Eli Lilly 2015 Annual Report Download - page 42

F30
FINANCIAL REPORT
The main coverage expansion provisions of the Affordable Care Act (ACA) are now in effect through both the
launch of state-based exchanges and the expansion of Medicaid. An emerging trend has been the prevalence
of benefit designs containing high out-of-pocket costs for patients, particularly for pharmaceuticals. In addition
to the coverage expansions, many employers in the commercial market, driven in part by ACA changes such
as the 2020 implementation of the excise tax on employer-sponsored health care coverage for which there is
an excess benefit (the so-called "Cadillac tax"), continue to evaluate strategies such as private exchanges
and wider use of consumer-driven health plans to reduce their healthcare liabilities over time. At the same
time, the broader paradigm shift towards quality-based reimbursement and the launch of several value-based
purchasing initiatives have placed demands on the pharmaceutical industry to offer products with proven real-
world outcomes data and a favorable economic profile.
International
International operations also are generally subject to extensive price and market regulations. Cost-
containment measures exist in a number of countries, including additional price controls and mechanisms to
limit reimbursement for our products. Such policies are expected to increase in impact and reach, given the
pressures on national and regional health care budgets that come from a growing aging population and
ongoing economic challenges. In addition, governments in many emerging markets are becoming
increasingly active in expanding health care system offerings. Given the budget challenges of increasing
health care coverage for citizens, policies may be proposed that promote generics only and reduce current
and future access to human pharmaceutical products.
Tax Matters
We are subject to income taxes in the U.S. and numerous foreign jurisdictions. Changes in the relevant tax
laws, regulations, administrative practices, principles, and interpretations could adversely affect our future
effective tax rates. The U.S. and a number of other countries are actively considering or enacting changes in
this regard. For example, the Obama administration proposed changes to the manner in which the U.S. would
tax the international income of U.S.-based companies, including unremitted earnings of foreign subsidiaries.
Other tax proposals under discussion or introduced in the U.S. Congress could change the tax rate and
manner in which U.S. companies would be taxed. Additionally, the Organisation for Economic Co-operation
and Development issued its final recommendations of international tax reform proposals to influence
international tax policy in major countries in which we operate. While outcomes of these initiatives continue to
develop and remain uncertain, changes to key elements of the U.S. or international tax framework could have
a material adverse effect on our consolidated operating results and cash flows.
Operating Results—2015
Revenue
The following table summarizes our revenue activity by jurisdiction:
Year Ended,
December 31, Change in
2015 2014 Dollars Percent
U.S. (1) $ 10,097.4 $ 9,134.1 $ 963.3 11 %
Outside U.S. 9,861.3 10,481.5 (620.2) (6)%
Revenue $ 19,958.7 $ 19,615.6 $ 343.1 2 %
Numbers may not add due to rounding.
(1) U.S. revenue includes revenue in Puerto Rico.