discontinuance of, or limitations on,
10