Risk Factors Update Summary

• Entered into a comprehensive settlement agreement for opioid lawsuits, paying up to $6.4 billion over 18 years. Liability of $6.0 billion recorded on balance sheet as of September 30, 2022.
• Medicare Part D benefit redesign beginning in 2024, including replacement of "coverage gap discounts" with new mandatory manufacturer discounts applicable during all phases of the Part D benefit after satisfaction of the deductible, beginning in 2025. This change might result in a significant reduction in revenue from the sale of drugs covered under Medicare Part D.
• The company faces increasing risks of cyberattacks and security breaches, which could disrupt business, result in data breaches, damage reputation, and increase costs.
• Negative publicity or failure to comply with ethical, social, product, labor, health and safety, accounting, or environmental standards could damage reputation and lead to litigation.
• The U.S. Inflation Reduction Act of 2022 was signed into law, which provides for a corporate alternative minimum tax on adjusted financial statement income and an excise tax on corporate stock repurchases.
• Federal price negotiation of "maximum fair prices" for certain "selected" high-expenditure drugs under Medicare Parts D and B, applicable beginning in 2026 for Part D drugs and 2028 for Part B drugs. This change might result in a significant reduction in revenue from the sale of drugs covered under Medicare Parts D and B.
• We sold 13.2 million shares of our common stock in November 2022. This change might result in a decrease in our stock price.
• The company faces risks related to natural disasters and severe hazards, including drought, storms, sea level rise, floods, and earthquakes.
• Limits on Medicare Part B and Part D patients' cost sharing for insulin, beginning in 2023. This change might result in a reduction in revenue from the sale of insulin.
• We announced our intent to acquire PharmaLex Holding GmbH for €1,280 million in cash. This change might result in increased revenue and market share.
• An increasing number of states and countries continue to enact privacy legislation, including recently enacted consumer privacy laws in Colorado, Connecticut, Utah, and Virginia.
• Reduction in hospital outpatient payments for 340B drugs from ASP plus 6% to ASP minus 22% (with certain exceptions), effective January 2018. This change might result in a reduction in revenue from the sale of 340B drugs.
• We expanded our operations in the United Kingdom and the European Union. Brexit could adversely affect our political, regulatory, and financial position.
• The company may be required to record a significant impairment charge for goodwill and intangible assets due to significant negative industry or economic trends, rising interest rates, or a significant decline in stock price.
• Compliance with global privacy, cybersecurity, and data protection-related laws and regulations is difficult and costly.
• We may conduct business in additional foreign countries, which subjects us to various risks inherent in global operations.
• The United States Supreme Court ruled in American Hospital Association v. Becerra that CMS's final rule was inconsistent with the Medicare statute and was therefore invalid. This change might result in a reduction in revenue from the sale of drugs covered under Medicare.
• Failure to comply with tax laws and regulations could adversely affect tax positions and/or tax liabilities.
• The company acknowledges that estimates and judgments by management are involved in the impairment assessment of goodwill and intangible assets.
• The passage of the IRA reforms may impact the company's customer pricing structures, manufacturer distribution relationships and revenue, customers' billing processes and reimbursement amounts, and drug prices more generally (including outside of the Medicare context). This change might result in a reduction in revenue from the sale of drugs.
• The company recognizes that security incidents such as ransomware attacks are becoming increasingly prevalent and severe, as well as increasingly difficult to detect.
• Legislative, regulatory, or industry measures to address the misuse of prescription opioid medications may affect the company's business in ways that cannot be predicted.
• Continued consolidation within the healthcare industry could adversely affect our results of operations.
• Loss or disruption of information systems could disrupt operations and have a material adverse effect on the business and results of operations.
• Our two largest trade receivable balances due from customers represented approximately 38% and 7% of accounts receivable, net. Any credit failure of a significant supplier could have an adverse effect on the supply or availability of products.
• The importation of drugs from Canada, if implemented, could negatively impact the company's customers' businesses and state or governmental healthcare programs.
• The company may experience cyberattacks aimed at disrupting services, which could result in the disclosure or misuse of confidential or proprietary information or personal data.
• The Inflation Reduction Act contains significant reforms affecting prescription drug pricing and reimbursement.