PFIZER INC

We are subject to extensive regulation by government authorities in the countries in which we do business. This includes laws and regulations governing the operations of biopharmaceutical companies, such as the research and development, testing, approval, manufacturing and marketing of products, pricing (including discounts and rebates) and price reporting, interactions with healthcare professionals, institutions, and referral sources, reporting of remuneration provided to healthcare providers and academic medical centers, financial assistance provided to patients, clinical research, data privacy and information security, among others. These laws and regulations may require administrative guidance for implementation, and a failure to comply could subject us to legal and/or administrative actions. Enforcement measures may include substantial fines and/or penalties, orders to stop non-compliant activities, criminal charges, warning letters, product recalls or seizures, delays in product approvals, exclusion from participation in government programs or contracts as well as limitations on conducting business in applicable jurisdictions, and could result in harm to our reputation and business. See Note 16A. Compliance with these laws and regulations is costly, and requires significant technical expertise and capital investment to ensure compliance.

In the U.S.

Drug and Biologic Regulation. The FDA, pursuant to the FFDCA, the Public Health Service Act and other federal statutes and regulations, extensively regulates pre- and post-marketing activities related to our biopharmaceutical products and devices. The statutes and regulations govern areas such as safety and efficacy, clinical trials, advertising and promotion, quality control, manufacturing, labeling, distribution, post-marketing safety surveillance and reporting, and record keeping. Other U.S. federal agencies, including the DEA, may also regulate certain of our products and activities.

For a biopharmaceutical company to market a drug or a biologic product, including vaccines, the FDA must approve a product’s NDA or BLA (or supplemental NDA or supplemental BLA). Prior to such approval, the FDA will evaluate whether the product is safe and effective for its intended use.

A drug or biologic may be subject to post marketing commitments, which are studies or clinical trials that the product sponsor agrees to conduct, or post marketing requirements, which are studies or clinical trials that are required as a condition of approval. In addition, we are also required to report adverse events and comply with cGMPs (the FDA regulations that govern all aspects of manufacturing quality for pharmaceuticals) and the Drug Supply Chain Security Act (the law that, among other things, sets forth requirements related to product tracing, product identifiers and verification for manufacturers, wholesale distributors, third-party logistics providers, re-packagers and dispensers to facilitate the tracing of product through the pharmaceutical distribution supply chain), as well as advertising and promotion regulations. See the Item 1A. Risk Factors—Development, Regulatory Approval and Marketing of Products and —Post-Authorization/Approval Data sections. We are also responsible for monitoring, reviewing, and the periodic reporting of adverse drug experience, or pharmacovigilance, including information received from any source, such as commercial marketing experience, postmarketing clinical investigations, postmarketing epidemiological or surveillance studies, clinical trials conducted by other parties within and outside the U.S., reports in the scientific literature, and unpublished scientific papers.

In the context of public health emergencies, like the COVID-19 pandemic, we may apply to the FDA for an EUA which, if granted, allows for the distribution and use of our products during the declared emergency, in accordance with the conditions set forth in the EUA, unless the EUA is terminated by the government. Although the criteria for an EUA differ from the criteria for approval of an NDA or BLA, EUAs nevertheless require the development and submission of data to satisfy the relevant FDA standards, and a number of ongoing obligations. The FDA generally expects EUA holders to work toward submission of full applications, such as a BLA or an NDA, as soon as possible.

Biosimilar Regulation. The FDA regulates biosimilars which are follow-on products that reference an innovative biological product. A product is biosimilar if the products are highly similar and there are no clinically meaningful differences between them. A biosimilar is interchangeable if switching the products does not decrease safety or efficacy. In many states, interchangeable biosimilars may be substituted for the reference product at the pharmacy. A biosimilar application may not be filed until four years, and not approved until 12 years, after reference product licensure. No other interchangeable may be approved until one year after approval of the first interchangeable.

Sales and Marketing Regulations. Our marketing and promotional practices are subject to federal and state laws, such as the Anti-Kickback Statute (AKS), Civil Monetary Penalties Law, False Claims Act and state laws governing kickbacks and false claims, intended to prevent fraud and abuse in the healthcare industry. These laws can apply to both our direct-to-consumer marketing practices as well as our marketing to clinicians and healthcare facilities. The AKS prohibits, among other things, soliciting, offering, receiving, or paying anything of value to generate business that may be paid for, in whole or in part, by a federal healthcare program. The Civil Monetary Penalties Law covers a variety of conduct, often violations under other laws, and includes penalties for AKS violations as well as causing the submission of false claims. The False Claims Act generally prohibits anyone from knowingly and willingly presenting, or causing to be presented, any claims for payment for goods or services, including to government payors, such as Medicare and Medicaid, that are false or fraudulent including false certifications of compliance with applicable law. The federal government and states also regulate sales and marketing activities and financial interactions between manufacturers and healthcare providers and academic medical centers, requiring disclosure to government authorities and the public of such interactions, and the adoption of compliance standards or programs. State attorneys general have also taken action to regulate the marketing of prescription drugs under state consumer protection and false advertising laws.

Pricing, Reimbursement and Access Regulations. Pricing and reimbursement for our products depend in part on government regulation. Any significant efforts at the federal or state levels to reform the healthcare system by changing the way healthcare is provided or funded or to expand controls on drug pricing, implement international reference pricing, including Most-Favored-Nation (MFN) drug pricing, or impact government reimbursement and access to medicines and vaccines on public and private insurance plans or consumer purchasing platforms could have a material impact on us.

In May 2025, the Trump Administration issued an Executive Order titled “Delivering Most-Favored Nation Prescription Drug Pricing to American Patients”, outlining a plan to reduce prescription drug costs in the U.S., which was followed by formal letters to major pharmaceutical companies (including Pfizer) in July 2025 outlining steps they should take to lower prescription drug costs to U.S. patients and taxpayers (collectively, the MFN Initiatives). In September 2025, Pfizer announced an agreement with the Trump Administration in which we voluntarily agreed to implement measures designed to make certain drug prices for U.S. patients more comparable to those in other developed countries. We are also participating in the TrumpRx.gov platform, which allows U.S. patients to purchase certain medicines at significant discounts to current retail prices. The September 2025 agreement also provides a three-year grace period during which time our products will not face Section 232 tariffs, provided the Company further invests in manufacturing in the U.S. Pfizer is now in the process of entering into binding final agreements to implement these arrangements.

In addition, we must offer discounts or rebates on purchases of pharmaceutical products, and often voluntarily agree to supplemental rebates, under various government programs including Medicare, Medicaid, the Veterans Administration and the 340B Program. We also must report specific prices to state and federal government agencies. The calculations necessary to determine the prices reported are complex and the failure to do so accurately may expose us to enforcement measures. See the discussion regarding rebates in the Product Revenue Deductions section within MD&A and Note 1G.

The drug pricing provisions of the IRA have been and continue to be implemented. The IRA includes several provisions intended to lower prescription drug costs for Medicare patients and to reduce drug spending by the federal government. The IRA also made significant changes to the Medicare Part D benefit design (IRA Medicare Part D Redesign), which took effect beginning in 2025 and negatively impacted our 2025 revenues by approximately $1 billion. We do not expect a material, incremental impact from the IRA Medicare Part D Redesign in 2026 versus the baseline set in 2025. Among other things, the IRA enhanced the Medicare Part D benefit by eliminating the coverage gap (“donut hole”) beginning in 2025, added a maximum out-of-pocket cap for Medicare beneficiaries (set at $2,100 for 2026), and created a new program, the Medicare Prescription Payment Plan, that allows patients to pay their cost-sharing over time. These changes also include a new Medicare Part D Manufacturer Discount Program, which changed our discounting obligations for Medicare Part D utilization of our drugs. Specifically, this program requires manufacturers to provide a 10% discount on branded prescriptions in the initial coverage phase and a 20% discount in the catastrophic phase. The IRA also imposes rebates under Medicare Part B and Medicare Part D on drug price increases that outpace inflation, and directs HHS to set the prices of certain high-expenditure, single-source drugs and biologics covered under Medicare, known as the MDPNP. In August 2023, CMS published the first ten medicines subject to the MDPNP, which included Eliquis. In August 2024, the government released the new Medicare price for Eliquis, which, effective January 1, 2026, is required to be offered to all Medicare beneficiaries at the price established by the government (known as the Maximum Fair Price). The Maximum Fair Price also must be offered to covered entities participating in the 340B Program that dispense Eliquis to a Medicare beneficiary when the Maximum Fair Price is lower than the statutorily-mandated price such entities are offered under the 340B Program. In January 2025, CMS announced the selection of another 15 drugs from Medicare Part D for the Maximum Fair Price, with prices to be set and effective on January 1, 2027. Ibrance and Xtandi were included in the list of 15 drugs selected. Another 15 drugs from Medicare Part B or Medicare Part D were selected on January 27, 2026, for the Maximum Fair Price to be set and effective on January 1, 2028. Xeljanz was included in the list of 15 drugs selected. It is possible that more of our products could be selected in future years, which could, among other things, lead to lower revenues. The MDPNP is currently subject to legal challenges and therefore, the outcome of the MDPNP remains uncertain. We continue to evaluate the impact of the IRA on our business, operations and financial condition and results as the full effect of the IRA on our business and the pharmaceutical industry remains uncertain. See the discussion regarding the IRA in the Overview of Our Performance, Operating Environment, Strategy and Outlook—Our Operating Environment section within MD&A.

Changes to the MDRP or the 340B Program also could have a material impact on our business. For example, certain changes finalized by CMS in a December 2020 final rule, including which products qualify as “line extension” drugs subject to increased rebate liability, may have a material adverse impact on our business. Additionally, in September 2024, CMS finalized a new rule that, among other items, expands the scope of medications considered to be “covered outpatient drugs” that could be subject to rebates under the MDRP and imposes penalties on covered outpatient drugs that CMS determines to be “misclassified.” Changes to the way we calculate Average Sales Price under the Medicare Part B program, including new rules regarding the treatment of bundled sales and bona fide service fees that were finalized in a November 2025 final rule, also may impact the reimbursement amount available to providers for our Part B products administered to Medicare beneficiaries. These changes could impact our revenues for such products if Part B reimbursement amounts are negatively impacted. Many pharmaceutical manufacturers believe the 340B Program continues to expand beyond the original intent of serving low-income/uninsured patients. However, there has been limited government oversight to control this significant growth. Accordingly, several manufacturers, including Pfizer, have implemented initiatives and policies seeking to improve 340B Program integrity and transparency, such as establishing certain conditions related to use of contract pharmacies, requesting or requiring limited data submissions by covered entities, and pursuing use of rebate models.

Some of these efforts have been the subject of legal challenges and other advocacy efforts by covered entities, states, and/or the HHS Health Resources and Services Administration (HRSA), the agency that administers the 340B Program. In 2022, we implemented a policy to help improve contract pharmacy integrity. In 2021 and 2022, HRSA sent letters to numerous manufacturers (not including Pfizer) that implemented contract pharmacy policies and integrity initiatives; the letters expressed HRSA’s view that those manufacturers’ policies were in violation of the 340B Program statute. Several manufacturers challenged HRSA’s enforcement letters in federal court. We believe that our policy is consistent with the statute and supported by the federal court decisions issued to date.

In addition, some states have enacted laws seeking to address various aspects of manufacturer policies related to contract pharmacy transactions in their states. Several stakeholders have challenged such laws and litigation is ongoing in several jurisdictions. Certain courts have decided these challenges in favor of manufacturers and other courts have ruled in favor of relevant states. Additionally, other states have considered and could enact similar laws going forward, although any such laws also may be subject to legal challenges.

Additional legal or legislative developments at the federal or state level with respect to the 340B Program may have an adverse impact on our integrity initiative, and we may face enforcement action or penalties, depending upon such developments. The 340B Program continues to be a subject of congressional scrutiny and inquiries, litigation, and other developments, any or all of which could affect the scope of the 340B Program and Pfizer’s obligation to offer the 340B price to 340B Program-covered entities under the 340B Program. See the Item 1A. Risk Factors—Pricing and Reimbursement section.

States seek to control healthcare costs related to Medicaid and other state regulated healthcare programs. A majority of states use preferred drug lists to manage access to pharmaceutical products under Medicaid, including some of our products. States may seek to negotiate supplemental rebate agreements that are larger than the minimum federal requirement for preferred formulary access. Preferred access to our products under the Medicaid managed care programs are often determined by the managed care health plans contracted by the state to administer benefits, which may also require supplemental rebates for preferred formulary access. We expect states will continue to seek cost cutting, which may focus on managed care capitation payments, upper pricing limits, supplemental rebates, and/or formulary management.

Coverage and cost sharing for certain insurance programs including Medicare, Medicaid and Children’s Health Immunization Program (CHIP) can depend on recommendations from advisory committees, including the U.S. Preventive Services Taskforce (USPSTF) and the ACIP. Changes in the recommendations or structure of those committees may affect the use of our medicines and vaccines.

In the U.S., there is considerable public and government scrutiny of pharmaceutical pricing and intellectual property and we expect to see continued focus by federal and state governments on regulating pricing and access to medicine, in addition to actions already taken, which could result in legislative and regulatory changes.

Further efforts by states and the federal government to regulate prices or payment for pharmaceutical products, including proposed actions to facilitate drug importation, implement international reference pricing, including MFN drug pricing, or establish upper pricing limits that cap reimbursement to lower reference prices, require deep discounts, impose financial penalties related to pricing practices, and require manufacturers to report and make public price increases and sometimes a written justification for the increase, could adversely affect our business if implemented.

Further, commercial payors often follow Medicare coverage and reimbursement policies when setting their own payment rates. Any reduction in cost or other containment measures may similarly be adopted by commercial plans. Payors may continue to promote generic drugs and biosimilars more aggressively to generate savings and attempt to stimulate additional price competition. In addition, we expect that consolidation and integration among pharmacy chains, wholesalers and PBMs will increase pricing pressures in the industry. See the Item 1A. Risk Factors—Managed Care Trends section.

Anti-Corruption. The FCPA prohibits U.S. corporations and their representatives from offering, promising, authorizing or making payments to any foreign government official, government staff member, political party or political candidate to obtain or retain business abroad. The scope of the FCPA includes interactions with certain healthcare professionals in many countries. Other countries have enacted similar anti-corruption laws and/or regulations.

Data Privacy. The number of privacy and data security laws and regulations in the U.S. to which we are subject on the federal and state level continues to increase. We routinely collect and use sensitive personal data relating to health. The legislative, regulatory and litigation landscape for privacy and data protection requirements is rapidly evolving and changing, and may limit our ability to use data globally or across borders. Data protection requirements are not universal and can conflict between jurisdictions. Compliance with those laws and regulations is made more complex by the lack of consistent standards, common definitions, or clear regulatory expectations. We also anticipate continued and new uses of data as we explore the use of AI tools both internally and externally. Enforcement of these data privacy and security laws and regulations is increasing and litigation is becoming more common, and we expect such trends will continue. Any failure or perceived failure by us to comply with applicable privacy and data protection laws and regulations, including cybersecurity breaches or incidents, could subject us to significant fines and penalties, and/or litigation, as well as negatively impact our reputation.

Outside the U.S.

New Drug Approvals. In the EU, the EMA conducts the scientific evaluation, supervision and safety monitoring of our innovative medicinal products that are eligible for the centralized marketing authorization procedure. Through the centralized procedure, pharmaceutical companies may submit to the EMA a single application for a marketing authorization valid in all the EU and the European Economic Area (EEA) countries. The EC grants marketing authorization by issuing a legally binding decision based on the EMA's recommendation. The centralized procedure is mandatory for certain new products (such as biotechnology and orphan medicine), optional for others (including new active substances and products with significant therapeutic, scientific, or technical innovation), and not available for all remaining products. In the U.K., the Medicines and Healthcare products Regulatory Agency (MHRA) is the sole regulatory authority, and companies must obtain an MHRA marketing authorization to market medicines in the U.K. In Japan, the Pharmaceuticals and Medical Device Agency is involved in a wide range of regulatory activities, including clinical studies, approvals, post-marketing reviews and pharmaceutical safety. In China, the National Medical Product Administration is the primary regulatory authority for approving and supervising medicines. Health authorities in many middle- and lower-income countries might require marketing approval or scientific opinions by a recognized regulatory authority (e.g., the FDA or EMA/EC) before they begin reviewing or approving applications. By way of example, the EMA, in cooperation with the WHO, can provide scientific opinions on high priority human medicines, including vaccines, for markets outside the EU.

In the EU, the European Council and the European Parliament reached an agreement in December 2025 on the most significant reform of the EU’s Pharmaceutical Legislation in 20 years (the EU Pharma Package). The reform still requires formal approval by both institutions and will enter into force upon publication in the EU’s Official Journal, expected in 2026. The reform encompasses a broad range of measures, including changes to regulatory exclusivity, incentives to combat microbial resistance, intellectual property exemptions for generic medicines, and marketing authorization procedures. Most provisions are expected to apply from 2028, following a two-year transition period. This landmark reform is expected to significantly influence the way innovative medicines are developed, authorized, monitored, and accessed across the EU. Once implemented, certain provisions of the reform could potentially have an adverse impact on our business.

In the EU, several other recently adopted or proposed legislative initiatives may affect our business, including the EU HTA-R, new rules on substances of human origin (SoHO Regulation), the ongoing reform of the rules governing SPCs, the EU Critical Medicines Act, and the EU Biotech Act. In addition, a number of EU regulations that are not primarily focused on medicinal products may nevertheless have a material impact on pharmaceutical companies. These include the EU AI Act, EU Data Act, and the EU Health Data Space Regulation, among others. Moreover, the EU is currently discussing the Digital Omnibus Package, which comprises a series of technical amendments to a wide body of EU digital legislation.

Pharmacovigilance. In the EU, the EMA’s PRAC is responsible for reviewing and making recommendations on product safety issues. Specifically, the PRAC focuses on detecting, assessing and communicating the risks associated with adverse reactions of medicinal products, while considering their therapeutic effects. It also evaluates post-authorization safety studies and conducts pharmacovigilance audits. Outside developed markets, pharmacovigilance requirements vary and are generally not as extensive, but there is a trend toward increasing regulation.

Pricing and Reimbursement. Certain governments, including in the different EU member states, the U.K., Japan, China, Canada and Australia provide healthcare at low-to-zero direct cost to consumers at the point of care and have significant power to regulate pharmaceutical prices or patient reimbursement levels to control costs for the government-sponsored healthcare system, particularly under global financing pressures. Governments globally may use a variety of measures to control costs, including, among others, legislative or regulatory pricing reforms, cross country collaboration and procurement, price cuts, mandatory rebates, health technology assessments, forced localization as a condition of market access, international reference pricing (i.e., the practice of a country linking its regulated medicine prices to those of other countries), QCE processes and VBP. In addition, the international patchwork of price regulation, differing economic conditions and incomplete value assessments across countries has led to varying access to quality medicines in many markets and some third-party trade in our products between countries.

In China, pricing pressures have increased in recent years because of an overall focus on healthcare cost containment with the central government emphasizing improved health outcomes and decreased drug prices as key indicators of progress towards its healthcare reform. State owned hospitals and the state insurance program account for the vast majority of all drug purchases, despite recent government efforts to promote use of commercial insurance for some innovative products. For patented innovative products, drug prices have decreased dramatically as a result of adding innovative drugs (including oncology medicines, pediatric medicines, orphan drugs and medicines for chronic diseases) to the National Reimbursement Drug List via access-price negotiation. Certain patented innovative drug products are also listed for enrollment into the Catalogue of Innovative Drugs for Commercial Insurance and subject to a similar price negotiation process with selected commercial insurance stakeholders. A centralized VBP program with a tendering process implemented at both the national level and the provincial level aims to contain healthcare costs by driving utilization of generics that have passed QCE. This has resulted in further lowering the price of medicines, especially off-patent medicines; this trend is expected to continue. China is continuing its use of Health Technology Assessment, a tool used to evaluate clinical effectiveness and economic value to manage public health budgets, and is controlling mark-ups within the country using a two-invoice limited system, aiming to regulate the pricing of pharmaceutical products and certain types of medical devices. Pfizer, along with most off-patent originators, has mostly not been successful in the VBP bidding process. The government has indicated that additional drugs which are past patent-based exclusivity expiry (including biological products) could be subjected to VBP qualification in future rounds. Pfizer did not participate in the eleventh national VBP round in 2025 because it did not include any relevant Pfizer products. While certain details of future QCE expansion have been made available, we are unable to determine the impact on our business of the various pricing measures underway.

Healthcare Provider Transparency and Disclosures. Several countries have implemented laws requiring (or industry trade associations have recommended) disclosure of transfers of value made by pharmaceutical companies to healthcare providers and/or healthcare organizations, such as academic teaching hospitals.

Intellectual Property. Reliable patent protection and enforcement around the world are among the key factors we consider for continued business and R&D investment. The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (WTO-TRIPS) requires participant countries to provide patent and other intellectual property-related protection for pharmaceutical products by law, with a time-limited exemption provided for least-developed countries. While some countries have made improvements, we still face patent grant, enforcement and other intellectual property challenges in many countries.

While the global intellectual property policy environment has generally improved following implementation of WTO-TRIPS and bilateral/multilateral trade agreements, our growth and ability to bring new product innovation to patients depends on maintaining those standards and further progress in intellectual property protection. In certain developed international markets, governments maintain relatively effective intellectual property policies. However, in the EU, the review of the pharmaceutical legislation is reducing or modifying the overall period of regulatory data and market protection. In several emerging market countries and multilateral institutions, governments continue to address the role of intellectual property in the context of, for example, access to medicines.

Considerable political and economic pressure has weakened current intellectual property protection in some countries and has led to policies such as more restrictive standards for obtaining patents and more difficult procedures for patenting biopharmaceutical inventions, restrictions on patenting certain types of inventions, revocation of patents, laws or regulations that promote or provide broad discretion to issue a compulsory license, weak intellectual property enforcement and failure to implement effective regulatory data protection. Our industry advocacy efforts focus on seeking a fair and transparent business environment for foreign manufacturers, underscoring the importance of strong intellectual property systems for all innovative industries (both domestic and foreign) and helping improve patients’ access to innovative medicines and vaccines.

Data Privacy. We are subject to extensive privacy and data protection laws and regulations around the world concerning the collection, use and sharing of personal data. We routinely collect and use sensitive personal data relating to health. The legislative, regulatory and litigation landscape for privacy and data protection requirements is rapidly evolving and changing, and may limit our ability to use data globally or across borders. Data protection requirements are not universal and can conflict between jurisdictions. Compliance with those laws and regulations is made more complex by the lack of consistent standards, common definitions, or clear regulatory expectations. We also anticipate continued and new uses of data as we explore the use of AI tools both internally and externally. Enforcement of these data privacy and security laws and regulations is increasing and litigation is becoming more common, and we expect such trends will continue. Any failure or perceived failure by us to comply with applicable privacy and data protection laws and regulations, including cybersecurity breaches or incidents, could subject us to significant fines and penalties, and/or litigation, as well as negatively impact our reputation.