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Fair Value Measurements
 12 Months Ended
Dec. 31, 2022
Fair Value Disclosures [Abstract]  
Fair Value Measurements FAIR VALUE MEASUREMENTS
The following table summarizes the types of assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy:
 December 31, 2022December 31, 2021
(in millions)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets:        
Available-for-sale debt securities:
U.S. treasury securities$410 $— $— $410 $407 $— $— $407 
U.S. government agencies securities— 35 — 35 — 4 — 4 
Non-U.S. government securities— 34 — 34 — 50 — 50 
Certificates of deposit— 54 — 54 — 249 — 249 
Corporate debt securities— 1,427 — 1,427 — 1,363 — 1,363 
Residential mortgage and asset-backed securities— 333 — 333 — 424 — 424 
Equity securities:
Money market funds3,831 — — 3,831 3,661 — — 3,661 
Equity investment in Galapagos NV (“Galapagos”)(1)
736 — — 736 931 — — 931 
Equity investment in Arcus Biosciences, Inc. (“Arcus”)(1)
286 — — 286 559 — — 559 
Other publicly traded equity securities175 — — 175 331 — — 331 
Deferred compensation plan220 — — 220 261 — — 261 
Foreign currency derivative contracts— 60 — 60 — 80 — 80 
Total$5,658 $1,943 $— $7,600 $6,150 $2,170 $— $8,320 
Liabilities:
Liability for MYR GmbH (“MYR”) contingent consideration$— $— $275 $275 $— $— $317 $317 
Deferred compensation plan220 — — 220 261 — — 261 
Foreign currency derivative contracts— 42 — 42 — 5 — 5 
Total$220 $42 $275 $538 $261 $5 $317 $583 
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(1)    See Note 10. Collaborations and Other Arrangements for additional information.
Level 2 Inputs
Available-for-Sale Debt Securities
For our available-for-sale debt securities, we estimate the fair values by reviewing trading activity and pricing as of the measurement date, and by taking into consideration valuations obtained from third-party pricing services. The pricing services utilize industry standard valuation models, including both income-based and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate the fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities, prepayment/default projections based on historical data and other observable inputs.
Foreign Currency Derivative Contracts
Substantially all of our foreign currency derivative contracts have maturities within an 18-month time horizon and all are with counterparties that have a minimum credit rating of A- or equivalent by S&P Global Ratings, Moody’s Investors Service, Inc. or Fitch Ratings, Inc. We estimate the fair values of these contracts by taking into consideration the valuations obtained from a third-party valuation service that utilizes an income-based industry standard valuation model for which all significant inputs are observable, either directly or indirectly. These inputs include foreign currency exchange rates, Secured Overnight Financing Rate and swap rates. These inputs, where applicable, are observable at commonly quoted intervals.
Senior Unsecured Notes
The total estimated fair values of our senior unsecured notes, determined using Level 2 inputs based on their quoted market values, were approximately $21.9 billion and $28.6 billion as of December 31, 2022 and 2021, respectively, and the carrying values were $24.1 billion and $25.6 billion as of December 31, 2022 and 2021, respectively.
Level 3 Inputs
Contingent Consideration
In connection with our first quarter 2021 acquisition of MYR, we recorded a liability for contingent consideration, which is revalued each reporting period until the related contingency is resolved. The contingent consideration was estimated using probability-weighted scenarios for U.S. Food and Drug Administration (“FDA”) approval of Hepcludex.
The following table summarizes the change in fair value of our contingent consideration:
Year Ended December 31,
(in millions)20222021
Beginning balance$317 $— 
Additions— 341 
Changes in valuation assumptions(1)
(21)(1)
Effect of foreign exchange remeasurement(2)
(21)(23)
Ending balance
$275 $317 
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(1)     Included in Research and development expenses on our Consolidated Statements of Income and primarily related to increasing discount rates and updated probability rate estimates.
(2)     Included in Other income (expense), net on our Consolidated Statements of Income.
Liability Related to Future Royalties
We recorded a liability related to future royalties as part of our fourth quarter 2020 acquisition of Immunomedics, Inc. (“Immunomedics”), which is subsequently amortized using the effective interest method over the remaining estimated life. The fair values of the liability related to future royalties were $1.1 billion and $1.3 billion as of December 31, 2022 and 2021, respectively, and the carrying value was $1.1 billion as of December 31, 2022 and 2021. See Note 11. Debt and Credit Facilities for additional information.
Nonrecurring Fair Value Measurements
During 2022, we recorded a partial impairment charge of $2.7 billion related to certain IPR&D assets. See Note 8. Goodwill and Intangible Assets for additional information. There were no indicators of impairment noted during 2021.
Fair Value Level Transfers
There were no transfers between Level 1, Level 2 and Level 3 in the periods