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Financial Instruments (Tables)
 12 Months Ended
Dec. 31, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Effect of Net Investment Hedges
The effects of the Company’s net investment hedges on OCI and the Consolidated Statement of Income are shown below:
Amount of Pretax (Gain) Loss Recognized in Other Comprehensive Income (1)
Amount of Pretax (Gain) Loss Recognized in Other (income) expense, net for Amounts Excluded from Effectiveness Testing
Years Ended December 31202020192018202020192018
Net Investment Hedging Relationships
Foreign exchange contracts
$26 $(10)$(18)$(19)$(31)$(11)
Euro-denominated notes385 (75)(183)— — — 
(1) No amounts were reclassified from AOCI into income related to the sale of a subsidiary.
Summary of Interest Rate Derivatives At December 31, 2020, the Company was a party to 14 pay-floating, receive-fixed interest rate swap contracts designated as fair value hedges of fixed-rate notes in which the notional amounts match the amount of the hedged fixed-rate notes as detailed in the table below:
2020
Debt InstrumentPar Value of DebtNumber of Interest Rate Swaps HeldTotal Swap Notional Amount
3.875% notes due 2021 (1)
$1,150 5 $1,150 
2.40% notes due 2022
1,000 4 1,000 
2.35% notes due 2022
1,250 5 1,250 
(1) These interest rate swaps matured in January 2021.
Schedule of Fair Value Hedging Instruments, Statements of Financial Performance and Financial Position
The table below presents the location of amounts recorded on the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges as of December 31:
Carrying Amount of Hedged LiabilitiesCumulative Amount of Fair Value Hedging Adjustment Increase (Decrease) Included in the Carrying Amount
2020201920202019
Balance Sheet Line Item in which Hedged Item is Included
Loans payable and current portion of long-term debt$1,150 $1,249 $— $(1)
Long-Term Debt2,301 3,409 53 14 
Fair Value of Derivatives on a Gross Basis Segregated Between those Derivatives that are Designated as Hedging Instruments and those that are Not Designated as Hedging Instruments
Presented in the table below is the fair value of derivatives on a gross basis segregated between those derivatives that are designated as hedging instruments and those that are not designated as hedging instruments as of December 31:
  20202019
  Fair Value of
Derivative		U.S. Dollar
Notional		Fair Value of
Derivative		U.S. Dollar
Notional
 Balance Sheet CaptionAssetLiabilityAssetLiability
Derivatives Designated as Hedging Instruments
       
Interest rate swap contractsOther current assets$1 $— $1,150 $— $— $— 
Interest rate swap contractsOther Assets54 — 2,250 15 — 3,400 
Interest rate swap contractsAccrued and other current liabilities— — — — 1 1,250 
Foreign exchange contractsOther current assets12 — 3,183 152 — 6,117 
Foreign exchange contractsOther Assets45 — 2,030 55 — 2,160 
Foreign exchange contractsAccrued and other current liabilities— 217 5,049 — 22 1,748 
Foreign exchange contractsOther Noncurrent Liabilities— 1 52 — 1 53 
  $112 $218 $13,714 $222 $24 $14,728 
Derivatives Not Designated as Hedging Instruments
       
Foreign exchange contractsOther current assets$70 $— $7,260 $66 $— $7,245 
Foreign exchange contractsAccrued and other current liabilities— 307 11,810 — 73 8,693 
  $70 $307 $19,070 $66 $73 $15,938 
  $182 $525 $32,784 $288 $97 $30,666 
Information on Derivative Positions Subject to Master Netting Arrangements as if they were Presented on a Net Basis The following table provides information on the Company’s derivative positions subject to these master netting arrangements as if they were presented on a net basis, allowing for the right of offset by counterparty and cash collateral exchanged per the master agreements and related credit support annexes at December 31:
20202019
AssetLiabilityAssetLiability
Gross amounts recognized in the consolidated balance sheet$182 $525 $288 $97 
Gross amounts subject to offset in master netting arrangements not offset in the consolidated balance sheet
(156)(156)(84)(84)
Cash collateral posted/received— (36)(34)— 
Net amounts$26 $333 $170 $13 
Location and Pretax Gain or Loss Amounts for Derivatives
The table below provides information regarding the location and amount of pretax (gains) losses of derivatives designated in fair value or cash flow hedging relationships:
Sales
Other (income) expense, net (1)
Other comprehensive income (loss)
Years Ended December 31202020192018202020192018202020192018
Financial Statement Line Items in which Effects of Fair Value or Cash Flow Hedges are Recorded$47,994 $46,840 $42,294 $(886)139 (402)$(441)$(648)$(361)
(Gain) loss on fair value hedging relationships
Interest rate swap contracts
Hedged items
— — — 40 95 (27)— — — 
Derivatives designated as hedging instruments
— — — (76)(65)50 — — — 
Impact of cash flow hedging relationships
Foreign exchange contracts
Amount of (loss) gain recognized in OCI on derivatives
— — — — — — (383)87 228 
(Decrease) increase in Sales as a result of AOCI reclassifications
(6)255 (160)— — — 6 (255)160 
Interest rate contracts
Amount of gain recognized in Other (income) expense, net on derivatives
— — — (4)(4)(4)— — — 
Amount of loss recognized in OCI on derivatives
— — — — — — (4)(6)(4)
(1) Interest expense is a component of Other (income) expense, net.
Income Statement Effects of Derivatives Not Designated as Hedging Instruments
The table below provides information regarding the income statement effects of derivatives not designated as hedging instruments:
Amount of Derivative Pretax (Gain) Loss Recognized in Income
Years Ended December 31202020192018
Derivatives Not Designated as Hedging InstrumentsIncome Statement Caption
Foreign exchange contracts (1)
Other (income) expense, net$(12)$174 $(260)
Foreign exchange contracts (2)
Sales13 1 (8)
Interest rate contracts (3)
Other (income) expense, net9 — — 
Forward contract related to Seagen common stockResearch and development expenses15 — — 
(1) These derivative contracts mitigate changes in the value of remeasured foreign currency denominated monetary assets and liabilities attributable to changes in foreign currency exchange rates.
(2) These derivative contracts serve as economic hedges of forecasted transactions.
(3) These derivatives serve as economic hedges against rising treasury rates.
Information on Investments in Debt and Equity Securities
Information on investments in debt and equity securities at December 31 is as follows:
 
 20202019
 Amortized
Cost		Gross UnrealizedFair
Value		Amortized
Cost		Gross UnrealizedFair
Value
  
GainsLossesGainsLosses
U.S. government and agency securities$84 $— $— $84 $266 $3 $— $269 
Foreign government bonds5 — — 5 — — — — 
Commercial paper— — — — 668 — — 668 
Corporate notes and bonds— — — — 608 13 — 621 
Asset-backed securities— — — — 226 1 — 227 
Total debt securities89 — — 89 1,768 17 — 1,785 
Publicly traded equity securities (1)
1,787 838 
Total debt and publicly traded equity securities
$1,876 $2,623 
(1) Unrealized net gains recognized in Other (income) expense, net on equity securities still held at December 31, 2020 were $163 million during 2020. Unrealized net gains recognized in Other (income) expense, net on equity securities still held at December 31, 2019 were $160 million during 2019.
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
Financial assets and liabilities measured at fair value on a recurring basis at December 31 are summarized below:
 Fair Value Measurements UsingFair Value Measurements Using
  Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
  20202019
Assets
Investments
Foreign government bonds$— $5 $— $5 $— $— $— $— 
Commercial paper— — — — — 668 — 668 
Corporate notes and bonds— — — — — 621 — 621 
Asset-backed securities— — — — — 227 — 227 
U.S. government and agency securities
— — — — — 209 — 209 
Publicly traded equity securities
780 — — 780 518 — — 518 
 780 5 — 785 518 1,725 — 2,243 
Other assets (1)
U.S. government and agency securities
84 — — 84 60 — — 60 
Publicly traded equity securities
1,007 — — 1,007 320 — — 320 
1,091 — — 1,091 380 — — 380 
Derivative assets (2)
Forward exchange contracts— 90 — 90 — 169 — 169 
Interest rate swaps— 55 — 55 — 15 — 15 
Purchased currency options— 37 — 37 — 104 — 104 
 — 182 — 182 — 288 — 288 
Total assets$1,871 $187 $— $2,058 $898 $2,013 $— $2,911 
Liabilities
Other liabilities
Contingent consideration$— $— $841 $841 $— $— $767 $767 
Derivative liabilities (2)
Forward exchange contracts— 505 — 505 — 95 — 95 
Written currency options— 20 — 20 — 1 — 1 
Interest rate swaps— — — — — 1 — 1 
— 525 — 525 — 97 — 97 
Total liabilities$— $525 $841 $1,366 $— $97 $767 $864 
(1)    Investments included in other assets are restricted as to use, including for the payment of benefits under employee benefit plans.
(2)    The fair value determination of derivatives includes the impact of the credit risk of counterparties to the derivatives and the Company’s own credit risk, the effects of which were not significant.
Summarized Information about the Changes in Liabilities for Contingent Consideration
Summarized information about the changes in liabilities for contingent consideration associated with business acquisitions is as follows:
20202019
Fair value January 1$767 $788 
Additions97 — 
Changes in estimated fair value (1)
83 64 
Payments(106)(85)
Fair value December 31 (2)(3)
$841 $767 
(1) Recorded in Cost of sales, Research and development expenses, and Other (income) expense, net. Includes cumulative translation adjustments.
(2) Balance at December 31, 2020 includes $148 million recorded as a current liability for amounts expected to be paid within the next 12 months.
(3) At December 31, 2020 and 2019, $711 million and $625 million, respectively, of the liabilities relate to the termination of the Sanofi Pasteur MSD joint venture in 2016. As part of the termination, Merck recorded a liability for contingent future royalty payments of 11.5% on net sales of all Merck products that were previously sold by the joint venture through December 31, 2024. The fair value of this liability is determined utilizing the estimated amount and timing of projected cash flows and a risk-adjusted discount rate of 8% to present value the cash flows.