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Financial Instruments (Tables)
 9 Months Ended
Sep. 30, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Effect of Net Investment Hedges on OCI and the Consolidated Statement of Income
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
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
($ in millions)20212020202120202021202020212020
Net Investment Hedging Relationships
Foreign exchange contracts
$1 $10 $(27)$15 $(4)$(4)$(12)$(15)
Euro-denominated notes(77)162 (199)182 — — — — 
(1) No amounts were reclassified from AOCL into income related to the sale of a subsidiary.
Summary of Interest Rate Swaps Held At September 30, 2021, the Company was a party to nine 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.
September 30, 2021
($ in millions)Par Value of DebtNumber of Interest Rate Swaps HeldTotal Swap Notional Amount
2.40% notes due 2022
$1,000 4 $1,000 
2.35% notes due 2022
1,250 5 1,250 
Amounts Recorded on Balance Sheet Related to Fair Value Hedges
The table below presents the location of amounts recorded on the Condensed Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges:
Carrying Amount of Hedged LiabilitiesCumulative Amount of Fair Value Hedging Adjustment Increase (Decrease) Included in the Carrying Amount
($ in millions)September 30, 2021December 31, 2020September 30, 2021December 31, 2020
Loans payable and current portion of long-term debt$2,274 $1,150 $25 $— 
Long-Term Debt— 2,301 — 53 
Fair Value of Derivatives on a Gross Basis Segregated between those Derivatives that are Designated as Hedging Instruments and those that are Not Designated as Hedging Instruments
Presented in the table below is the fair value of derivatives on a gross basis segregated between those derivatives that are designated as hedging instruments and those that are not designated as hedging instruments:
  September 30, 2021December 31, 2020
  Fair Value of DerivativeU.S. Dollar
Notional		Fair Value of DerivativeU.S. Dollar
Notional
($ in millions)AssetLiabilityAssetLiability
Derivatives Designated as Hedging Instruments
Balance Sheet Caption
Interest rate swap contractsOther current assets$26 $— $2,250 $1 $— $1,150 
Interest rate swap contractsOther Assets— — — 54 — 2,250 
Foreign exchange contractsOther current assets224 — 7,138 12 — 3,183 
Foreign exchange contractsOther Assets45 — 1,469 45 — 2,030 
Foreign exchange contractsAccrued and other current liabilities— 15 1,601 — 217 5,049 
Foreign exchange contractsOther Noncurrent Liabilities— 1 145 — 1 52 
  $295 $16 $12,603 $112 $218 $13,714 
Derivatives Not Designated as Hedging Instruments
Balance Sheet Caption      
Foreign exchange contractsOther current assets$82 $— $6,333 $70 $— $7,260 
Foreign exchange contractsAccrued and other current liabilities— 117 9,522 — 307 11,810 
  $82 $117 $15,855 $70 $307 $19,070 
  $377 $133 $28,458 $182 $525 $32,784 
Information on Derivative Positions Subject to Master Netting Arrangements as if they were Presented on a Net Basis The following table provides information on the Company’s derivative positions subject to these master netting arrangements as if they were presented on a net basis, allowing for the right of offset by counterparty and cash collateral exchanged per the master agreements and related credit support annexes:
 September 30, 2021December 31, 2020
($ in millions)AssetLiabilityAssetLiability
Gross amounts recognized in the condensed consolidated balance sheet$377 $133 $182 $525 
Gross amounts subject to offset in master netting arrangements not offset in the condensed consolidated balance sheet
(120)(120)(156)(156)
Cash collateral received/posted(65)— — (36)
Net amounts$192 $13 $26 $333 
Location and Amount of Pretax (Gains) Losses of Derivatives
The table below provides information regarding the location and amount of pretax (gains) losses of derivatives designated in fair value or cash flow hedging relationships (including amounts attributable to discontinued operations):
Sales
Other (income) expense, net (1)
Other comprehensive income (loss)Sales
Other (income) expense, net (1)
Other comprehensive income (loss)
Three Months Ended September 30,Three Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,Nine Months Ended September 30,Nine Months Ended September 30,
($ in millions)202120202021202020212020202120202021202020212020
Financial Statement Line Items in which Effects of Fair Value or Cash Flow Hedges are Recorded$13,154 $10,929 $(450)$(312)$38 $10 $35,183 $30,570 $(1,007)$(637)$1,595 $(190)
(Gain) loss on fair value hedging relationships
Interest rate swap contracts
Hedged items
— — (9)(14)— — — — (29)54 — — 
Derivatives designated as hedging instruments
— — (1)— — — — — (1)(76)— — 
Impact of cash flow hedging relationships
Foreign exchange contracts
Amount of gain (loss) recognized in OCI on derivatives
— — — — 72 (195)— — — — 193 (126)
(Decrease) increase in Sales as a result of AOCL reclassifications
(36)(23)— — 36 23 (219)65 — — 219 (65)
Interest rate contracts
Amount of gain recognized in Other (income) expense, net on derivatives
— — — (1)— — — — (2)(3)— — 
Amount of loss recognized in OCI on derivatives
— — — — — (1)— — — — (2)(3)
(1) Interest expense is a component of Other (income) expense, net.
Income Statement Effects of Derivatives Not Designated as Hedging Instruments
The table below provides information regarding the income statement effects of derivatives not designated as hedging instruments (including amounts attributable to discontinued operations):
Amount of Derivative Pretax (Gain) Loss Recognized in Income
Three Months Ended
September 30,		Nine Months Ended
September 30,
($ in millions)2021202020212020
Derivatives Not Designated as Hedging InstrumentsIncome Statement Caption
Foreign exchange contracts (1)
Other (income) expense, net$18 $(7)$234 $(138)
Foreign exchange contracts (2)
Sales(4)7 6 4 
Interest rate contracts (3)
Other (income) expense, net— — — 9 
Forward contract related to Seagen common stockResearch and development— 22 — 22 
(1) These derivative contracts primarily mitigate changes in the value of remeasured foreign currency denominated monetary assets and liabilities attributable to changes in foreign currency exchange rates. Amount in the first nine months of 2021 includes a loss on forward exchange contracts entered into in conjunction with the spin-off of Organon.
(2) These derivative contracts serve as economic hedges of forecasted transactions.
(3) These derivative contracts serve as economic hedges against rising treasury rates.
Information on Investments in Debt and Equity Securities
Information on investments in debt and equity securities is as follows:
 September 30, 2021December 31, 2020
 Amortized
Cost		Gross UnrealizedFair
Value		Amortized
Cost		Gross UnrealizedFair
Value
($ in millions)GainsLossesGainsLosses
U.S. government and agency securities$83 $— $— $83 $84 $— $— $84 
Corporate notes and bonds4 — — 4 — — — — 
Foreign government bonds2 — — 2 5 — — 5 
Total debt securities$89 $— $— $89 $89 $— $— $89 
Publicly traded equity securities (1)
1,915 1,787 
Total debt and publicly traded equity securities
$2,004 $1,876 
(1) Unrealized net gains of $90 million and unrealized net losses of $109 million were recorded in Other (income) expense, net on equity securities still held at September 30, 2021 in the third quarter and first nine months of 2021, respectively. Unrealized net gains recorded in Other (income) expense, net on equity securities still held at September 30, 2020 were $43 million and $512 million in the third quarter and first nine months of 2020, respectively.
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
Financial assets and liabilities measured at fair value on a recurring basis are summarized below:
Fair Value Measurements UsingFair Value Measurements Using
 Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
($ in millions)September 30, 2021December 31, 2020
Assets
Investments
Foreign government bonds$— $2 $— $2 $— $5 $— $5 
Publicly traded equity securities433 — — 433 780 — — 780 
 433 2 — 435 780 5 — 785 
Other assets (1)
U.S. government and agency securities83 — — 83 84 — — 84 
Corporate notes and bonds4 — — 4 — — — — 
Publicly traded equity securities1,482 — — 1,482 1,007 — — 1,007 
1,569 — — 1,569 1,091 — — 1,091 
Derivative assets (2)
Forward exchange contracts— 230 — 230 — 90 — 90 
Purchased currency options— 121 — 121 — 37 — 37 
Interest rate swaps— 26 — 26 — 55 — 55 
 — 377 — 377 — 182 — 182 
Total assets$2,002 $379 $— $2,381 $1,871 $187 $— $2,058 
Liabilities
Other liabilities
Contingent consideration$— $— $902 $902 $— $— $841 $841 
Derivative liabilities (2)
Forward exchange contracts— 132 — 132 — 505 — 505 
Written currency options— 1 — 1 — 20 — 20 
— 133 — 133 — 525 — 525 
Total liabilities$— $133 $902 $1,035 $— $525 $841 $1,366 
(1) Investments included in other assets are restricted as to use, including for the payment of benefits under employee benefit plans.
(2)    The fair value determination of derivatives includes the impact of the credit risk of counterparties to the derivatives and the Company’s own credit risk, the effects of which were not significant.
Information About the Changes in Liabilities for Contingent Consideration
Summarized information about the changes in the fair value of liabilities for contingent consideration associated with business acquisitions is as follows:
Nine Months Ended September 30,
($ in millions)20212020
January 1$841 $767 
Additions— 97 
Changes in estimated fair value (1)
73 71 
Payments— (106)
Other(12)— 
September 30 (2)(3)
$902 $829 
(1) Recorded in Cost of sales, Research and development expenses, and Other (income) expense, net. Includes cumulative translation adjustments.
(2) Balance at September 30, 2021 includes $289 million recorded as a current liability for amounts expected to be paid within the next 12 months.
(3) At September 30, 2021 and December 31, 2020, $747 million and $711 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 using a risk-adjusted discount rate of 8% to present value the cash flows.