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What changed in UNITED THERAPEUTICS Corp's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of UNITED THERAPEUTICS Corp's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+594 added−505 removedSource: 10-K (2024-02-21) vs 10-K (2023-02-22)

Top changes in UNITED THERAPEUTICS Corp's 2023 10-K

594 paragraphs added · 505 removed · 428 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

225 edited+115 added−45 removed272 unchanged
Biggest changeRegulation of Medical Devices We currently do not hold any stand-alone medical device authorizations, but we do hold FDA authorization for the Tyvaso Inhalation System and the Dreamboat inhaler as part of the drug-device combination NDAs for Tyvaso and Tyvaso DPI, respectively.
Biggest changeFor RMAT designation, the product also must be intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition, and the preliminary clinical evidence must indicate that the product has the potential to address unmet medical needs for the disease or condition. 2023 Annual Report 25 Regulation of Medical Devices We currently do not hold any stand-alone medical device authorizations, but we do hold FDA authorization for the Dreamboat inhaler and the Tyvaso Inhalation System as part of the drug-device combination NDAs for Tyvaso DPI and nebulized Tyvaso, respectively.
Outside of the United States, Remodulin is marketed and sold for treatment of PAH throughout most of Europe, Canada, Mexico, and various countries throughout Asia, the Middle East, and South America, as noted in the table above. We believe that Remodulin has many qualities that make it an appealing alternative to competitive therapies.
Outside of the United States, Remodulin is marketed and sold for the treatment of PAH throughout most of Europe, Canada, Mexico, and various countries throughout Asia, the Middle East, and South America, as noted in the table above. We believe that Remodulin has many qualities that make it an appealing alternative to competitive therapies.
In 2009, the FDA approved Adcirca with a recommended dose of 40 mg, making it the only once-daily PDE-5 inhibitor for treatment of PAH. Adcirca is indicated to improve exercise ability in patients with PAH. Studies establishing effectiveness included predominately patients with functional class II-III symptoms. Headaches were the most commonly reported side effect.
In 2009, the FDA approved Adcirca with a recommended dose of 40 mg, making it the only once-daily PDE-5 inhibitor for the treatment of PAH. Adcirca is indicated to improve exercise ability in patients with PAH. Studies establishing effectiveness included predominately patients with functional class II-III symptoms. Headaches were the most commonly reported side effect.
Product to Treat Cancer — Unituxin In March 2015, the FDA approved our Biologics License Application ( BLA ) for Unituxin, in combination with granulocyte-macrophage colony-stimulating factor, interleukin-2, and 13-cis-retinoic acid, for treatment of patients with high-risk neuroblastoma (a rare form of pediatric cancer) who achieve at least a partial response to prior first-line multiagent, multimodality therapy.
Product to Treat Cancer — Unituxin In March 2015, the FDA approved our Biologics License Application ( BLA ) for Unituxin, in combination with granulocyte-macrophage colony-stimulating factor, interleukin-2, and 13-cis-retinoic acid, for the treatment of patients with high-risk neuroblastoma (a rare form of pediatric cancer) who achieve at least a partial response to prior first-line multiagent, multimodality therapy.
This exclusivity period will extend through March 202 4, and also covers Tyvaso DPI for PH-ILD. In 2004, the European Commission designated Tyvaso an orphan medicinal product for treatment of both PAH and chronic thromboembolic pulmonary hypertension, which would confer a ten-year exclusivity period commencing if and when we obtain marketing approval.
This exclusivity period will extend through March 202 4, and also covers Tyvaso DPI for PH-ILD. In 2004, the European Commission designated Tyvaso an orphan medicinal product for the treatment of both PAH and chronic thromboembolic pulmonary hypertension, which would confer a ten-year exclusivity period commencing if and when we obtain marketing approval.
Tyvaso and Orenitram—Potential Future Generic Competition We settled litigation with Watson and Actavis related to their ANDAs seeking FDA approval to market generic versions of nebulized Tyvaso and Orenitram, respectively, before the expiration of certain of our U.S. patents.
Nebulized Tyvaso and Orenitram—Potential Future Generic Competition We settled litigation with Watson and Actavis related to their ANDAs seeking FDA approval to market generic versions of nebulized Tyvaso and Orenitram, respectively, before the expiration of certain of our U.S. patents.
Adcirca—Generic Competition A U.S. patent for Adcirca for treatment of pulmonary hypertension expired in November 2017, and FDA-conferred regulatory exclusivity expired in May 2018, leading to the launch of a generic version of Adcirca by Mylan N.V. in August 2018, and by additional companies in February 2019.
Adcirca—Generic Competition A U.S. patent for Adcirca for the treatment of pulmonary hypertension expired in November 2017 and FDA-conferred regulatory exclusivity expired in May 2018, leading to the launch of a generic version of Adcirca by Mylan N.V. in August 2018, and by additional companies in February 2019.
Adcirca License Agreement In 2008, Lilly granted us an exclusive license to develop, market, promote, and commercialize Adcirca for treatment of pulmonary hypertension in the United States. We agreed to pay Lilly royalties based on our net product sales of Adcirca.
Adcirca License Agreement In 2008, Lilly granted us an exclusive license to develop, market, promote, and commercialize Adcirca for the treatment of pulmonary hypertension in the United States. We agreed to pay Lilly royalties based on our net product sales of Adcirca.
Tyvaso DPI and the MannKind Agreement In September 2018, we entered into a worldwide, exclusive license and collaboration agreement with MannKind for the development and commercialization of Tyvaso DPI for treatment of PAH. The agreement became effective on October 15, 2018.
Tyvaso DPI and the MannKind Agreement In September 2018, we entered into a worldwide, exclusive license and collaboration agreement with MannKind for the development and commercialization of Tyvaso DPI for the treatment of PAH. The agreement became effective on October 15, 2018.
The Food and Drug Omnibus Reform Act ( FDORA ), which was passed as part of the Consolidated Appropriations Act, 2023, expands the FDA’s authority in regulating accelerated approval requirements for drugs and biologics, including allowing the FDA to require initiation of a post-approval study before granting accelerated approval and to expedite withdrawal of approval if conditions are not satisfied.
The Food and Drug Omnibus Reform Act ( FDORA ), which was passed as part of the Consolidated Appropriations Act, 2023, expands the FDA’s authority in regulating accelerated approval requirements for drugs and biologics, including allowing the FDA to require initiation of a post-approval study before granting accelerated approval and to expedite withdrawal of approval if the conditions for granting accelerated approval are not satisfied.
Some “pre-amendment” devices (devices that were legally marketed prior to May 28, 1976) are unclassified, but are subject to FDA’s premarket notification and clearance process in order to be commercially distributed. A 510(k) application also sometimes requires clinical data. The FDA also allows the submission of a direct de novo petition.
Some “pre-amendment” devices (devices that were legally marketed prior to May 28, 1976) are unclassified, but are subject to the FDA’s premarket notification and clearance process in order to be commercially distributed. A 510(k) application also sometimes requires clinical data. The FDA also allows the submission of a direct de novo petition.
In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. In October 2020, the HHS and the FDA issued a final rule and guidance concerning two new pathways for importing lower-cost drugs into the United States.
In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. In October 2020, HHS and the FDA issued a final rule and guidance concerning two new pathways for importing lower-cost drugs into the United States.
Our comprehensive total rewards package includes a competitive base salary, short-term cash incentive compensation, stock awards, and an employee stock purchase plan, which encourages all of our full-time Unitherians to participate in our financial success. For example, all full-time domestic Unitherians are eligible to receive minimum annual compensation of $75,000, including salary and bonus.
Our comprehensive total rewards package includes a competitive base salary, short-term cash incentive compensation, stock awards, and an employee stock purchase plan, which encourages all full-time Unitherians to participate in our financial success. For example, all full-time domestic Unitherians are eligible to receive minimum annual compensation of $75,000, including salary and bonus.
We maintain, at a minimum, a two-year inventory of Tyvaso (nebulized only), Remodulin, and Orenitram based on expected demand, and we contract with third-party contract manufacturers to supplement our capacity for some products, in order to mitigate the risk that we might not be able to manufacture internally sufficient quantities to meet patient demand.
We maintain, at a minimum, a two-year inventory of nebulized Tyvaso, Remodulin, and Orenitram based on expected demand, and we contract with third-party contract manufacturers to supplement our capacity for some products, in order to mitigate the risk that we might not be able to manufacture internally sufficient quantities to meet patient demand.
Human Capital We are united by our commitment to developing innovative therapies for unmet needs and our dedication to be responsible citizens that have a positive impact on patients, the environment, and society. Our employees, whom we call “ Unitherians ,” are mission critical to these commitments because they share the same passion and dedication to meeting our purpose.
Human Capital We are united by our commitment to developing innovative therapies for unmet needs and our dedication to be responsible citizens that have a positive impact on patients, the environment, and society. Our employees, whom we call Unitherians , are mission critical to these commitments because they share the same passion and dedication to meeting our purpose.
Studies establishing the effectiveness of Tyvaso to treat PAH included predominately PAH patients with functional class III symptoms (patients who may not have symptoms at rest but whose activities are greatly limited by shortness of breath, fatigue, or near fainting). Tyvaso was generally well tolerated in these trials.
Studies establishing the effectiveness of nebulized Tyvaso to treat PAH included predominately PAH patients with functional class III symptoms (patients who may not have symptoms at rest but whose activities are greatly limited by shortness of breath, fatigue, or near fainting). Nebulized Tyvaso was generally well tolerated in these trials.
The Yutrepia NDA was submitted under the 505(b)(2) regulatory pathway with Tyvaso as the reference listed drug and received tentative approval from the FDA in November 2021. If and when Liquidia launches commercial sales of Yutrepia, it would compete directly with Tyvaso, Tyvaso DPI, and our other treprostinil-based products.
The Yutrepia NDA was submitted under the 505(b)(2) regulatory pathway with nebulized Tyvaso as the reference listed drug and received tentative approval from the FDA in November 2021. If and when Liquidia launches commercial sales of Yutrepia, it would compete directly with Tyvaso DPI, nebulized Tyvaso, and our other treprostinil-based products.
Most applications for non-priority drugs are reviewed within ten to twelve months. Special pathways, including “accelerated approval,” “fast track” status, “breakthrough therapy” status, and “priority review” status are granted for certain drugs that offer major advances in treatment, or provide a treatment where no adequate therapy exists.
Most applications for non-priority drugs are reviewed within ten to twelve months. Special expedited pathways, including “accelerated approval,” “fast track” status, “breakthrough therapy” status, and “priority review” status are granted for certain drugs that offer major advances in treatment, or provide a treatment where no adequate therapy exists.
Tyvaso and Tyvaso DPI are also approved to treat pulmonary hypertension associated with interstitial lung disease ( PH-ILD ). In the United States, we market and sell an oncology product, Unituxin ® (dinutuximab) Injection ( Unituxin ), which is approved for treatment of high-risk neuroblastoma, and the Remunity ® Pump for Remodulin ( Remunity ).
Tyvaso DPI and nebulized Tyvaso are also approved to treat pulmonary hypertension associated with interstitial lung disease ( PH-ILD ). In the United States, we market and sell an oncology product, Unituxin ® (dinutuximab) Injection ( Unituxin ), which is approved for the treatment of high-risk neuroblastoma, and the Remunity ® Pump for Remodulin ( Remunity ).
Oral non-prostacyclin therapies (such as PDE-5 inhibitors and ERAs) are commonly prescribed as first-line treatments for less severely ill PAH patients. As patients progress in their disease severity, additional advanced approved therapies, such as inhaled prostacyclin analogues (including Tyvaso and Tyvaso DPI) or infused prostacyclin analogues (including Remodulin) are then commonly added.
Oral non-prostacyclin therapies (such as PDE-5 inhibitors and ERAs) are commonly prescribed as first-line treatments for less severely ill PAH patients. As patients progress in their disease severity, additional advanced approved therapies, such as inhaled prostacyclin analogues (including Tyvaso DPI and nebulized Tyvaso) or infused prostacyclin analogues (including Remodulin) are then commonly added.
Orenitram Orenitram is the only FDA-approved, orally-administered prostacyclin analogue, and is the only oral PAH prostacyclin class therapy approved in the United States that is titratable to a maximum tolerated dose without a dose ceiling. We sell Orenitram to the same specialty pharmaceutical distributors in the United States that distribute Tyvaso, Tyvaso DPI, and Remodulin.
Orenitram Orenitram is the only FDA-approved, orally-administered prostacyclin analogue, and is the only oral PAH prostacyclin class therapy approved in the United States that is titratable to a maximum tolerated dose without a dose ceiling. We sell Orenitram to the same specialty pharmaceutical distributors in the United States that distribute Tyvaso DPI, nebulized Tyvaso, and Remodulin.
We believe that this new inhaled treprostinil therapy provides substantial lifestyle benefits to PAH and PH-ILD patients, as compared with nebulized Tyvaso Inhalation Solution therapy, because it is: (1) less time consuming to administer and easier to maintain, as the device is provided in pre-filled, single use, disposable cassettes, eliminating the need for cleaning and filling; and (2) mobile and more convenient, as the compact design of the inhaler and drug cassettes used with Tyvaso DPI enables the device to easily fit into the patient’s pocket and the device does not require electricity to function.
We believe that this new inhaled treprostinil therapy provides substantial lifestyle benefits to PAH and PH-ILD patients, as compared with nebulized Tyvaso therapy, because it is: (1) less time-consuming to administer and easier to maintain, as the device is provided in pre-filled, single-use, disposable cassettes, eliminating the need for cleaning and filling; and (2) mobile and more convenient, as the compact design of the inhaler and drug cassettes used with Tyvaso DPI enables the device to easily fit into the patient’s pocket and the device does not require electricity to function.
Distribution of Commercial Products United States Distribution of Tyvaso, Tyvaso DPI, Remodulin, Remunity Pump, Orenitram, and Unituxin We distribute Tyvaso, Tyvaso DPI, Remodulin, the Remunity Pump, and Orenitram throughout the United States through two contracted specialty pharmaceutical distributors: Accredo Health Group, Inc. and its affiliates ( Accredo ) and Caremark, L.L.C. ( CVS Specialty ).
Distribution of Commercial Products United States Distribution of Tyvaso DPI, Nebulized Tyvaso, Remodulin, Remunity Pump, Orenitram, and Unituxin We distribute Tyvaso DPI, nebulized Tyvaso, Remodulin, the Remunity Pump, and Orenitram throughout the United States through two contracted specialty pharmaceutical distributors: Accredo Health Group, Inc. and its affiliates ( Accredo ) and Caremark, L.L.C. ( CVS Specialty ).
We market and sell the following commercial therapies in the United States to treat PAH: Tyvaso ® (treprostinil) Inhalation Solution ( Tyvaso ), which includes the Tyvaso Inhalation System; Tyvaso DPI ® (treprostinil) Inhalation Powder ( Tyvaso DPI ); Remodulin ® (treprostinil) Injection ( Remodulin ); Orenitram ® (treprostinil) Extended-Release Tablets ( Orenitram ); and Adcirca ® (tadalafil) Tablets ( Adcirca ).
We market and sell the following commercial therapies in the United States to treat PAH: Tyvaso DPI ® (treprostinil) Inhalation Powder ( Tyvaso DPI ); Tyvaso ® (treprostinil) Inhalation Solution ( nebulized Tyvaso ), which includes the Tyvaso Inhalation System; Remodulin ® (treprostinil) Injection ( Remodulin ); Orenitram ® (treprostinil) Extended-Release Tablets ( Orenitram ); and Adcirca ® (tadalafil) Tablets ( Adcirca ).
Manufacturing and Supply We synthesize treprostinil, the active ingredient in Tyvaso, Tyvaso DPI, and Remodulin, and treprostinil diolamine, the active ingredient in Orenitram, at our facility in Silver Spring, Maryland. We produce dinutuximab, the active ingredient in Unituxin, at our Silver Spring facility. We manufacture drug product for nebulized Tyvaso, Remodulin, and Unituxin at our Silver Spring facility.
Manufacturing and Supply We synthesize treprostinil, the active ingredient in Tyvaso DPI, nebulized Tyvaso, and Remodulin, and treprostinil diolamine, the active ingredient in Orenitram, at our facilities in Silver Spring, Maryland. We produce dinutuximab, the active ingredient in Unituxin, at our Silver Spring facility. We manufacture drug product for nebulized Tyvaso, Remodulin, and Unituxin at our Silver Spring facility.
Mahon, J.D. 59 Executive Vice President, General Counsel, and Corporate Secretary Martine Rothblatt, Ph.D., J.D., M.B.A . , founded United Therapeutics in 1996 and has served as Chairperson and Chief Executive Officer since its inception. Previously, she created the satellite radio company SiriusXM. She is an inventor or co‑inventor on nine U.S. patents, with additional patents pending.
Mahon, J.D. 60 Executive Vice President, General Counsel, and Corporate Secretary Martine Rothblatt, Ph.D., J.D., M.B.A . , founded United Therapeutics in 1996 and has served as Chairperson and Chief Executive Officer since its inception. Previously, she created the satellite radio company SiriusXM. She is an inventor or co‑inventor on nine U.S. patents, with additional patents pending.
Our people mission focuses on five key commitments, providing Unitherians with: • Challenging, innovative work • Opportunities for career advancement • Autonomy to do their best work • Inspiring work environment allowing for work/life integration • Competitive pay and benefits In 2022, we achieved approximately $2.0 million in revenue per employee, which ranks near the top of our industry peer group.
Our people mission focuses on five key commitments, providing Unitherians with: • Challenging, innovative work • Opportunities for career advancement • Autonomy to do their best work • Inspiring work environment allowing for work/life integration • Competitive pay and benefits In 2023, we achieved approximately $2.0 million in revenue per employee, which ranks near the top of our industry peer group.
The FDA may also perform certain confirmatory tests on lots of some products, such as viral vaccines, before releasing the lots for distribution by the manufacturer. As with drugs, after approval of biologics, manufacturers must address any safety issues that arise, are subject to recalls or a halt in manufacturing, and are subject to periodic inspection after approval.
The FDA may also perform certain confirmatory tests on lots of some products, such as viral vaccines, before releasing the lots for distribution by the manufacturer. As with small-molecule drugs, after approval of biologics, manufacturers must address any safety issues that arise, are subject to recalls or a halt in manufacturing, and are subject to periodic inspection after approval.
The impacts of our efforts are evident in the results of a recent external engagement survey conducted by Great Place to Work, which showed that approximately 93 percent of respondents consider United Therapeutics “a great place to work.” Health and Safety. We are committed to providing and maintaining a safe, healthy, and secure workplace for all Unitherians.
The impacts of our efforts are evident in the results of a recent external engagement survey conducted by Great Place to Work, which showed that approximately 95 percent of respondents consider United Therapeutics “a great place to work.” Health and Safety. We are committed to providing and maintaining a safe, healthy, and secure workplace for all Unitherians.
Tyvaso, Tyvaso DPI, Remodulin, and Orenitram Proprietary Rights We have a number of issued patents and pending patent applications covering our treprostinil-based products, Tyvaso, Tyvaso DPI, Remodulin, and Orenitram.
Tyvaso DPI, Nebulized Tyvaso, Remodulin, and Orenitram Proprietary Rights We have a number of issued patents and pending patent applications covering our treprostinil-based products, Tyvaso DPI, nebulized Tyvaso, Remodulin, and Orenitram.
( Northern Therapeutics ), is conducting a Canadian clinical study (called SAPPHIRE ) of a gene therapy product called Aurora-GT, in which a PAH patient’s own endothelial progenitor cells are isolated, transfected with the gene for human endothelial nitric oxide synthase, expanded ex vivo , and then delivered back to the same patient.
( Northern Therapeutics ), is conducting a clinical study in Canada (called SAPPHIRE ) of a gene therapy product called Aurora-GT, in which a PAH patient’s own endothelial progenitor cells are isolated, transfected with the gene for human endothelial nitric oxide synthase, expanded ex vivo , and then delivered back to the same patient.
For drug-device combination products, comprised of an FDA-approved drug and device primary mode of action, the Cures Act applies Hatch Waxman requirements to the premarket review process such that a patent dispute regarding the listed drug may result in the delay of the 510(k) clearance or PMA approval of the combination product.
For drug-device combination products, comprised of an FDA-approved drug and device primary mode of action, the 21st Century Cures Act applies Hatch Waxman requirements to the premarket review process such that a patent dispute regarding the listed drug may result in the delay of the 510(k) clearance or PMA approval of the combination product.
The Cures Act requires the FDA to establish a program that would expedite access to devices that provide more effective treatment or diagnosis of life-threatening or irreversibly debilitating diseases or conditions, for which no approved or cleared treatment exists or which offer significant advantages over existing approved or cleared alternatives.
The 21st Century Cures Act requires the FDA to establish a program that would expedite access to devices that provide more effective treatment or diagnosis of life-threatening or irreversibly debilitating diseases or conditions, for which no approved or cleared treatment exists or which offer significant advantages over existing approved or cleared alternatives.
In May 2022, we settled litigation with ANI regarding its ANDA seeking FDA approval to market a generic version of Orenitram. Under the settlement agreements, ANI can market its generic version of Orenitram in the United States beginning in December 2027, although it may be permitted to enter the market earlier under certain circumstances.
In May 2022, we settled litigation with ANI regarding its ANDA seeking FDA approval to market a generic version of Orenitram. Under the settlement agreement, ANI can market its generic version of Orenitram in the United States beginning in December 2027, although it may be permitted to enter the market earlier under certain circumstances.
We are engaged in research and development of a variety of technologies designed to increase the supply of transplantable organs and tissues and to improve outcomes for transplant recipients through regenerative medicine, 3-D organ bioprinting, xenotransplantation, and ex vivo lung perfusion.
We are engaged in research and development of a variety of technologies designed to increase the supply of transplantable organs and tissues and to improve outcomes for transplant recipients through xenotransplantation, regenerative medicine, 3-D organ bioprinting, bio-artificial organs, and ex vivo lung perfusion.
These therapies are manufactured and marketed by large pharmaceutical companies such as Johnson & Johnson, Gilead Sciences, Inc., and Bayer Schering Pharma AG, as well as a variety of large generic drug manufacturers. There are also a wide variety of investigational PAH therapies undergoing development.
These therapies are manufactured and marketed by large pharmaceutical companies such as Johnson & Johnson, Gilead Sciences, Inc., and Bayer Schering Pharma AG, as well as a variety of large generic drug manufacturers. There are also a wide variety of investigational PAH therapies in development.
PAH is designated as group 1 pulmonary hypertension, which includes multiple etiologies such as idiopathic (meaning the cause is unknown) and heritable PAH, as well as PAH associated with connective tissue diseases. Pulmonary hypertension associated with lung disease, such as PH-ILD, has been classified as group 3 pulmonary hypertension.
PAH is designated as group 1 PH, which includes multiple etiologies such as idiopathic (meaning the cause is unknown) and heritable PAH, as well as PAH associated with connective tissue diseases. PH associated with lung disease, such as PH-ILD, has been classified as group 3 PH.
In addition, patients with PAH are classified into classes based on clinical severity, ranging from functional class I (no symptoms) through functional class IV (severe symptoms). Labeled indications for PAH therapies often note that clinical studies for the drug predominantly included patients in one or more functional classes. Our pulmonary hypertension products were initially approved to treat only PAH.
In addition, patients with PAH are classified into classes based on clinical severity, ranging from functional class I (no symptoms) through functional class IV (severe symptoms). Labeled indications for PAH therapies often note that clinical studies for the drug predominantly included patients in one or more functional classes. Our PH products were initially approved to treat only PAH.
Following expiration, we will remain obligated to refund the purchase price of any Adcirca that we previously sold to distributors that expires unsold. For additional discussion, refer to our Adcirca product description included in Part I, Item 1—Business Overview—Products to Treat Pulmonary Arterial Hypertension. We also agreed to purchase Adcirca at a fixed manufacturing cost.
Following expiration of the agreement, we will remain obligated to refund the purchase price of any Adcirca that we previously sold to distributors that expires unsold. For additional discussion, see our Adcirca product description included in Part I, Item 1—Business Overview—Products to Treat Pulmonary Arterial Hypertension. We also agreed to purchase Adcirca at a fixed manufacturing cost.
For additional discussion, refer to the risk factor entitled, Our intellectual property rights may not effectively deter competitors from developing competing products that, if successful, could have a material adverse effect on our revenues and profit s, contained in Part I , Item 1A—Risk Factors included in this Report.
For additional discussion, see the risk factor entitled, Our intellectual property rights may not effectively deter competitors from developing competing products that, if successful, could have a material adverse effect on our revenues and profit s, contained in Part I , Item 1A—Risk Factors included in this Report.
Therapies undergoing registration-phase studies, or which have completed registration-phase studies, include the following: • Yutrepia, a dry powder formulation of treprostinil developed by Liquidia, which is designed for pulmonary delivery using a disposable inhaler.
Therapies in registration-phase studies, or which have completed registration-phase studies, include the following: • Yutrepia, a dry powder formulation of treprostinil developed by Liquidia, which is designed for pulmonary delivery using a disposable inhaler.
We have two unexpired patents related to the manufacture of treprostinil that expire in 2028 and are listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book (see Orange Book below), for Tyvaso, Tyvaso DPI, Remodulin, and Orenitram.
We have three unexpired patents related to the manufacture of treprostinil that expire in 2028 and are listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book (see Orange Book below), for Tyvaso DPI, nebulized Tyvaso, Remodulin, and Orenitram.
The rebates are calculated as the difference between the annual Non-FAMP and FCP. Pricing and rebate calculations vary across products and programs, are complex, and are often subject to interpretation by us, governmental or regulatory agencies, and the courts, which can change and evolve over time.
The rebates are calculated as the difference between the annual Non-FAMP and FCP. 2023 Annual Report 29 Pricing and rebate calculations vary across products and programs, are complex, and are often subject to interpretation by us, governmental or regulatory agencies, and the courts, which can change and evolve over time.
Therapies that are eligible for RAT designation include cell therapies, therapeutic tissue engineering products, human cell and tissue products, or any combination product using these therapies, with certain exceptions.
Therapies that are eligible for RMAT designation include cell therapies, therapeutic tissue engineering products, human cell and tissue products, or any combination product using these therapies, with certain exceptions.
We have a policy that prohibits all forms of unlawful harassment and retaliation and provide training to all Unitherians on their responsibilities and protections under this policy. PBC Conversion. In 2021, we converted United Therapeutics into a public benefit corporation, becoming the first company in our industry to do so.
We have a policy that prohibits all forms of unlawful harassment and retaliation and provide training to all Unitherians on their responsibilities and protections under this policy. 2023 Annual Report 33 PBC Conversion. In 2021, we converted United Therapeutics into a public benefit corporation, becoming the first company in our industry to do so.
After reviewing the data from the SAPPHIRE study, which enrolled 12 patients and is expected to unblind in early 2024, we will decide whether to pursue a BLA for Aurora-GT, and Northern Therapeutics will consider whether to initiate further studies. We have the exclusive right to pursue this technology in the United States.
After reviewing the data from the SAPPHIRE study, which enrolled 12 patients and is expected to unblind in the first half of 2024, we will decide whether to pursue a BLA for Aurora-GT, and Northern Therapeutics will consider whether to initiate further studies. We have the exclusive right to pursue this technology in the United States.
The study protocol and informed consent information for patients in clinical trials must also be approved by an institutional review board ( IRB ). An IRB may also require the clinical trial at a site to be halted temporarily or permanently for failure to comply with the IRB’s requirements, or may impose other conditions.
The study protocol and informed consent information for patients in clinical trials must also be 2023 Annual Report 21 approved by an institutional review board ( IRB ). An IRB may also require the clinical trial at a site to be halted temporarily or permanently for failure to comply with the IRB’s requirements, or may impose other conditions.
This profile contrasts favorably with non-treprostinil based, continuously infused prostacyclin therapies on the market—Flolan ® , Veletri ® , and generic epoprostenol. Flolan and generic epoprostenol are not stable at room temperature (and therefore require refrigeration or the use of cooling packs), but Veletri may be stable at room temperature depending on its concentration.
This profile contrasts favorably with non-treprostinil based, continuously-infused prostacyclin therapies on the market: Flolan ® ; Veletri ® ; and generic epoprostenol. 2023 Annual Report 5 Flolan and generic epoprostenol are not stable at room temperature (and therefore require refrigeration or the use of cooling packs), but Veletri may be stable at room temperature depending on its concentration.
More recently, the Biden administration has reaffirmed its aim to take further action with respect to the pharmaceutical industry, beyond implementation of the IRA.
The Biden administration has also recently reaffirmed its aim to take further action with respect to the pharmaceutical industry, beyond implementation of the IRA.
The provision of benefits or advantages to physicians to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order, or use of medicinal products, which is prohibited in the EU, is governed by the national anti-bribery laws of the EU member states. Violation of these laws could result in substantial fines and imprisonment.
The provision of benefits or advantages to physicians to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order, or use of medicinal products, which is prohibited in the EU, is governed by the national anti-bribery laws of the 2023 Annual Report 31 EU member states. Violation of these laws could result in substantial fines and imprisonment.
We also engage in a variety of additional research and development efforts, including technologies designed to increase the supply of transplantable organs and tissues and improve outcomes for transplant recipients through regenerative medicine, 3-D organ bioprinting, xenotransplantation, and ex vivo lung perfusion.
We also engage in a variety of additional research and development efforts, including technologies designed to increase the supply of transplantable organs and tissues and improve outcomes for transplant recipients through xenotransplantation, regenerative medicine, bio-artificial organs, three-dimensional ( 3-D ) organ bioprinting, and ex vivo lung perfusion.
Thus, approval of a Section 505(b)(2) NDA can be delayed until all the listed patents claiming the referenced product have expired, until any non-patent exclusivity, such as exclusivity for obtaining approval of a new active 20 United Therapeutics, a public benefit corporation ingredient, listed in the Orange Book for the referenced product has expired, and, in the case of a Paragraph IV certification and subsequent patent infringement suit, until the earlier of 30 months, settlement of the lawsuit or a decision in the infringement case that is favorable to the Section 505(b)(2) applicant.
Thus, approval of a Section 505(b)(2) NDA can be delayed until all the listed patents claiming the referenced product have expired, until any non-patent exclusivity, such as exclusivity for obtaining approval of a new active ingredient, listed in the Orange Book for the referenced product has expired, and, in the case of a Paragraph IV certification and subsequent patent infringement suit, until the earlier of 30 months, settlement of the lawsuit or a decision in the infringement case that is favorable to the Section 505(b)(2) applicant.
Orphan drug designation also may qualify an applicant for federal tax credits related to research and development costs. 2022 Annual Report 19 Patent Term and Regulatory Exclusivity In 1984, the Hatch-Waxman Act created a faster approval process for generic drugs, called the ANDA.
Orphan drug designation also may qualify an applicant for federal tax credits related to research and development costs. Patent Term and Regulatory Exclusivity In 1984, the Hatch-Waxman Act created a faster approval process for generic drugs, called the ANDA.
Liquidia could obtain final FDA approval for its proposed product prior to May 2027 in two circumstances: (1) Liquidia could prevail on appeal, either from the district court judgment or IPR proceedings, such that its product is not found to infringe any valid claims of our patents; or (2) the district court or appeals court could stay the district court order barring FDA approval of its product during the pendency of its appeals.
Liquidia could obtain final FDA approval for its proposed product prior to May 2027 in two circumstances: (1) Liquidia could prevail on appeal, either from the district court judgment or IPR proceedings, such that its product is not found to infringe any valid claims of our patents; or (2) the district court could modify the district court order barring FDA approval of its product.
In May 2021, Sandoz/Liquidia Corporation announced that Sandoz’s generic treprostinil has been made available for subcutaneous use, following FDA clearance of a cartridge that can deliver the product via the Smiths Medical CADD MS-3 pump. See Note 14— Litigation, to our consolidated financial statements included in this Report.
In May 2021, Sandoz/Liquidia Corporation announced that Sandoz’s generic treprostinil was made available for subcutaneous use, following FDA clearance of a cartridge that can administer the product via the Smiths Medical CADD MS-3 pump. See Note 14— Litigation, to our consolidated financial statements included in this Report.
This allows therapeutic concentrations of Remodulin to be delivered at very low flow rates via miniaturized infusion pumps for both subcutaneous and intravenous infusion. Remodulin can be continuously infused for up to 48 hours before refilling the external infusion pump.
This allows therapeutic concentrations of Remodulin to be delivered at low flow rates via miniaturized infusion pumps for both subcutaneous and intravenous infusion. Remodulin can be continuously infused for up to 72 hours before refilling the external infusion pump, or up to 48 hours for diluted Remodulin.
Tadalafil is also the active pharmaceutical ingredient in Cialis ® , which is marketed by Eli Lilly and Company ( Lilly ) for treatment of erectile dysfunction. We acquired the commercial rights to Adcirca for treatment of PAH in the United States from Lilly in 2008.
Tadalafil is also the active pharmaceutical ingredient in Cialis®, which is marketed by Eli Lilly and Company ( Lilly ) for the treatment of erectile dysfunction. We acquired the commercial rights to Adcirca for the treatment of PAH in the United States from Lilly in 2008. We sell Adcirca at prices established by Lilly.
( Liquidia )), related to the infusion devices used to deliver Remodulin subcutaneously. We understand that generic treprostinil was initially launched by Sandoz/RareGen for use only by intravenous administration.
( Liquidia )), related to the infusion devices used to administer Remodulin subcutaneously. We understand that generic treprostinil was initially launched by Sandoz/RareGen for use only by intravenous infusion.
Through December 31, 2022, we have seen limited erosion of Remodulin sales as a result of generic treprostinil competition in the United States. We are currently engaged in litigation with Sandoz and its marketing partner, RareGen (now a subsidiary of Liquidia Corporation, the parent company of Liquidia Technologies, Inc.
Through December 31, 2023, we have seen limited erosion of Remodulin sales as a result of the availability of generic treprostinil injection in the United States. We are currently engaged in litigation with Sandoz and its marketing partner, RareGen (now a subsidiary of Liquidia Corporation, the parent company of Liquidia Technologies, Inc.
We are proud of our diverse workforce, and we firmly believe that being a great place to work means being diverse and inclusive. Women represent 51 percent of all Unitherians and 36 percent of our workforce identify as members of a racial or ethnic minority.
We are proud of our diverse workforce, and we firmly believe that being a great place to work means being diverse and inclusive. Women represent 52 percent of all Unitherians, and 35 percent of our workforce identify as members of a racial or ethnic minority.
Median 6MWD improved with Orenitram at weeks 36 (13 meters) and 48 (21 meters) compared to placebo. 6 United Therapeutics, a public benefit corporation • Change in Borg dyspnea score and WHO functional class : When classified categorically as “improved,” “no change,” or “deteriorated,” participants in the Orenitram group exhibited a significantly positive shift in Borg dyspnea score and WHO functional class compared to placebo at weeks 24, 36, and 48. • Change in NT-proBNP levels : NT-proBNP levels were significantly improved with Orenitram at weeks 24 and 36.
Median 6MWD improved with Orenitram at weeks 36 (13 meters) and 48 (21 meters) compared to placebo. • Change in Borg dyspnea score and WHO functional class : When classified categorically as “improved,” “no change,” or “deteriorated,” participants in the Orenitram group exhibited a significantly positive shift in Borg dyspnea score and WHO functional class compared to placebo at weeks 24, 36, and 48. • Change in NT-proBNP levels : NT-proBNP levels were significantly improved with Orenitram at weeks 24 and 36.
In November 2018, we received approval from Health Canada to market Unituxin, and we launched commercial sales of the product in Canada in late 2019. In June 2021, our Japanese distributor obtained approval to market Unituxin in Japan, and launched commercial sales shortly thereafter.
In November 2018, we received approval from Health Canada to market Unituxin, and we launched commercial sales of the product in Canada in late 2019. In June 2021, our Japanese distributor, Ohara Pharmaceutical Co., Ltd. ( Ohara ), obtained approval to market Unituxin in Japan and launched commercial sales shortly thereafter.
A REMS can include medication guides, communication plans for healthcare professionals, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, and the use of patient registries. Additionally, quality control as well as drug manufacture, packaging, and labeling procedures must continue to conform to cGMP requirements.
A REMS can include medication guides, communication plans for healthcare professionals, special training or 22 United Therapeutics, a public benefit corporation certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, and the use of patient registries. Additionally, quality control as well as drug manufacture, packaging, and labeling procedures must continue to conform to cGMP requirements.
Prior to 2001, he served United Therapeutics, beginning with its formation in 1996, in his capacity as principal and managing partner of a law firm specializing in technology and media law. 2022 Annual Report 31
Prior to 2001, he served United Therapeutics, beginning with its formation in 1996, in his capacity as principal and managing partner of a law firm specializing in technology and media law. 2023 Annual Report 35
The TETON studies were prompted by data from the INCREASE study of Tyvaso in PH-ILD, which demonstrated improvements in certain key parameters of lung function in pulmonary hypertension patients with fibrotic lung disease (improved absolute FVC and reduced exacerbations of underlying lung disease).
The TETON 1 and TETON 2 studies were prompted by data from the INCREASE study of nebulized Tyvaso for the treatment of PH-ILD, which demonstrated improvements in certain key parameters of lung function in pulmonary hypertension patients with fibrotic lung disease (improved absolute FVC and reduced exacerbations of underlying lung disease).
In particular, the preliminary results showed that Orenitram, when taken with an oral PAH background therapy, decreased the risk of a clinical worsening event versus placebo by 25 percent (p=0.0391), driven by a 61 percent decrease in the risk of disease progression for patients taking Orenitram, when compared to placebo (p=0.0002).
In particular, the preliminary results showed that Orenitram, when taken with an oral PAH background therapy, decreased the risk of a clinical worsening event versus 6 United Therapeutics, a public benefit corporation placebo by 25 percent (p=0.0391), driven by a 61 percent decrease in the risk of disease progression for patients taking Orenitram, when compared to placebo (p=0.0002).
In February 2018, we settled patent litigation with Actavis Laboratories FL, Inc. ( Actavis ) related to its ANDA seeking FDA approval to market a generic version of Orenitram in the United States.
Orenitram is currently only approved in the United States. In February 2018, we settled patent litigation with Actavis Laboratories FL, Inc. ( Actavis ) related to its ANDA seeking FDA approval to market a generic version of Orenitram in the United States.
In September 2021, the FDA issued two guidance documents, one final and one draft, intended to inform prospective applicants and facilitate the development of proposed biosimilars and interchangeable biosimilars, as well as to describe the FDA’s interpretation of certain statutory requirements added by the BPCIA.
In September 2021, the FDA issued two guidance documents, one final and one draft, intended to inform prospective applicants and facilitate the development of proposed biosimilars and interchangeable biosimilars, as well as to describe the FDA’s interpretation of certain statutory requirements added by the BPCIA. In September 2023, the FDA issued additional draft guidance on the same topic.
Both of these patents are subject to the IPR proceedings discussed below under Generic Competition and Challenges to our Intellectual Property Rights . In addition to the treprostinil patents noted above, we have other patents specific to our individual treprostinil-based products, including the following: • Tyvaso.
One of these patents is subject to the IPR proceedings discussed below under Generic Competition and Challenges to our Intellectual Property Rights . In addition to the treprostinil patents noted above, we have other patents specific to our individual treprostinil-based products, including the following: • Tyvaso DPI .
Ralinepag Ralinepag is a next-generation, oral, selective, and potent prostacyclin receptor agonist that we are developing for treatment of PAH.
Ralinepag Ralinepag is a next-generation, once-daily, oral, selective, and potent prostacyclin receptor agonist that we are developing for the treatment of PAH.
We manufacture Orenitram drug product and we package, warehouse, and distribute Tyvaso, Remodulin, Orenitram, and Unituxin at our facility in Research Triangle Park, North Carolina.
We manufacture Orenitram drug product and we package, warehouse, and distribute nebulized Tyvaso, Remodulin, Orenitram, and Unituxin at our facilities in Research Triangle Park, North Carolina.
Clinical trials involving significant risk devices (e.g., devices that present a potential for serious risk to the health, safety, or welfare of human subjects) are required to obtain both FDA approval of an investigational device exemption ( IDE ) application and IRB approval before study initiation.
Clinical trials involving significant risk devices (e.g., devices that present a potential for serious risk to the health, safety, or 26 United Therapeutics, a public benefit corporation welfare of human subjects) are required to obtain both FDA approval of an investigational device exemption ( IDE ) application and IRB approval before study initiation.
We participate in the Medicaid Drug Rebate program, pursuant to which, as a condition of having federal funds made available for our drugs under Medicaid and Medicare Part B, we are required to pay a rebate to each state Medicaid program for our covered outpatient drugs that are reimbursed by Medicaid.
We participate in the Medicaid Drug Rebate program, pursuant to which, as a condition of having federal funds made available for our drugs under Medicaid and Medicare Part B, we are required to pay a rebate to each state Medicaid program for our 28 United Therapeutics, a public benefit corporation covered outpatient drugs that are reimbursed by Medicaid.
Outside the United States, we generate revenues from the sale of Tyvaso, Remodulin, and Unituxin. We are actively advancing a pipeline of research and development projects that includes new indications, formulations, and delivery devices for our existing products, as well as new products to treat PAH and other conditions.
Outside the United States, we derive revenues from sales of nebulized Tyvaso, Remodulin, and Unituxin. We are actively advancing a pipeline of research and development projects that includes new indications and delivery devices for our existing products, as well as new products to treat PAH and other conditions.
In addition, Y-mAbs Therapeutics, Inc. ( Y-mAbs ), is developing several GD-2 targeting drug candidates, and in November 2020 obtained FDA approval for Danyelza ® (naxitamab - gqgk) to treat pediatric and adult patients with relapsed and refractory (second line) high-risk neuroblastoma in bone or bone marrow. Y-mAbs launched commercial sales of Danyelza in 2021.
( Y-mAbs ), is developing several GD-2 targeting drug candidates, and in November 2020 obtained FDA approval for Danyelza ® (naxitamab-gqgk) to treat pediatric and adult patients with relapsed and refractory (second line) high-risk neuroblastoma in bone or bone marrow. Y-mAbs launched commercial sales of Danyelza in 2021. Y-mAbs is also conducting studies of naxitamab for frontline high-risk neuroblastoma.
They are also available through the SEC at http://www.sec.gov/edgar/searchedgar/companysearch.html . 30 United Therapeutics, a public benefit corporation INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following is a list, as of February 22, 2023, setting forth certain information regarding our executive officers.
They are also available through the SEC at http://www.sec.gov/edgar/searchedgar/companysearch.html . 34 United Therapeutics, a public benefit corporation INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following is a list, as of February 21, 2024, setting forth certain information regarding our executive officers.
Our Commercial Products Our commercial product portfolio consists of the following: Product Mode of Delivery Indication Current Status Our Territory Tyvaso Inhaled solution via ultrasonic nebulizer PAH and PH-ILD Commercial sales in the U.S., Argentina, and Israel* Worldwide Tyvaso DPI Inhaled dry powder via pre-filled, single-use cartridges PAH and PH-ILD Commercial sales in the U.S.
Our Commercial Products Our commercial product portfolio consists of the following: Product Mode of Delivery Indication Current Status Our Territory Tyvaso DPI Inhaled dry powder via pre-filled, single-use cartridges PAH and PH-ILD Commercial sales in the U.S.
Following the successful INCREASE phase 3 registration study of Tyvaso in patients with PH-ILD, including patients with underlying idiopathic pulmonary fibrosis ( IPF ) and combined pulmonary fibrosis and emphysema, the FDA approved our efficacy supplement to the Tyvaso new drug application ( NDA ) in March 2021. As a result, Tyvaso’s label was updated to include the PH-ILD indication.
Following the successful INCREASE study of nebulized Tyvaso in patients with PH-ILD, including patients with underlying idiopathic pulmonary fibrosis ( IPF ) and combined pulmonary fibrosis and emphysema, the FDA approved our efficacy supplement to the nebulized Tyvaso NDA in March 2021. As a result, nebulized Tyvaso’s label was updated to include the PH-ILD indication.
We recognized $325.1 million, $306.1 million, and $293.1 million in Orenitram net product sales, representing 17 percent, 18 percent, and 20 percent of our total revenues for the years ended December 31, 2022, 2021, and 2020, respectively. In 2013, the FDA approved Orenitram for treatment of PAH patients to improve exercise capacity.
We recognized $359.4 million, $325.1 million, and $306.1 million in Orenitram net product sales, representing 15 percent, 17 percent, and 18 percent of our total revenues for the years ended December 31, 2023, 2022, and 2021, respectively. In 2013, the FDA approved Orenitram for the treatment of PAH patients to improve exercise capacity.
Cybersecurity and data security threats continue to evolve and raise the risk of an incident that could affect our operations or compromise our business information or sensitive personal information, including health data. 28 United Therapeutics, a public benefit corporation We may also need to collect more extensive health-related information from our employees to manage our workforce.
Cybersecurity and data security threats continue to evolve and raise the risk of an incident that could affect our operations or compromise our business information or sensitive personal information, including health data. We may also need to collect more extensive health-related information from our employees to manage our workforce.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur ability to exercise control over regulatory compliance by our third-party manufacturers is limited. • We may experience difficulty designing and implementing processes and procedures to ensure compliance with applicable regulations as we develop manufacturing operations for new products. • Natural and man-made disasters (such as fires, contamination, power loss, hurricanes, earthquakes, flooding, terrorist attacks, and acts of war), disease outbreaks, and pandemics such as COVID-19 impacting our internal and third-party manufacturing sites could cause a supply disruption. • Even if we, our third-party manufacturers, and other third parties involved in the manufacturing process comply with applicable drug and device manufacturing regulations, the sterility and quality of our products could be substandard and such products could not be sold or used or could be subject to recalls. • The FDA and its international counterparts would require new testing and compliance inspections of new manufacturers of our products, or new manufacturing facilities we operate. • The FDA and other regulatory agencies may not be able to timely inspect our facilities, or those of our third-party manufacturers, which could result in delays in obtaining necessary regulatory approvals for our products. 2022 Annual Report 33 • We may be unable to contract with needed manufacturers on satisfactory terms or at all. • The supply of materials and components necessary to manufacture and package our products may become scarce or unavailable, which could delay the manufacturing and subsequent sale of such products.
Biggest changeIf these plans are not successfully and timely implemented, we could be unable to meet the growing demand for Tyvaso DPI, which would negatively impact our Tyvaso DPI revenues. 2023 Annual Report 37 • We may experience difficulty designing and implementing processes and procedures to ensure compliance with applicable regulations as we develop manufacturing operations for new products. • Natural and man-made disasters (such as fires, contamination, power loss, hurricanes, earthquakes, flooding, terrorist attacks, and acts of war), disease outbreaks, and pandemics such as COVID-19 impacting our internal and third-party manufacturing sites could cause a supply disruption. • The sterility and quality of our products could be substandard and such products could not be sold or used or could be subject to recalls. • The FDA and its international counterparts would require new testing and compliance inspections of new manufacturers of our products, or new manufacturing facilities we operate. • If we produce products that do not meet FDA-approved specifications and we fail to detect these issues prior to distribution of these products, our products may be the subject of safety alerts, product recalls, or other corrective actions, and we may be charged in product liability claims and lawsuits which, regardless of their ultimate outcome, could have a material adverse effect on our business and reputation and on our ability to attract and retain customers. • Regulatory agencies may not be able to timely inspect our facilities, or those of our third-party manufacturers, which could result in delays in obtaining necessary regulatory approvals for our products. • We may be unable to contract with needed manufacturers on satisfactory terms or at all. • The supply of materials and components necessary to manufacture and package our products may become scarce or unavailable, which could delay the manufacturing and subsequent sale of such products.
Outside the United States, we rely substantially on our international distributors to obtain and maintain regulatory approvals for our products and to market and sell our products in compliance with applicable laws and regulations. In the United States, we derive all of our treprostinil-based revenues from sales to two distributors, Accredo and CVS Specialty.
Outside the United States, we rely substantially on our international distributors to obtain and maintain regulatory approvals for our products and to market and sell our products in compliance with applicable laws and regulations. In the United States, we derive substantially all of our treprostinil-based revenues from sales to two distributors, Accredo and CVS Specialty.
Regulatory approval for our currently marketed products is limited by the FDA and other regulators to those specific indications and conditions for which clinical safety and efficacy have been demonstrated. Any regulatory approval of our products is limited to specific diseases and indications for which our products have been deemed safe and effective by the FDA.
Regulatory approval for our currently marketed products is limited by the FDA and other regulators to those specific indications and conditions for which clinical safety and efficacy have been demonstrated. Any regulatory approval of our products is limited to specific diseases and indications for which our products have been deemed safe and effective.
Significantly, on August 16, 2022, President Biden signed the IRA into law. This statute marks the most significant action by Congress with respect to the pharmaceutical industry since adoption of the PPACA in 2010.
Most significantly, on August 16, 2022, President Biden signed the IRA into law. This statute marks the most significant action by Congress with respect to the pharmaceutical industry since adoption of the PPACA in 2010.
In October 2020, the HHS and the FDA issued a final rule and guidance concerning two new pathways for importing lower-cost drugs into the United States.
In October 2020, HHS and the FDA issued a final rule and guidance concerning two new pathways for importing lower-cost drugs into the United States.
Nonetheless, certain 340B covered entities and the HHS, in a non-binding (and now-retracted) Advisory Opinion, stated that, in their view, manufacturers in the 340B program are obligated to sell 340B drugs at the 340B ceiling prices to all contract pharmacies acting as agents of a covered entity.
Nonetheless, certain 340B covered entities and HHS, in a non-binding (and now-retracted) Advisory Opinion, stated that, in their view, manufacturers in the 340B program are obligated to sell 340B drugs at the 340B ceiling prices to all contract pharmacies acting as agents of a covered entity.
A U.S. patent for Adcirca for treatment of pulmonary hypertension expired in November 2017, and FDA-conferred regulatory exclusivity expired in May 2018, leading to the launch of a generic version of Adcirca in August 2018. We have no issued patents or pending patent applications covering Unituxin.
A U.S. patent for Adcirca for the treatment of pulmonary hypertension expired in November 2017, and FDA-conferred regulatory exclusivity expired in May 2018, leading to the launch of a generic version of Adcirca in August 2018. We have no issued patents or pending patent applications covering Unituxin.
If our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent such third party, or those to whom they communicate such technology or information, from using that technology or information to compete with us, and our business and competitive position could be harmed.
If our trade secrets were lawfully obtained or independently developed by a competitor, we would have no right to prevent such third party, or those to whom they communicate such technology or information, from using that technology or information to compete with us, and our business and competitive position could be harmed.
Our portfolio of investments is subject to market, interest, operational, and credit risk that may reduce its value. We maintain a portfolio of investments that includes: (1) corporate debt securities; (2) strategic investments in publicly-traded equity securities; and (3) strategic debt and equity investments in privately-held companies.
Our portfolio of investments is subject to market, interest, operational, and credit risk that may reduce its value. We maintain a portfolio of investments that includes: (1) corporate debt securities; (2) strategic investments in publicly-traded equity securities; and (3) strategic equity investments in privately-held companies.
We and certain other manufacturers initiated litigation challenging the Advisory Opinion and HRSA’s position on contract pharmacies generally. HHS subsequently withdrew the Advisory Opinion, but HRSA issued letters to manufacturers, including us, threatening enforcement action if the manufacturers do not abandon their 340B contract pharmacy policies. We filed suit against HHS and HRSA on June 23, 2021 in the U.S.
We and certain other manufacturers initiated litigation challenging the Advisory Opinion and HRSA’s position on contract pharmacies generally. HHS subsequently withdrew the Advisory Opinion, but HRSA issued letters to manufacturers, including us, threatening enforcement action if the manufacturers do not abandon their 340B contract pharmacy policies. We filed suit against HHS and HRSA in June 2021 in the U.S.
Third parties have challenged, and may in the future challenge, the validity of our patents, through patent litigation and/or initiating proceedings, including re-examinations, IPRs, post-grant reviews, and interference proceedings, before the USPTO or other applicable patent filing offices, or other means. For example, Liquidia is challenging various patents related to Tyvaso and our other treprostinil-related patents.
Third parties have challenged, and may in the future challenge, the validity of our patents, through patent litigation and/or initiating proceedings, including re-examinations, IPRs, post-grant reviews, and interference proceedings, before the USPTO or other applicable patent filing offices, or other means. For example, Liquidia is challenging various patents related to nebulized Tyvaso and our other treprostinil-related patents.
This requirement of Delaware PBC law may make our company a less attractive takeover target than a traditional for-profit corporation. Non-competition and all other restrictive covenants in most of our employment agreements will terminate upon a change of control that is not approved by our Board.
This requirement of Delaware law may make our company a less attractive takeover target than a traditional for-profit corporation. Non-competition and all other restrictive covenants in most of our employment agreements will terminate upon a change of control that is not approved by our Board.
We may also face unexpected costs in preparing products for commercial sale, or in maintaining sales levels of our currently marketed therapeutic products. Our 2022 Credit Agreement contains affirmative and negative covenants that, among other things, limit our ability to incur additional indebtedness.
We may also face unexpected costs in preparing products for commercial sale, or in maintaining sales levels of our currently marketed therapeutic products. Our Credit Agreement contains affirmative and negative covenants that, among other things, limit our ability to incur additional indebtedness.
For example, a third party submitted a citizen petition to the FDA requesting that the FDA refuse to approve Tyvaso DPI, and/or impose additional requirements in order to approve the product. While the petition was denied by the FDA, it delayed the FDA’s approval of our NDA for Tyvaso DPI.
For example, a third party submitted a citizen petition to the FDA requesting that the FDA refuse to approve Tyvaso DPI, and/or impose additional requirements in order to approve the product. While the petition was denied by the FDA, it delayed FDA approval of our NDA for Tyvaso DPI.
Our ability to repay or refinance our debt obligations under our 2022 Credit Agreement and any future debt that we may incur will depend on our financial condition and operating performance, which are subject to a number of factors beyond our control.
Our ability to repay or refinance our debt obligations under our Credit Agreement and any future debt that we may incur will depend on our financial condition and operating performance, which are subject to a number of factors beyond our control.
Item 1A. Risk Factors Risks Related to Our Products and Our Operations We rely heavily on sales of our treprostinil-based therapies to generate revenues and support our operations. Sales of our treprostinil-based therapies — Tyvaso, Tyvaso DPI, Remodulin, and Orenitram — comprise the vast majority of our revenues.
Item 1A. Risk Factors Risks Related to Our Products and Our Operations We rely heavily on sales of our treprostinil-based therapies to generate revenues and support our operations. Sales of our treprostinil-based therapies — Tyvaso DPI, nebulized Tyvaso, Remodulin, and Orenitram — comprise the vast majority of our revenues.
For example, for treatment of PAH, we compete with over fifteen branded and generic drugs. Sales of a generic version of Adcirca launched in August 2018 have had a material adverse impact on our sales of Adcirca.
For example, for the treatment of PAH, we compete with over fifteen branded and generic drugs. Sales of a generic version of Adcirca launched in August 2018 have had a material adverse impact on our sales of Adcirca.
There is no guarantee that our Board will resolve conflicts among the financial interests of our shareholders, our specific public benefit purpose, or stakeholders materially affected by our conduct, in favor of our shareholders’ financial interests.
There is no guarantee that our Board will resolve conflicts among the financial interests of our shareholders, our public benefit purpose, or stakeholders materially affected by our conduct, in favor of our shareholders’ financial interests.
Any increase in our stock price resulting from the announcement of a change of control, and our broad-based change of control severance program, under which Unitherians may be entitled to severance benefits if they are terminated without cause (or they terminate their employment for good reason) following a change of control, could make an acquisition of our company significantly more expensive to the purchaser.
Any increase in our stock price resulting from the announcement of a change of control, and our broad-based change of control severance program, under which our employees may be entitled to severance benefits if they are terminated without cause (or they terminate their employment for good reason) following a change of control, could make an acquisition of our company significantly more expensive to the purchaser.
An example of a known risk associated with the delivery system used for intravenous Remodulin is sepsis, which is a serious and potentially life-threatening infection of the bloodstream caused by a wide variety of bacteria. In addition, Unituxin is associated with severe side effects, and its label contains a boxed warning related to potential infusion reactions and neurotoxicity.
An example of a known risk associated with the pump system used for intravenous Remodulin is sepsis, which is a serious and potentially life-threatening infection of the bloodstream caused by a wide variety of bacteria. In addition, Unituxin is associated with severe side effects, and its label contains a boxed warning related to potential infusion reactions and neurotoxicity.
Failure to obtain approvals on a timely basis or to comply with these requirements could delay, disrupt, or prevent commercialization of our products. The products we develop must be approved for marketing and sale by regulatory agencies. Our research and development efforts must comply with extensive regulations, including those promulgated by the FDA and the U.S. Department of Agriculture.
Failure to obtain approvals on a timely basis or to comply with these requirements could delay, disrupt, or prevent commercialization of our products. The products we develop must be approved for marketing and sale by regulatory agencies. Our research and development efforts must comply with extensive regulations, including those promulgated by the FDA, the U.S.
If either of these two distributors places significantly larger or smaller orders in a given time period, our revenues can be materially impacted in a way that does not reflect patient demand. We rely entirely on third parties to supply pumps and other supplies necessary to deliver Remodulin.
If either of these two distributors places significantly larger or smaller orders in a given time period, our revenues can be materially impacted in a way that does not reflect patient demand. We rely entirely on third parties to supply pumps and other supplies necessary to administer Remodulin.
Our confidentiality agreements with our Unitherians and others to whom we disclose trade secrets and confidential information may not necessarily prevent our trade secrets from being used or disclosed without our authorization. These agreements may be difficult, time-consuming, and expensive to enforce or may not provide an adequate remedy in the event of unauthorized disclosure.
Our confidentiality agreements with our employees and others to whom we disclose trade secrets and confidential information may not necessarily prevent our trade secrets from being used or disclosed without our authorization. These agreements may be difficult, time-consuming, and expensive to enforce or may not provide an adequate remedy in the event of unauthorized disclosure.
The choice of forum provision may limit our shareholders’ ability to bring a claim in a forum that they find favorable for disputes with us or our directors, officers, or other Unitherians, and may discourage such lawsuits. There is uncertainty as to whether a court would enforce this provision.
The choice of forum provision may limit our shareholders’ ability to bring a claim in a forum that they find favorable for disputes with us or our directors, officers, or other employees, and may discourage such lawsuits. There is uncertainty as to whether a court would enforce this provision.
This requirement of Delaware PBC law may make our company a less attractive takeover target than a traditional for-profit corporation.
This requirement of Delaware law may make our company a less attractive takeover target than a traditional for-profit corporation.
If any of these systems require long-term repair or replacement, the impacted facility may not be able to manufacture product for a substantial period of time. • We, along with our third-party manufacturers, rely upon local municipalities to supply our facilities with clean water, which is processed into high purity water and used as a key ingredient for three of our commercial drug products.
If any of these systems require long-term repair or replacement, the impacted facility may not be able to manufacture product for a substantial period of time. • We and our third-party manufacturers rely upon local municipalities to supply our facilities with clean water, which is processed into high purity water and used as a key ingredient for several of our commercial drug products.
This dependence on intellectual property developed by others involves the following risks: • We may be unable to obtain rights to intellectual property that we need for our business at a reasonable cost or at all; • If any of our product licenses or purchase agreements are terminated, we may lose our rights to develop, make, and sell the products to which such licenses or agreements relate; • Our rights to develop and market products to which the intellectual property relates are frequently limited to specific territories and fields of use (such as treatment of particular diseases); and 2022 Annual Report 39 • If a licensor of intellectual property fails to maintain the intellectual property licensed, we may lose any ability to prevent others from developing or marketing similar products covered by such intellectual property.
This dependence on intellectual property developed by others involves the following risks: • We may be unable to obtain rights to intellectual property that we need for our business at a reasonable cost or at all; • If any of our product licenses or purchase agreements are terminated, we may lose our rights to develop, make, and sell the products to which such licenses or agreements relate; • Our rights to develop and market products to which the intellectual property relates are frequently limited to specific territories and fields of use (such as the treatment of particular diseases); and • If a licensor of intellectual property fails to maintain the intellectual property licensed, we may lose any ability to prevent others from developing or marketing similar products covered by such intellectual property.
Certain provisions of Delaware law, our restated certificate of incorporation, and our ninth amended and restated bylaws may prevent, delay, or discourage a merger, tender offer, or proxy contest; the assumption of control by a holder of a large block of our securities; and/or the replacement or removal of current management by our shareholders.
Certain provisions of Delaware law, our restated certificate of incorporation, and bylaws may prevent, delay, or discourage a merger, tender offer, or proxy contest; the assumption of control by a holder of a large block of our securities; and/or the replacement or removal of current management by our shareholders.
For example, supply disruptions caused by COVID-19 impacted DEKA’s ability to secure certain components and raw materials necessary to manufacture sufficient quantities of Remunity Pumps and accessories, delaying our ability to commence commercial sales, and ongoing global semiconductor supply disruptions could impact our third-party manufacturers’ ability to secure semiconductor chips necessary to manufacture sufficient quantities of devices required to deliver Tyvaso and Remodulin, which would have a material impact on our operations.
For example, supply disruptions caused by COVID-19 impacted DEKA’s ability to secure certain components and raw materials necessary to manufacture sufficient quantities of Remunity Pumps and accessories, delaying our ability to commence commercial sales, and ongoing global semiconductor supply disruptions could impact our third-party manufacturers’ ability to secure semiconductor chips necessary to manufacture sufficient quantities of devices required to administer nebulized Tyvaso and Remodulin, which would have a material impact on our operations.
Our bylaws provide that, to the fullest extent permitted by law, unless we agree in writing to an alternative forum, (a) the Delaware Court of Chancery (or, if such court does not have, or declines to accept, jurisdiction, another state court or a federal court located in Delaware) will be the exclusive forum for any complaint asserting any internal corporate claims, including claims in the right of the corporation based upon a violation of a duty by a current or former director, officer, Unitherian, or stockholder in such capacity, or as to which the Delaware General Corporation Law confers jurisdiction upon the Court of Chancery, and (b) the federal district courts will be the exclusive forum for any complaint asserting a cause of action arising under the Securities Act of 1933, as amended.
Our bylaws provide that, to the fullest extent permitted by law, unless we agree in writing to an alternative forum, (1) the Delaware Court of Chancery (or, if such court does not have, or declines to accept, jurisdiction, another state court or a federal court located in Delaware) will be the exclusive forum for any complaint asserting any internal corporate claims, including claims in the right of the corporation based upon a violation of a duty by a current or former director, officer, employee, or stockholder in such capacity, or as to which the Delaware General Corporation Law confers jurisdiction upon the Court of Chancery, and (2) the federal district courts will be the exclusive forum for any complaint asserting a cause of action arising under the Securities Act of 1933, as amended.
If local municipalities are unable to supply water that meets relevant quality standards, we and our third-party manufacturers may be unable to manufacture product until such a situation is remediated. • Our supply chain for raw materials and consumables extends worldwide and is complex. Suppliers based in China and Taiwan play a substantial role in our supply chain.
If local municipalities are unable to supply water that meets relevant quality standards, we and our third-party manufacturers may be unable to manufacture these products until such a situation is remediated. • Our supply chain for raw materials and consumables extends worldwide and is complex. Suppliers based in China and Taiwan play a substantial role in our supply chain.
The price of our common stock could decline sharply due to general market conditions as well as the following factors, among others: 2022 Annual Report 41 • quarterly and annual financial results and any failure to meet our expectations or those of securities analysts; • timing of enrollment and results of our clinical trials; • announcements regarding generic or other challenges to the intellectual property related to our products, the launch of generic versions of our products or other competitive products, such as sotatercept or Yutrepia, and the impact of competition from generic and other products on our revenues; • announcements regarding litigation matters, including our ongoing patent litigation with Liquidia related to its NDA for Yutrepia, among others; • announcements regarding our efforts to obtain FDA approval of, and to launch commercial sales of, new products; • physician, patient, investor, or public concerns regarding the efficacy and/or safety of products marketed or being developed by us or by others; • changes in, or new laws and regulations affecting reimbursement of, our therapeutic products by government payers, changes in reimbursement policies of private insurance companies, and negative publicity surrounding the cost of high-priced therapies; • announcements of technological innovations or new products or announcements regarding our existing products, including in particular the development of new, competing therapies; • substantial sales of our common stock by us or our existing shareholders, or concerns that such sales may occur; • future issuances of common stock by us or other activity which could be viewed as being dilutive to our shareholders; • rumors or incorrect statements by investors and/or analysts concerning our company, our products, or our operations; • failures or delays in our efforts to obtain or maintain domestic or international regulatory approvals; • discovery of previously unknown problems with our marketed products, or problems with our manufacturing, regulatory, compliance, promotional, marketing or sales activities that result in regulatory penalties or restrictions on our products, up to the withdrawal of our products from the market; and • accumulation of significant short positions in our common stock by hedge funds or other investors or the significant accumulation of our common stock by hedge funds or other institutional investors with investment strategies that may lead to short-term holdings.
The price of our common stock could decline sharply due to general market conditions as well as the following factors, among others: • quarterly and annual financial results and any failure to meet our expectations or those of securities analysts; • timing of enrollment and results of our clinical trials; • announcements regarding generic or other challenges to the intellectual property related to our products, the launch of generic versions of our products or other competitive products, such as sotatercept or Yutrepia, and the impact of competition from generic and other products on our revenues; • announcements regarding litigation matters, including our ongoing litigation with Liquidia, among others; • announcements regarding our efforts to obtain regulatory approval of, and to launch commercial sales of, new products; • physician, patient, investor, or public concerns regarding the efficacy and/or safety of products marketed or being developed by us or by others; • changes in, or new laws and regulations affecting reimbursement of, our therapeutic products by government payers, changes in reimbursement policies of private insurance companies, including the implementation and impacts of the IRA, and negative publicity surrounding the cost of high-priced therapies; • announcements of technological innovations or new products or announcements regarding our existing products, including in particular the development of new, competing therapies; • substantial sales of our common stock by us or our existing shareholders, or concerns that such sales may occur; • future issuances of common stock by us or other activity which could be viewed as being dilutive to our shareholders; • rumors or incorrect statements by investors and/or analysts concerning our company, our products, or our operations; • failures or delays in our efforts to obtain or maintain domestic or international regulatory approvals; • discovery of previously unknown problems with our marketed products, or problems with our manufacturing, regulatory, compliance, promotional, marketing, or sales activities that result in regulatory penalties or restrictions on our products, up to the withdrawal of our products from the market; and • accumulation of significant short positions in our common stock by hedge funds or other investors or the significant accumulation of our common stock by hedge funds or other institutional investors with investment strategies that may lead to short-term holdings.
District Court for the District of Columbia. On September 22, 2021, HRSA sent to us, along with the other manufacturers challenging HRSA’s 340B interpretation, letters stating that HRSA was referring this issue to the OIG for potential enforcement action. We have not had any communication from the OIG regarding our 340B contract pharmacy policy.
District Court for the District of Columbia. In September 2021, HRSA sent to us, along with the other manufacturers challenging HRSA’s 340B interpretation, letters stating that HRSA was referring this issue to the OIG for potential enforcement action. We have not had any communication from the OIG regarding our 340B contract pharmacy policy.
Our manufacturing strategy exposes us to significant risks. We must be able to manufacture sufficient quantities of our commercial products to satisfy demand. We manufacture Remodulin, Orenitram, Tyvaso, and Unituxin, including the active ingredient in each of these products, at our own facilities and rely on third parties for additional manufacturing capacity for Remodulin and Tyvaso.
Our manufacturing strategy exposes us to significant risks. We must be able to manufacture sufficient quantities of our commercial products to satisfy demand. We manufacture nebulized Tyvaso drug product, Remodulin, Orenitram, and Unituxin, including the active ingredient in each of these products, at our own facilities and rely on third parties for additional manufacturing capacity for nebulized Tyvaso and Remodulin.
These investments are subject to general economic conditions, volatility in the financial marketplace, market- and industry-wide dynamics, changes in interest rates, industry- and company-specific developments impacting the business, prospects, and credit ratings of the issuer of the securities, and other factors, each of which has affected, and may in the future affect, the income that we receive from our investments, the net realizable value of our investments, and our ability to sell them.
These investments are subject to general economic conditions, volatility in the financial marketplace, market- and industry-wide dynamics, the current elevated interest rate environment and changes in interest rates, industry- and company-specific developments impacting the business, prospects, and credit ratings of the issuer of the securities, and other factors, each of which has affected, and may in the future affect, the income that we receive from our investments, the net realizable value of our investments, and our ability to sell them.
Statutory and regulatory changes regarding these programs and their requirements could negatively affect the coverage and reimbursement by these programs of our products or any future products for which we receive regulatory approval and could negatively impact our results of operations. Our failure to comply with these price reporting, rebate payment, or pricing requirements could adversely impact our financial results.
Changes to these programs could negatively affect the coverage and reimbursement by these programs of our products or any future products for which we receive regulatory approval and could negatively impact our results of operations. Our failure to comply with these price reporting, rebate payment, or pricing requirements could adversely impact our financial results.
The final rule allows certain prescription drugs to be imported from Canada, and the guidance describes procedures for drug manufacturers to facilitate the importation of FDA-approved drugs and biologics manufactured abroad and originally intended for sale in a foreign country into the United States.
The final rule allows certain prescription drugs to be imported from Canada, and the guidance describes procedures for drug manufacturers to facilitate the importation of FDA-approved drugs and biologics manufactured abroad and originally intended for sale in a foreign country into the United States. The FDA recently approved Florida’s drug importation plan.
While physicians may prescribe drugs for uses that are not described in the product’s labeling and for uses that differ from those approved by regulatory authorities (called “off-label” uses), our ability to promote our products is limited to those indications that are specifically approved by the FDA.
While physicians may prescribe drugs for uses that are not described in the product’s labeling and for uses that differ from those approved by regulatory authorities (called “off-label” uses), our ability to promote our products is limited to those indications that are specifically approved by the FDA and its international counterparts.
In addition, some states have imposed restrictions on manufacturer co-pay programs when therapeutic equivalents are available. Growing use of such programs, or new laws limiting manufacturer ability to provide co-pay assistance, could affect patient access to our products and limit product utilization, which may, in turn, adversely affect our business, prospects, and stock price.
In addition, some states have imposed restrictions on manufacturer co-pay programs when therapeutic 2023 Annual Report 43 equivalents are available. Growing use of such programs, or new laws limiting manufacturer ability to provide co-pay assistance, could affect patient access to our products and limit product utilization, which may, in turn, adversely affect our business, prospects, and stock price.
We also have limited visibility into the supply chains on which our primary suppliers rely; as such, we rely on our primary suppliers to have robust risk mitigation strategies to detect issues and prevent supply disruption. • We are closely monitoring the military conflict in Ukraine.
We also have limited visibility into the supply chains on which our primary suppliers rely; as such, we rely on our primary suppliers to have robust risk mitigation strategies to detect issues and prevent supply disruption. • We are closely monitoring the military conflicts in Ukraine and Israel.
If we fail to attract and retain such employees, whom we call “Unitherians”, we may not be successful in developing and commercializing new therapies. Risks Related to Legal Compliance We must comply with extensive laws and regulations in the United States and other countries.
If we fail to attract and retain such employees, we may not be successful in developing and commercializing new therapies. Risks Related to Legal Compliance We must comply with extensive laws and regulations in the United States and other countries.
In particular in the EU, and in addition to continuing pressure on prices and cost containment measures, legislative developments at the EU or member state level may result in significant additional requirements or obstacles that may increase operating costs.
In addition to continuing pressure on prices and cost containment measures, legislative developments at the European Union ( EU ) or member state level may result in significant additional requirements or obstacles that may increase operating costs.
The availability of generic versions of Remodulin in the United States could materially impact our revenues, and generic competition has materially impacted our Remodulin revenues outside the United States. Our competitors are also developing new products that may compete with ours.
The availability of generic treprostinil injection in the United States could materially impact our revenues, and generic competition has materially impacted our Remodulin revenues outside the United States. Our competitors are also developing new products that may compete with ours.
Our ability to obtain FDA approval for our products has been, and in the future may be, materially impacted by the outcome and quality of our clinical trials and other data submitted to regulators, as well as the quality of our manufacturing operations and those of our third-party contract manufacturers and contract laboratories.
Our ability to obtain regulatory approvals for our products has been, and in the future may be, materially impacted by the outcome and quality of our clinical trials and other data submitted to regulators, as well as the quality of our manufacturing operations and those of our third-party contract manufacturers and contract laboratories.
Applicable laws and regulations, including the IRA, could affect our obligations in ways we cannot anticipate. 2022 Annual Report 37 Pricing and rebate calculations vary among products and programs. The calculations are complex and are often subject to interpretation by us, governmental or regulatory agencies, and the courts.
Applicable laws and regulations, including the IRA, could affect our obligations in ways we cannot anticipate. Pricing and rebate calculations vary among products and programs. The calculations are complex and are often subject to interpretation by us, governmental or regulatory agencies, and the courts.
In addition, patent laws of foreign jurisdictions may not protect our patent rights to the same extent as the patent laws of the United States.
In addition, patent laws of foreign jurisdictions may not protect our patent rights to the same extent as the United States’ laws.
We may not be able to generate sufficient cash to service or repay our indebtedness, which may have a material adverse effect on our financial position, results of operations, and cash flows. We may borrow up to $2.0 billion under our 2022 Credit Agreement, which matures in March 2027. Currently, our outstanding principal balance is $800.0 million.
We may not be able to generate sufficient cash to service or repay our indebtedness, which may have a material adverse effect on our financial position, results of operations, and cash flows. We may borrow up to $2.0 billion under our Credit Agreement, which matures in March 2028. Currently, our outstanding principal balance is $700.0 million.
In the United States, the AKS prohibits, among other activities, knowingly and willfully offering, paying, soliciting, or receiving remuneration (i.e., anything of value) to induce, or in return for, the purchase, lease, order or arranging the purchase, lease or order of any health care product or service reimbursable under any federally financed healthcare program like Medicare or Medicaid.
In the United States, the Federal Anti-Kickback Statute prohibits, among other activities, knowingly and willfully offering, paying, soliciting, or receiving remuneration (i.e., anything of value) to induce, or in return for, the purchase, lease, order or arranging the purchase, lease or order of any health care product or service reimbursable under any federally financed healthcare program like Medicare or Medicaid.
If a third party commences legal action against us for infringement, we may incur significant costs to defend the action and our management’s attention could be diverted from our day-to-day business operations, whether or not the action has merit.
If a third party commences legal action against us for infringement, we may incur significant costs to defend ourselves against the claims made in the action and our management’s attention could be diverted from our day-to-day business operations, whether or not the action has merit.
Third parties assist us in activities critical to our operations, such as: (1) manufacturing our clinical and commercial products; (2) conducting clinical trials, preclinical studies, and other research and development activities; (3) obtaining regulatory approvals; (4) conducting pharmacovigilance and product complaint activities, including drug safety, reporting adverse events, and handling product complaints; (5) obtaining medical device clearances and approvals for the devices used to deliver our drugs; and (6) marketing and distributing our products.
Third parties assist us in activities critical to our operations, such as: (1) manufacturing our clinical and commercial products; (2) conducting clinical trials, preclinical studies, and other research and development activities; (3) obtaining regulatory approvals; (4) conducting pharmacovigilance and product complaint activities, including adverse event reporting, and handling product complaints; (5) obtaining medical device clearances and approvals for the devices used to administer our drugs; and (6) marketing and distributing our products.
See, for example, the discussion of the Inflation Reduction Act in the risk factor below entitled Government healthcare reform and other reforms could adversely affect our revenue, costs, and results of operations . Our prostacyclin analogue products (Tyvaso, Tyvaso DPI, Remodulin, and Orenitram) and our oncology product (Unituxin) are expensive therapies.
See, for example, the discussion of the IRA in the risk factor below entitled Government healthcare reform and other reforms could adversely affect our revenue, costs, and results of operations . Our prostacyclin analogue products (Tyvaso DPI, nebulized Tyvaso, Remodulin, and Orenitram) and our oncology product (Unituxin) are expensive therapies.
Once approved, the 2022 Annual Report 35 manufacture, distribution, advertising, and marketing of our products are subject to extensive regulation, including product labeling, strict pharmacovigilance and adverse event and medical device reporting, complaint processing, storage, distribution, and record-keeping requirements. Our product candidates have in the past and may in the future fail to receive regulatory approval.
Once approved, the manufacture, distribution, advertising, and marketing of our products are subject to extensive regulation, including requirements related to product labeling, pharmacovigilance and adverse event and medical device reporting, complaint processing, storage, distribution, and record-keeping. Our product candidates have in the past and may in the future fail to receive regulatory approval.
Certain programs, such as the 340B program and the VA FSS pricing program, impose limits on the price we are permitted to charge certain entities for our products or for any future products for which we receive regulatory approval.
Certain programs, such as the 340B program, impose limits on the price we are permitted to charge certain entities for our products or for any future products for which we receive regulatory approval.
Risks Related to Our Common Stock The price of our common stock can be highly volatile and may decline. The price of common stock can be highly volatile within the pharmaceutical and biotechnology sector. Consequently, significant price and volume fluctuations in the market may not relate to operating performance.
The price of common stock can be highly volatile within the pharmaceutical and biotechnology sector. Consequently, significant price and volume fluctuations in the market may not relate to operating performance.
Among other things, there have been several U.S. Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things: bring more transparency to drug pricing; reduce the cost of prescription drugs under government payer programs; review the relationship between pricing and manufacturer patient programs; and reform government program reimbursement methodologies for drugs.
Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things: bring more transparency to drug pricing; reduce the cost of prescription drugs under government payer programs; review the relationship between pricing and manufacturer patient programs; and reform government program reimbursement methodologies for drugs.
Our clinical trials have been (for example, the PERFECT study), and in the future may be, discontinued, delayed, canceled, or disqualified for various reasons, including: (1) the COVID-19 pandemic, which initially caused us to suspend enrollment of most of our clinical studies, and may do so again; (2) the drug is ineffective, or physicians and/or patients believe that the drug is ineffective, or that other therapies are more effective or convenient; (3) patients do not enroll in or complete clinical trials at the rate we expect; (4) we, or clinical trial sites or other third parties do not adhere to trial protocols and required quality controls under good clinical practices ( GCP ) regulations and similar regulations outside the United States; (5) patients experience severe side effects during treatment or die during our trials because of adverse events; and (6) the results of clinical trials conducted in a particular country are not acceptable to regulators in other countries.
Our clinical trials have been and in the future may be discontinued, delayed, canceled, or disqualified for various reasons, including: (1) pandemics such as the COVID-19 pandemic, which initially caused us to suspend enrollment of most of our clinical studies; (2) the drug is unsafe or ineffective, or physicians and/or patients believe that the drug is unsafe or ineffective, or that other therapies are safer, more effective, better tolerated, or more convenient; (3) patients do not enroll in or complete clinical trials at the rate we expect, due to the availability of alternative therapies, the enrollment of competing clinical trials, or other reasons; (4) we, or clinical trial sites or other third parties do not adhere to trial protocols and required quality controls under good clinical practices ( GCP ) regulations and similar regulations outside the United States; (5) patients experience severe side effects during treatment or die during our trials because of adverse events; and (6) the results of clinical trials conducted in a particular country are not acceptable to regulators in other countries.
FDA approval is also required for new formulations and new indications for an approved product.
Regulatory approval is also required for new formulations and new indications for an approved product.
If we must restate or recalculate information provided under these programs, our costs of compliance could increase. Additionally, we could be held liable for errors associated with our submission of pricing data, including retroactive rebates and program refunds.
If we must restate or recalculate information provided under these programs, our costs of compliance could increase. We could be held liable for errors in our pricing data, including retroactive rebates and program refunds.
For further details, please see Part I, Item 1.—Business—Patents and Other Proprietary Rights, Strategic Licenses, and Market Exclusivity—Generic Competition and Challenges to our Intellectual Property Rights. We cannot be sure that our existing or any new patents will effectively deter or delay competitors’ efforts to bring new products to market, or that additional patent applications will result in new patents.
For further details, see Part I, Item 1—Business—Patents and Other Proprietary Rights, Strategic Licenses, and Market Exclusivity—Generic Competition and Challenges to our Intellectual Property Rights. 44 United Therapeutics, a public benefit corporation We cannot be sure that our existing or any new patents will effectively deter or delay competitors’ efforts to bring new products to market, or that additional patent applications will result in new patents.
In addition, many competing therapies are less invasive or more convenient than our products, and use of these competing therapies often delays or prevents initiation of our therapies. 32 United Therapeutics, a public benefit corporation The successful commercialization of our products depends on the availability of coverage and adequacy of reimbursement from third-party payers, including governmental authorities and private health insurers.
In addition, many competing therapies are less invasive or more convenient than our products, and use of these competing therapies often delays or prevents initiation of our therapies. The successful commercialization of our products depends on the availability of coverage and adequacy of reimbursement from third-party payers, including governmental authorities and private health insurers.
If our products fail in clinical trials, we will be unable to sell those products. To obtain approvals from the FDA and international regulatory agencies to sell new products, or to expand the product labeling for our existing products, we must conduct clinical trials demonstrating that our products are safe and effective. Regulators have substantial discretion over the approval process.
To obtain approvals from the FDA and international regulatory agencies to sell new products, or to expand the product labeling for our existing products, we must conduct clinical trials demonstrating that our products are safe and effective. Regulators have substantial discretion over the approval process.
The process of obtaining and maintaining regulatory approvals for new drugs, biologics, and medical devices is lengthy, expensive, and uncertain. The regulatory approval process is particularly uncertain for our transplantation programs, which include the development of xenotransplantation, regenerative medicine, 3-D organ bioprinting, and cell-based products.
Department of Agriculture, and their international counterparts, as applicable. The process of obtaining and maintaining regulatory approvals for new drugs, biologics, and medical devices is lengthy, expensive, and uncertain. The regulatory approval process is particularly uncertain for our transplantation programs, which include the development of xenotransplantation, regenerative medicine, 3-D organ bioprinting, and cell-based products.
However, if these alternative systems are not seen as adequate substitutes, or are not developed on a timely basis, our sales of Remodulin could be materially, adversely impacted. Lilly manufactures and supplies Adcirca for us. We use Lilly’s pharmaceutical wholesaler network to distribute Adcirca.
We are also engaged in further efforts to develop alternative pumps to administer Remodulin. However, if these alternative systems are not seen as adequate substitutes, or are not developed on a timely basis, our sales of Remodulin could be materially, adversely impacted. Lilly manufactures and supplies Adcirca for us. We use Lilly’s pharmaceutical wholesaler network to distribute Adcirca.
Additional risks of our manufacturing strategy include the following: • We, our third-party manufacturers, and other third parties involved in the manufacturing process, such as third parties that operate testing and storage facilities, are subject to the FDA’s current good manufacturing practices regulations, current good tissue practices, and similar international regulatory standards, and other quality standards related to device manufacturing.
Additional risks of our manufacturing strategy include the following: • We, our third-party manufacturers, and other third parties involved in the manufacturing process, such as third parties that operate testing and storage facilities, are subject to the cGMP requirements of the FDA and its international counterparts, as applicable, current good tissue practices, and similar international regulatory standards, and other quality standards related to device manufacturing.
We are required to report certain adverse events to the FDA. Development of new products, and new formulations and indications for existing products, could result in new side effects and adverse events which may be serious in nature.
We are required to report certain adverse events to the FDA and its international counterparts. Development of new products, and 2023 Annual Report 39 new formulations and indications for existing products, could result in new side effects and adverse events which may be serious in nature.
Individual states in the United States have also increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement limitations, marketing cost disclosure, and transparency measures, and, in some cases, measures designed to encourage importation from other countries and bulk purchasing.
Removal of the rebate cap could increase our Medicaid rebate liability. Individual states in the United States have also increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement limitations, marketing cost disclosure, and transparency measures, and, in some cases, measures designed to encourage importation from other countries and bulk purchasing.
In the event that CMS terminates our rebate agreement, no federal payments would be available under Medicaid or Medicare Part B for our covered outpatient drugs.
If CMS terminates our rebate agreement, no federal payments would be available under Medicaid or Medicare Part B for our covered outpatient drugs.
Our business activities may be subject to challenge under laws in jurisdictions around the world restricting particular marketing practices, such as: • Anti-kickback and false claim statutes, the Foreign Corrupt Practices Act, and the United Kingdom Bribery Act.
We must comply with various laws in jurisdictions around the world that restrict certain marketing practices. Our business activities may be subject to challenge under laws in jurisdictions around the world restricting particular marketing practices, such as: • Anti-kickback and false claim statutes, the Foreign Corrupt Practices Act, and the United Kingdom Bribery Act.
Competitors may also seek to design around our patents or exclude patented methods of treatment, such as patent-protected indications, from the label for generic versions of our products in an effort to develop competing products that do not infringe our patents.
When our patents expire, competitors may develop generic versions of our products and market them at a lower price. Competitors may also seek to design around our patents or exclude patented methods of treatment, such as patent-protected indications, from the label for generic versions of our products in an effort to develop competing products that do not infringe our patents.
If HRSA prevails on appeal or develops a new theory of liability, we may face enforcement action or penalties as well as adverse publicity. We expect the compliance of policies like ours will continue to be litigated.
If HRSA prevails on appeal or develops a new theory of liability, we may face enforcement action or penalties as well as adverse publicity. Such an outcome may also prompt other parties to challenge our policies. We expect the compliance of policies like ours will continue to be litigated.
These restrictive change of control provisions could impede or prevent mergers or other transactions that could benefit our shareholders. Our shareholders must rely on stock appreciation for any return on their investment in us. We have never paid, and do not intend to pay, cash dividends. Our 2022 Credit Agreement may restrict us from doing so.
These restrictive change of control provisions could impede or prevent mergers or other transactions that could benefit our shareholders. 2023 Annual Report 47 Our shareholders must rely on stock appreciation for any return on their investment in us. We have never paid, and do not intend to pay, cash dividends.
Government to resolve a DOJ investigation of our support of non-profit patient assistance programs and paid $210.0 million, plus interest, to the U.S. Government upon settlement.
In December 2017, we entered into a civil Settlement Agreement with the U.S. Government to resolve a DOJ investigation of our support of non-profit patient assistance programs and paid $210.0 million, plus interest, to the U.S. Government upon settlement.
We anticipate that the IRA and other healthcare reform measures that may be adopted in the future may result in additional downward pressure on coverage and the payment that we receive for any approved product, and adversely impact our business.
We anticipate that the IRA and other healthcare reform measures that may be adopted in the future may result in additional downward pressure on the payment that we receive for any approved product, and adversely impact our business. Any reduction in reimbursement from Medicare and other government programs may result in a similar reduction in payment from commercial payers.
We also entered into a Corporate Integrity Agreement (the CIA ) with the OIG, which required us to maintain our corporate compliance program and to undertake a set of defined corporate integrity obligations for five years ending December 2022. Members of Congress have called upon the OIG to issue revised guidance about patient assistance programs.
We also entered into a Corporate Integrity Agreement (the CIA ) with the OIG, which required us to maintain our corporate compliance program and to undertake a set of defined corporate integrity obligations for five years ending December 2022.
We collect, store, and use sensitive or confidential data, including intellectual property, our proprietary business information and that of our suppliers, customers, and business partners, and personally identifiable information. The secure maintenance of this information is critical to our operations and business strategy.
We collect, store, and use sensitive or confidential data, including intellectual property, our proprietary business information and that of our suppliers, customers, and business partners, and personally identifiable information.
In addition, Congress has recently enacted other statutes that could adversely affect our ability to successfully commercialize our products. Under the American Rescue Plan Act of 2021, effective January 1, 2024, the statutory cap on Medicaid Drug Rebate program rebates that manufacturers pay to state Medicaid programs will be eliminated, which could increase our Medicaid rebate liability.
In addition, Congress enacted other statutes that could adversely affect our ability to successfully commercialize our products. The American Rescue Plan Act of 2021 eliminated the statutory cap on Medicaid Drug Rebate program rebates that manufacturers pay to state Medicaid programs, effective January 1, 2024. Previously, the rebate was capped at the drug’s average manufacturer price.
In addition, misreporting and failure to timely report data to CMS also can be grounds for CMS to terminate our Medicaid drug rebate agreement, pursuant to which we participate in the Medicaid Drug Rebate program.
We could also become subject to allegations under the False Claims Act and other laws and regulations. In addition, misreporting and failure to timely report data to CMS also can be grounds for CMS to terminate our Medicaid drug rebate agreement, pursuant to which we participate in the Medicaid Drug Rebate program.
Patent litigation can be time consuming, distracting, and costly, and the outcome may be difficult to predict and unfavorable to us. If we are unsuccessful in the defense of our patents, our business could be negatively impacted.
Patent litigation can be time consuming, distracting, and costly, and the outcome may be difficult to predict and unfavorable to us. If we are unsuccessful in the defense of our patents, our business could be negatively impacted. We also rely on trade secrets to protect our proprietary know-how and other confidential technological advances.
The period under which our commercial and developmental therapies are protected by our patent rights is limited. Three of our U.S. patents covering our current methods of synthesizing and producing treprostinil, the active ingredient in Tyvaso, Tyvaso DPI, Remodulin, and Orenitram, expired in October 2017, and three more will expire in 2028.
The period under which our commercial and developmental therapies are protected by our patent rights is limited. Three of our U.S. patents covering our current methods of synthesizing and producing treprostinil expired in October 2017, and three more will expire in 2028. Our patents related to our individual treprostinil-based products expire at various times between 2024 and 2042.
The IRA permits the Secretary of the Department of Health and Human Services ( HHS ) to implement many of these provisions through guidance, as opposed to regulation, for the initial years.
The IRA permits the Secretary of the Department of Health and Human Services ( HHS ) to implement many of these provisions through guidance, as opposed to regulation, for the initial years. HHS has issued guidance, and is expected to continue to issue guidance, even while lawsuits challenging the IRA remain pending.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe believe that these facilities, along with various other owned and leased facilities, are adequate for our current operations and that additional land and facilities for future expansion are reasonably available.
Biggest changeNew Hampshire—We lease a 74,500 square foot office and laboratory facility in Manchester, New Hampshire, where we conduct our 3-D organ bioprinting research and development activities. We believe that these facilities, along with various other owned and leased facilities, are adequate for our current operations and that additional land and facilities for future expansion are reasonably available.
Item 2. Properties Maryland—We own a 415,000 square foot combination laboratory and office building complex in Silver Spring, Maryland that serves as our co-headquarters, is used to manufacture our products, and houses one of our ex vivo lung perfusion centers.
Item 2. Properties Maryland—We own a 415,000 square foot combination laboratory and office building campus in Silver Spring, Maryland that serves as our co-headquarters, is used to manufacture our products, and houses one of our ex vivo lung perfusion centers.
These manufacturing activities include the synthesis of treprostinil, the active ingredient in Tyvaso, Tyvaso DPI, and Remodulin, and treprostinil diolamine, the active ingredient in Orenitram, as well as dinutuximab, the active ingredient in Unituxin. We also manufacture Tyvaso, Remodulin, and Unituxin drug product in our Silver Spring complex.
These manufacturing activities include the synthesis of treprostinil, the active ingredient in Tyvaso DPI, nebulized Tyvaso, and Remodulin, and treprostinil diolamine, the active ingredient in Orenitram, as well as dinutuximab, the active ingredient in Unituxin. We also manufacture nebulized Tyvaso drug product, Remodulin drug product, and Unituxin drug product in our Silver Spring campus.
North Carolina—We own a 380,000 square foot combination manufacturing facility and office building in Research Triangle Park, North Carolina ( RTP facility ), which serves as our co-headquarters and is occupied by our clinical research and development, commercialization, and our logistics and manufacturing personnel.
We also plan to produce manufactured lungs for clinical studies at our Silver Spring campus. North Carolina—We own a 380,000 square foot combination manufacturing facility and office building in Research Triangle Park, North Carolina ( RTP facility ), which serves as our co-headquarters and is occupied by our clinical research and development, commercialization, and our logistics and manufacturing personnel.
We manufacture Orenitram drug product and we package, warehouse, and distribute Tyvaso, Remodulin, Orenitram, and Unituxin at this location. We also own a 170-acre site containing approximately 217,000 square feet of building space adjacent to our RTP facility, which we use for our research, development, and manufacturing facilities related to our lung regeneration program, office space, and for future expansion.
We also own a 170-acre site containing approximately 225,000 square feet of building space adjacent to our RTP facility, which we use for our research, development, warehousing and logistics hub and manufacturing facilities related to our lung regeneration program, office space, and for future expansion.
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In 2019, we completed construction of a new cell culture and purification facility. In early 2021, we decided to repurpose this facility to produce manufactured lungs for clinical studies.
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We manufacture Orenitram drug product and we package, warehouse, and distribute nebulized Tyvaso, Remodulin, Orenitram, and Unituxin at this location.
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In 2023, we demolished a 47,000 square foot administrative building near 50 United Therapeutics, a public benefit corporation the RTP facility and have commenced construction of a new Tyvaso DPI manufacturing facility on this site.
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Additionally, in 2023, we completed construction of a new warehouse and logistics hub near our RTP facility to serve as the storage and distribution facility for Tyvaso DPI. Virginia—We recently completed a 65,000 square foot designated pathogen-free facility in southwestern Virginia intended to produce porcine hearts and kidneys for use in xenotransplantation clinical trials.
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We also lease a laboratory and farm in southwestern Virginia that support our xenotransplantation research and development efforts. Minnesota—Our Miromatrix subsidiary leases a 42,300 square foot office and laboratory facility in Eden Prairie, Minnesota, where it produces manufactured kidney and liver products for research and development purposes and clinical trials.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changePlease refer to Note 14— Litigation , to our consolidated financial statements, which is incorporated herein by reference. Item 4. Mine Safety Disclosures Not applicable. PART II
Biggest changeSee Note 14— Litigation , to our consolidated financial statements, which is incorporated herein by reference. Item 4. Mine Safety Disclosures Not applicable. PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 44 PART II 44 Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 44 Item 6. [Reserved] 45 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 46 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 56 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 51 PART II 51 Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 51 Item 6. [Reserved] 52 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 53 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 64 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeComparison of Five-Year Total Cumulative Shareholder Return The following chart shows the performance from December 31, 2017 through December 31, 2022 of our common stock, compared with an investment in the stocks represented in each of the Nasdaq U.S. Benchmark TR Index and the Nasdaq U.S.
Biggest changeIssuer Purchases of Equity Securities We did not repurchase any of our outstanding equity securities during the year ended December 31, 2023. 2023 Annual Report 51 Comparison of Five-Year Total Cumulative Shareholder Return The following chart shows the performance from December 31, 2018 through December 31, 2023 of our common stock, compared with an investment in the stocks represented in each of the Nasdaq U.S.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on the Nasdaq Global Select Market under the symbol “UTHR”. Number of Holders As of February 15, 2023, there were 32 holders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on the Nasdaq Global Select Market under the symbol “UTHR”. Number of Holders As of February 14, 2024, there were 31 holders of record of our common stock.
Benchmark Pharmaceuticals TR Index, assuming the investment of $100 at the beginning of the period and the reinvestment of dividends, if any.
Benchmark TR Index and the Nasdaq U.S. Benchmark Pharmaceuticals TR Index, assuming the investment of $100 at the beginning of the period and the reinvestment of dividends, if any.
Dividend Policy We have never paid and have no present intention to pay cash dividends on our common stock in the foreseeable future, and our 2022 Credit Agreement contains covenants that may restrict us from doing so.
Dividend Policy We have never paid and have no present intention to pay cash dividends on our common stock in the foreseeable future. We intend to retain any earnings for use in our business operations.
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We intend to retain any earnings for use in our business operations. 44 United Therapeutics, a public benefit corporation Issuer Purchases of Equity Securities We did not repurchase any of our outstanding equity securities during the year ended December 31, 2022.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe tables below include a reconciliation of the liability accounts associated with these deductions (in millions): Year Ended December 31, 2022 Rebates & Chargebacks Prompt Pay Discounts Allowance for Sales Returns Distributor Fees Total Balance, January 1, 2022 $ 67.8 $ 3.8 $ 6.3 $ 7.9 $ 85.8 Provisions attributed to sales in: Current period 202.8 43.2 2.3 34.5 282.8 Prior periods (4.3) (0.5) (3.1) 0.5 (7.4) Payments or credits attributed to sales in: Current period (121.1) (38.9) (0.7) (23.6) (184.3) Prior periods (63.9) (3.2) (1.5) (8.4) (77.0) Balance, December 31, 2022 $ 81.3 $ 4.4 $ 3.3 $ 10.9 $ 99.9 Year Ended December 31, 2021 Rebates & Chargebacks Prompt Pay Discounts Allowance for Sales Returns Distributor Fees Total Balance, January 1, 2021 $ 65.3 $ 3.0 $ 12.5 $ 3.7 $ 84.5 Provisions attributed to sales in: Current period 217.0 38.5 — 31.3 286.8 Prior periods 1.6 — (3.9) 0.2 (2.1) Payments or credits attributed to sales in: Current period (151.8) (34.7) — (22.4) (208.9) Prior periods (64.3) (3.0) (2.3) (4.9) (74.5) Balance, December 31, 2021 $ 67.8 $ 3.8 $ 6.3 $ 7.9 $ 85.8 Year Ended December 31, 2020 Rebates & Chargebacks Prompt Pay Discounts Allowance for Sales Returns Distributor Fees Total Balance, January 1, 2020 $ 51.7 $ 2.6 $ 14.2 $ 4.1 $ 72.6 Provisions attributed to sales in: Current period 196.1 32.5 — 20.6 249.2 Prior periods (0.2) — — (0.3) (0.5) Payments or credits attributed to sales in: Current period (139.7) (29.6) — (16.9) (186.2) Prior periods (42.6) (2.5) (1.7) (3.8) (50.6) Balance, December 31, 2020 $ 65.3 $ 3.0 $ 12.5 $ 3.7 $ 84.5 50 United Therapeutics, a public benefit corporation Cost of Sales The table below summarizes cost of sales by major category (dollars in millions): Year Ended December 31, Dollar Change Percentage Change 2022 2021 2020 2022 v. 2021 2021 v. 2020 2022 v. 2021 2021 v. 2020 Category: Cost of sales $ 146.7 $ 116.7 $ 101.0 $ 30.0 $ 15.7 26 % 16 % Share-based compensation expense (1) 4.9 5.8 7.1 (0.9) (1.3) (16) % (18) % Total cost of sales $ 151.6 $ 122.5 $ 108.1 $ 29.1 $ 14.4 24 % 13 % (1) Refer to Share-Based Compensation section below for discussion.
Biggest changeThe tables below include a reconciliation of the liability accounts associated with these deductions (in millions): 2023 Annual Report 57 Year Ended December 31, 2023 Rebates & Chargebacks Prompt Pay Discounts Allowance for Sales Returns Distributor Fees Total Balance, January 1, 2023 $ 81.3 $ 4.4 $ 3.3 $ 10.9 $ 99.9 Provisions attributed to sales in: Current period 278.0 52.5 1.3 40.7 372.5 Prior periods (2.5) (0.1) (1.9) (0.9) (5.4) Payments or credits attributed to sales in: Current period (169.8) (47.3) — (30.3) (247.4) Prior periods (78.6) (4.2) (0.8) (10.0) (93.6) Balance, December 31, 2023 $ 108.4 $ 5.3 $ 1.9 $ 10.4 $ 126.0 Year Ended December 31, 2022 Rebates & Chargebacks Prompt Pay Discounts Allowance for Sales Returns Distributor Fees Total Balance, January 1, 2022 $ 67.8 $ 3.8 $ 6.3 $ 7.9 $ 85.8 Provisions attributed to sales in: Current period 202.8 43.2 2.3 34.5 282.8 Prior periods (4.3) (0.5) (3.1) 0.5 (7.4) Payments or credits attributed to sales in: Current period (121.1) (38.9) (0.7) (23.6) (184.3) Prior periods (63.9) (3.2) (1.5) (8.4) (77.0) Balance, December 31, 2022 $ 81.3 $ 4.4 $ 3.3 $ 10.9 $ 99.9 Year Ended December 31, 2021 Rebates & Chargebacks Prompt Pay Discounts Allowance for Sales Returns Distributor Fees Total Balance, January 1, 2021 $ 65.3 $ 3.0 $ 12.5 $ 3.7 $ 84.5 Provisions attributed to sales in: Current period 217.0 38.5 — 31.3 286.8 Prior periods 1.6 — (3.9) 0.2 (2.1) Payments or credits attributed to sales in: Current period (151.8) (34.7) — (22.4) (208.9) Prior periods (64.3) (3.0) (2.3) (4.9) (74.5) Balance, December 31, 2021 $ 67.8 $ 3.8 $ 6.3 $ 7.9 $ 85.8 Cost of Sales The table below summarizes cost of sales by major category (dollars in millions): Year Ended December 31, Dollar Change Percentage Change 2023 2022 2021 2023 v. 2022 2022 v. 2021 2023 v. 2022 2022 v. 2021 Category: Cost of sales $ 255.1 $ 146.7 $ 116.7 $ 108.4 $ 30.0 74 % 26 % Share-based compensation expense (1) 2.4 4.9 5.8 (2.5) (0.9) (51) % (16) % Total cost of sales $ 257.5 $ 151.6 $ 122.5 $ 105.9 $ 29.1 70 % 24 % (1) See Share-Based Compensation section below for discussion.
We consider the following accounting policies to be critical to our consolidated financial statements because they require the use of our judgment and estimates (including those that are forward-looking) in their application. Revenue Recognition We generate revenues from the sale of our commercial products: Tyvaso, Tyvaso DPI, Remodulin, Orenitram, Unituxin, and Adcirca.
We consider the following accounting policies to be critical to our consolidated financial statements because they require the use of our judgment and estimates (including those that are forward-looking) in their application. Revenue Recognition We generate revenues from the sale of our commercial products: Tyvaso DPI, nebulized Tyvaso, Remodulin, Orenitram, Unituxin, and Adcirca.
Changes in our liability associated with outstanding STAP awards as a result of such re-measurements are recorded as adjustments to share-based compensation expense (benefit) and can create substantial volatility within our operating expenses from period to period.
Changes in our liability associated with outstanding STAP awards as a result of such re-measurements are recorded as adjustments to share-based compensation expense (benefit) and can create volatility within our operating expenses from period to period.
Tyvaso is an inhaled formulation of the prostacyclin analogue treprostinil, approved by the FDA and regulatory authorities in Argentina, Israel, and Japan to improve exercise ability in patients with pulmonary arterial hypertension ( PAH ).
Nebulized Tyvaso is an inhaled formulation of the prostacyclin analogue treprostinil, approved by the FDA and regulatory authorities in Argentina, Israel, and Japan to improve exercise ability in patients with pulmonary arterial hypertension ( PAH ).
Tyvaso was also approved by the FDA in March 2021 and by regulators in Israel in December 2022 to improve exercise ability in patients with PH-ILD.
Nebulized Tyvaso was also approved by the FDA in March 2021 and by regulators in Israel in December 2022 to improve exercise ability in patients with PH-ILD.
W e also sell Tyvaso, Remodulin, and Unituxin to distributors internationally. We sell Adcirca through the pharmaceutical wholesale network of Eli Lilly and Company ( Lilly ).
W e also sell nebulized Tyvaso, Remodulin, and Unituxin to distributors internationally. We sell Adcirca through the pharmaceutical wholesale network of Eli Lilly and Company ( Lilly ).
For a description of our related accounting policies, refer to Note 2 —Summary of Significant Accounting Policies—Revenue Recognition to our consolidated financial statements. The following category of gross-to-net deductions involves the use of significant estimates and judgments and information obtained from external sources.
For a description of our related accounting policies, see Note 2 —Summary of Significant Accounting Policies—Revenue Recognition to our consolidated financial statements. The following category of gross-to-net deductions involves the use of significant estimates and judgments and information obtained from external sources.
(2) Internal research and development primarily includes salary-related expenses for research and development functions, internal costs to manufacture product candidates before FDA approval, and internal facilities-related expenses, including depreciation, related to research and development activities. (3) Refer to Share-Based Compensation section below for discussion.
(2) Internal research and development primarily includes salary-related expenses for research and development functions, internal costs to manufacture product candidates before FDA approval, and internal facilities-related expenses, including depreciation, related to research and development activities. (3) See Share-Based Compensation section below for discussion.
These statements, which are based on our beliefs and expectations about future outcomes and on information available to us through the date this Report on Form 10-K is filed with the SEC, include, among others, statements related to the following: • Expectations of revenues, expenses, profitability, cash flows, and growth in the number of patients being treated with our products, including anticipated growth in the number of Tyvaso patients as a result of the expansion of its label to include pulmonary hypertension associated with interstitial lung disease ( PH-ILD ) and anticipated growth in revenues following the recent commercial launch of Tyvaso DPI; • The sufficiency of our cash on hand to support operations; • Our ability to obtain financing on terms favorable to us or at all; • Our ability to obtain and maintain domestic and international regulatory approvals; • Our ability to maintain attractive pricing and reimbursement levels for our products, in light of increasing competition, including from generic products, pressure from government and other payers to decrease the costs associated with healthcare, including the potential impact of the Inflation Reduction Act of 2022 ( IRA ) on our business; • The expected volume and timing of sales of our commercial products, as well as potential future commercial products, including the anticipated effect of various research and development efforts on sales of these products; • The timing and outcome of clinical studies, other research and development efforts, and related regulatory filings and approval s; • The outcome of pending and potential future legal and regulatory actions by the U.S.
These statements, which are based on our beliefs and expectations about future outcomes and on information available to us through the date this Report on Form 10-K is filed with the SEC, include, among others, statements related to the following: • Expectations of revenues, expenses, profitability, cash flows, and growth in the number of patients being treated with our products, including anticipated growth in the number of nebulized Tyvaso patients as a result of the expansion of its label to include pulmonary hypertension associated with interstitial lung disease ( PH-ILD ) and anticipated growth in Tyvaso DPI revenues; • The sufficiency of our cash on hand to support operations; • Our ability to obtain and maintain domestic and international regulatory approvals; • Our ability to maintain attractive pricing and reimbursement levels for our products, in light of increasing competition, including from generic products and pressure from government and other payers to decrease the costs associated with healthcare, including the potential impact of the Inflation Reduction Act of 2022 ( IRA ) on our business; • The expected volume and timing of sales of our commercial products, as well as potential future commercial products, including the anticipated effect of various research and development efforts on sales of these products; • The timing and outcome of clinical studies, other research and development efforts, and related regulatory filings and approval s; • The outcome of pending and potential future legal and regulatory actions by the U.S.
Our ability to achieve our objectives, grow our business, and maintain profitability will depend on many factors, including among others: (1) the timing and outcome of preclinical research, clinical trials, and regulatory approval applications for products we develop; (2) the timing and degree of our success in commercially launching new products; (3) the demand for our products; (4) the price of our products and the reimbursement of our products by public and private health insurance organizations, including the impact on such prices and reimbursement amounts as a result of the IRA; (5) the competition we face within our industry, 48 United Therapeutics, a public benefit corporation including competition from generic companies and new PAH therapies; (6) our ability to effectively manage our business in an increasingly complex legal and regulatory environment; (7) our ability to defend against challenges to our patents; and (8) the risks identified in Part I, Item 1A—Risk Factors , included in this Report.
Our ability to achieve our objectives, grow our business, and maintain profitability will depend on many factors, including among others: (1) the timing and outcome of preclinical research, clinical trials, and regulatory approval applications for products we develop; (2) the timing and degree of our success in commercially launching new products; (3) the demand for our products; (4) the price of our products and the reimbursement of our products by public and private health insurance organizations, including the impact on such prices and reimbursement amounts as a result of the IRA; (5) the competition we face within our industry, including competition from generic companies and the anticipated launch of new PAH and PH-ILD therapies; (6) our ability to effectively manage our business in an increasingly complex legal and regulatory environment; (7) our ability to defend against challenges to our patents; and (8) the risks identified in Part I, Item 1A—Risk Factors , included in this Report.
Discussions of year-to-year comparisons between 2021 and 2020 that are not included in this Report can be found in Part II, Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations of our Form 10-K filed on February 24, 2022 (our 2021 Annual Report ).
Discussions of year-to-year comparisons between 2022 and 2021 that are not included in this Report can be found in Part II, Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations of our Form 10-K filed on February 22, 2023 (our 2022 Annual Report ).
Currently, we grant stock options and restricted stock units under the United Therapeutics Corporation Amended and Restated 2015 Stock Incentive Plan (as amended to date, the 2015 Plan ), which provides for the issuance of up to 11,500,000 shares of our common stock, including the 500,000 shares added pursuant to an amendment and restatement of the 2015 Plan approved by our shareholders in June 2022.
Currently, we grant stock options and restricted stock units under the United Therapeutics Corporation Amended and Restated 2015 Stock Incentive Plan (as amended to date, the 2015 Plan ), which provides for the issuance of up to 12,500,000 shares of our common stock, including the 1,000,000 shares added pursuant to an amendment and restatement of the 2015 Plan approved by our shareholders in June 2023.
Refer to Note 11— Employee Benefit Plans—Supplemental Executive Retirement Plan to our consolidated financial statements for further details.
See Note 11— Employee Benefit Plans—Supplemental Executive Retirement Plan to our consolidated financial statements for further details.
We do not have any other off-balance sheet arrangements within the meaning of Item 303(a)(4) of Regulation S-K. Summary of Critical Accounting Policies and Estimates We prepare our consolidated financial statements in conformity with generally accepted accounting principles in the United States ( GAAP ).
We do not have any other off-balance sheet arrangements within the meaning of Item 303(a)(4) of Regulation S-K. 62 United Therapeutics, a public benefit corporation Summary of Critical Accounting Policies and Estimates We prepare our consolidated financial statements in conformity with generally accepted accounting principles in the United States ( GAAP ).
For additional information on the assumptions used in the Black-Scholes-Merton valuation model, see Note 8— Share-Based Compensation, to our consolidated financial statements. Recently Issued Accounting Standards See Note 3— Recently Issued Accounting Standards , to our consolidated financial statements for information on our anticipated adoption of recently issued accounting standards.
For additional information on the assumptions used in the Black-Scholes-Merton valuation model, see Note 8— Share-Based Compensation, to our consolidated financial statements. Recently Issued Accounting Standards See Note 3— Recently Issued Accounting Standards , to our consolidated financial statements for information on our anticipated adoption of recently issued accounting standards. 2023 Annual Report 63
(2) Estimated based on the intrinsic value of exercisable outstanding STAP awards as of December 31, 2022. Refer to Note 8 —Share-Based Compensation—STAP Awards to our consolidated financial statements for further details. (3) Consists of actuarially derived, undiscounted, estimated future payouts of benefits.
See Note 7— Debt to our consolidated financial statements for further details. (2) Estimated based on the intrinsic value of exercisable outstanding STAP awards as of December 31, 2023. See Note 8 —Share-Based Compensation—STAP Awards to our consolidated financial statements for further details. (3) Consists of actuarially derived, undiscounted, estimated future payouts of benefits.
We caution you that these statements are not guarantees of future performance and are subject to numerous evolving risks and uncertainties that we may not be able to accurately predict or assess, and that may cause our actual results to differ materially from anticipated results, including the risks and uncertainties we describe in Part I, Item 1A—Risk Factors of this Report and factors described in other cautionary statements, cautionary language, and risk factors set forth in our other filings with the SEC. 46 United Therapeutics, a public benefit corporation Overview of Marketed Products We market and sell the following commercial products: • Tyvaso and Tyvaso DPI.
We caution you that these statements are not guarantees of future performance and are subject to numerous evolving risks and uncertainties that we may not be able to accurately predict or assess, and that may cause our actual results to differ materially from anticipated results, including the risks and uncertainties we describe in Part I, Item 1A—Risk Factors of this Report and risks and uncertainties described in other cautionary statements, cautionary language, and risk factors set forth in our other filings with the SEC. 2023 Annual Report 53 Overview of Marketed Products We market and sell the following commercial products: • Tyvaso DPI and Nebulized Tyvaso.
Refer to Note 12— Commitments and Contingencies to our consolidated financial statements for further details. (6) As of December 31, 2022, our other non-current liabilities in our consolidated balance sheets includes a liability of $15.9 million for unrecognized tax benefits, including related interest and penalties.
See Note 12— Commitments and Contingencies to our consolidated financial statements for further details. (6) As of December 31, 2023, our other non-current liabilities in our consolidated balance sheets includes a liability of $7.0 million for unrecognized tax benefits, including related interest and penalties.
Due to this time lag, we must estimate the amount of rebates and chargebacks to accrue. As of December 31, 2022 and 2021, we had a liability of $81.3 million and $67.8 million, respectively, related to rebates and chargebacks.
Due to this time lag, we must estimate the amount of rebates and chargebacks to accrue. As of December 31, 2023 and 2022, we had a liability of $108.4 million and $81.3 million, respectively, related to rebates and chargebacks.
Share-Based Compensation The table below summarizes share-based compensation expense by major category (dollars in millions): Year Ended December 31, Dollar Change Percentage Change 2022 2021 2020 2022 v. 2021 2021 v. 2020 2022 v. 2021 2021 v. 2020 Category: Stock options $ 22.6 $ 25.4 $ 44.0 $ (2.8) $ (18.6) (11) % (42) % Restricted stock units 35.7 24.7 20.5 11.0 4.2 45 % 20 % STAP awards 46.7 86.6 97.8 (39.9) (11.2) (46) % (11) % Employee stock purchase plan 1.8 1.8 1.5 — 0.3 — % 20 % Total share-based compensation expense $ 106.8 $ 138.5 $ 163.8 $ (31.7) $ (25.3) (23) % (15) % The table below summarizes share-based compensation expense by line item in our consolidated statements of operations (dollars in millions): Year Ended December 31, Dollar Change Percentage Change 2022 2021 2020 2022 v. 2021 2021 v. 2020 2022 v. 2021 2021 v. 2020 Cost of sales $ 4.9 $ 5.8 $ 7.1 $ (0.9) $ (1.3) (16) % (18) % Research and development 23.8 24.4 29.5 (0.6) (5.1) (2) % (17) % Selling, general, and administrative 78.1 108.3 127.2 (30.2) (18.9) (28) % (15) % Total share-based compensation expense $ 106.8 $ 138.5 $ 163.8 $ (31.7) $ (25.3) (23) % (15) % The decrease in share-based compensation expense for the year ended December 31, 2022, as compared to the same period in 2021, was primarily due to: (1) a decrease in STAP expense driven by a 29 percent increase in our stock price during 2022, as compared to a 42 percent increase in our stock price during 2021; and (2) a decrease in stock option expense due to fewer awards granted and remaining outstanding in 2022, as compared to the same period in 2021, partially offset by an increase in restricted stock unit expense.
Share-Based Compensation The table below summarizes share-based compensation expense by major category (dollars in millions): Year Ended December 31, Dollar Change Percentage Change 2023 2022 2021 2023 v. 2022 2022 v. 2021 2023 v. 2022 2022 v. 2021 Category: Stock options $ 15.4 $ 22.6 $ 25.4 $ (7.2) $ (2.8) (32) % (11) % Restricted stock units 52.4 35.7 24.7 16.7 11.0 47 % 45 % STAP awards (30.7) 46.7 86.6 (77.4) (39.9) (166) % (46) % Employee stock purchase plan 2.0 1.8 1.8 0.2 — 11 % — % Total share-based compensation expense $ 39.1 $ 106.8 $ 138.5 $ (67.7) $ (31.7) (63) % (23) % The table below summarizes share-based compensation expense by line item in our consolidated statements of operations (dollars in millions): Year Ended December 31, Dollar Change Percentage Change 2023 2022 2021 2023 v. 2022 2022 v. 2021 2023 v. 2022 2022 v. 2021 Cost of sales $ 2.4 $ 4.9 $ 5.8 $ (2.5) $ (0.9) (51) % (16) % Research and development 15.6 23.8 24.4 (8.2) (0.6) (34) % (2) % Selling, general, and administrative 21.1 78.1 108.3 (57.0) (30.2) (73) % (28) % Total share-based compensation expense $ 39.1 $ 106.8 $ 138.5 $ (67.7) $ (31.7) (63) % (23) % The decrease in share-based compensation expense for the year ended December 31, 2023, as compared to the same period in 2022, was primarily due to: (1) an increase in STAP benefit driven by a 21 percent decrease in our stock price during 2023, as compared to a 29 percent increase in our stock price during 2022; and (2) a decrease in stock option expense due to fewer awards remaining outstanding in 2023, as compared to the same period in 2022, partially offset by an increase in restricted stock unit expense.
Refer to Note 4 —Investments and Note 5— Fair Value Measurements, to our consolidated financial statements for more information. Income Tax Expense Income tax expense was $223.3 million for the year ended December 31, 2022, as compared to $118.1 million for the same period in 2021.
See Note 4 —Investments and Note 5— Fair Value Measurements, to our consolidated financial statements for more information. Income Tax Expense Income tax expense was $289.5 million for the year ended December 31, 2023, compared to $223.3 million for the same period in 2022.
Health Resource Services Administration related to the Public Health Service’s 340B drug pricing program; • The impact of competing therapies on sales of our commercial products, including the impact of generic versions of Adcirca and Remodulin; established therapies such as Uptravi; and newly-developed therapies such as Merck’s sotatercept and Liquidia’s Yutrepia; • The expectation that we will be able to manufacture sufficient quantities and maintain adequate inventories of our commercial products, through both our in-house manufacturing capabilities and third-party manufacturing sites, and our ability to obtain and maintain related approvals by the FDA and other regulatory agencies; • The adequacy of our intellectual property protection and the validity and expiration dates of the patents we own or license, as well as the regulatory exclusivity periods for our products; • The effect of our recent conversion to a Delaware public benefit corporation; • Any statements that include the words “believe,” “seek,” “expect,” “anticipate,” “forecast,” “project,” “intend,” “estimate,” “should,” “could,” “may,” “will,” “plan,” or similar expressions; and • Other statements contained or incorporated by reference in this Report that are not historical facts.
Health Resource Services Administration ( HRSA ) related to the Public Health Service’s 340B drug pricing program (the 340B program ); • The impact of competing therapies on sales of our commercial products, including the impact of generic versions of Remodulin; established therapies such as Uptravi; and newly-developed therapies such as Merck’s sotatercept and Liquidia’s Yutrepia; • The expectation that we will be able to manufacture sufficient quantities and maintain adequate inventories of our commercial products, through both our in-house manufacturing capabilities and third-party manufacturing sites (including our plans to expand manufacturing capacity for Tyvaso DPI), and our ability to obtain and maintain related approvals by the FDA and its international counterparts; • Expectations regarding the amount and timing of capital expenditures to construct new facilities to support our product development and commercialization efforts; • Expectations regarding the timing and impact of our business development efforts; • The adequacy of our intellectual property protection and the validity and expiration dates of the patents we own or license, as well as the regulatory exclusivity periods for our products; • The effect of our conversion to a Delaware public benefit corporation ( PBC ); • Any statements that include the words “believe,” “seek,” “expect,” “anticipate,” “forecast,” “project,” “intend,” “estimate,” “should,” “could,” “may,” “will,” “plan,” or similar expressions; and • Other statements contained or incorporated by reference in this Report that are not historical facts.
Refer to Note 8 —Share-Based Compensation , to our consolidated financial statements for more information. 52 United Therapeutics, a public benefit corporation Other (Expense) Income, Net The change in other (expense) income, net for the year ended December 31, 2022, as compared to the same period in 2021, was primarily due to net unrealized and realized gains and losses on equity securities.
See Note 8 —Share-Based Compensation , to our consolidated financial statements for more information. Other (Expense) Income, Net The change in other (expense) income, net for the year ended December 31, 2023, as compared to the same period in 2022, was primarily due to net unrealized and realized gains and losses on equity securities.
Although we no longer grant STAP awards, we had approximat ely 0.6 millio n STAP awards outstanding as of December 31, 2022. We account for STAP awards as liabilities because they are settled in cash.
Although we no longer grant STAP awards, we had approximat ely 0 .4 million STAP awards outstanding as of December 31, 2023. We account for STAP awards as liabilities because they are settled in cash.
(5) Other primarily includes upfront fees and milestone payments to third parties under license agreements related to development-stage products, adjustments to the fair value of our contingent consideration obligations, and a one-time expense associated with the redemption of a pediatric disease priority review voucher in 2021. (6) Calculation is not meaningful. Research and development, excluding share-based compensation.
(5) Other primarily includes upfront fees and milestone payments to third parties under license agreements related to development-stage products, adjustments to the fair value of our contingent consideration obligations, costs to acquire certain IPR&D assets, and a one-time expense associated with the redemption of a pediatric disease priority review voucher in 2021.
Due to the high degree of uncertainty on the timing of future events that could extinguish these unrecognized tax benefits, we are unable to estimate the period of settlement and therefore we have excluded these unrecognized tax benefits from the table above.
Due to the high degree of uncertainty on the timing of future events that could extinguish these unrecognized tax benefits, we are unable to estimate the period of settlement and therefore we have excluded these unrecognized tax benefits from the table above. See Note 10— Income Taxes to our consolidated financial statements for further details.
( Liquidia ) related to its new drug application ( NDA ) for Yutrepia; our litigation with Humana Inc., United Healthcare Services, Inc., MSP Recovery Claims, Series LLC, and related entities; and our litigation with the U.S. Department of Health and Human Services and the U.S.
( Liquidia ) related to its new drug application ( NDA ) for Yutrepia; our lawsuit against the FDA related to Liquidia’s efforts to add PH-ILD to the NDA for Yutrepia; our litigation with Humana Inc., United Healthcare Services, Inc., MSP Recovery Claims, Series LLC, and related entities; and our litigation with the U.S.
For additional detail regarding our commercial products, see Part I, Item 1—Business—Our Commercial Products. Research and Development We are engaged in research and development of new indications and delivery devices for our existing product s. W e recently developed a new pump for Remodulin, called the Remunity Pump, and are currently developing a new version of the Remunity Pump.
For additional detail regarding our commercial products, see Part I, Item 1—Business—Our Commercial Products. Research and Development We are engaged in research and development of new indications and delivery devices for our existing product s.
Off-Balance Sheet Arrangements We hold an interest in an unconsolidated variable interest entity ( VIE ). We determined that we are not the primary beneficiary of this entity. As a result, we do not consolidate this VIE. Refer to Note 4— Investments—Variable Interest Entities .
We determined that we are not the primary beneficiary of this entity. As a result, we do not consolidate this VIE. See Note 4— Investments—Variable Interest Entities .
For additional details, refer to Note 10— Income Taxes to our consolidated financial statements. Financial Condition, Liquidity, and Capital Resources We have funded our operations principally through sales of our commercial products and, from time-to-time, third-party financing arrangements.
Our effective income tax rate was approximately 23 percent for the years ended December 31, 2023 and 2022. For additional details, see Note 10— Income Taxes to our consolidated financial statements. Financial Condition, Liquidity, and Capital Resources We have funded our operations principally through sales of our commercial products and, from time-to-time, third-party financing arrangements.
(4) Impairments primarily includes impairment charges to write-down the carrying value of in-process research and development ( IPR&D ) and of certain property, plant, and equipment as a result of research and development activities.
(4) Impairments primarily includes impairment charges to write down the carrying value of in-process research and development ( IPR&D ) and of certain property, plant, and equipment as a result of research and development activities. During the years ended December 31, 2023, 2022, and 2021, we recorded impairment charges of zero, zero, and $130.0 million, respectively.
Research and Development The table below summarizes the nature of research and development expense by major expense category (dollars in millions): Year Ended December 31, Dollar Change Percentage Change 2022 2021 2020 2022 v. 2021 2021 v. 2020 2022 v. 2021 2021 v. 2020 Category: External research and development (1) $ 168.8 $ 156.7 $ 177.4 $ 12.1 $ (20.7) 8 % (12) % Internal research and development (2) 131.4 117.2 111.3 14.2 5.9 12 % 5 % Share-based compensation expense (3) 23.8 24.4 29.5 (0.6) (5.1) (2) % (17) % Impairments (4) — 130.0 0.5 (130.0) 129.5 (100) % NM (6) Other (5) (1.1) 111.8 39.0 (112.9) 72.8 (101) % 187 % Total research and development expense $ 322.9 $ 540.1 $ 357.7 $ (217.2) $ 182.4 (40) % 51 % (1) External research and development primarily includes fees paid to third parties (such as clinical trial sites, contract research organizations, and contract laboratories) for preclinical and clinical studies and payments to third-party contract manufacturers before FDA approval of the relevant product.
The increase in cost of sales for the year ended December 31, 2023, as compared to the same period in 2022, was primarily due to an increase in Tyvaso DPI royalty expense and product costs, following its commercial launch in June 2022, and an increase in Remunity product sales. 58 United Therapeutics, a public benefit corporation Research and Development The table below summarizes the nature of research and development expense by major expense category (dollars in millions): Year Ended December 31, Dollar Change Percentage Change 2023 2022 2021 2023 v. 2022 2022 v. 2021 2023 v. 2022 2022 v. 2021 Category: External research and development (1) $ 192.0 $ 168.8 $ 156.7 $ 23.2 $ 12.1 14 % 8 % Internal research and development (2) 146.6 131.4 117.2 15.2 14.2 12 % 12 % Share-based compensation expense (3) 15.6 23.8 24.4 (8.2) (0.6) (34) % (2) % Impairments (4) — — 130.0 — (130.0) — % (100) % Other (5) 53.8 (1.1) 111.8 54.9 (112.9) NM (6) (101) % Total research and development expense $ 408.0 $ 322.9 $ 540.1 $ 85.1 $ (217.2) 26 % (40) % (1) External research and development primarily includes fees paid to third parties (such as clinical trial sites, contract research organizations, and contract laboratories) for preclinical and clinical studies and payments to third-party contract manufacturers before FDA approval of the relevant product.
We have entered into separate, non-exclusive distribution agreements with Accredo Health Group, Inc. and its affiliates and Caremark, L.L.C. to distribute Tyvaso, Tyvaso DPI, Remodulin, the Remunity Pump, and Orenitram in the United States, and we have entered into an exclusive distribution agreement with ASD Specialty Healthcare, Inc., an affiliate of AmerisourceBergen Corporation, to distribute Unituxin in the United States.
( CVS Specialty ) to distribute Tyvaso DPI, nebulized Tyvaso, Remodulin, the Remunity Pump, and Orenitram in the United States, and we have entered into an exclusive distribution agreement with ASD Specialty Healthcare, Inc., an affiliate of Cencora, Inc. (formerly known as AmerisourceBergen Corporation), to distribute Unituxin in the United States.
Financing Activities The increase of $30.6 million in net cash provided by financing activities for the year ended December 31, 2022, as compared to the year ended December 31, 2021, was primarily due to a $38.4 million increase in proceeds from the exercise of stock options, partially offset by a $7.5 million increase in payments of debt issuance costs related to the 2022 Credit Agreement.
Financing Activities The increase of $87.3 million in net cash used in financing activities for the year ended December 31, 2023, as compared to the year ended December 31, 2022, was primarily due to a $100.0 million repayment on our line of credit; partially offset by: (1) a $9.6 million increase in proceeds from the exercise of stock options; and (2) a $4.8 million decrease in payments of debt issuance costs related to the 2022 Credit Agreement.
These costs also include share-based 2022 Annual Report 47 compensation and salary-related expenses for direct manufacturing and indirect support personnel, quality review and release for commercial distribution, direct materials and supplies, depreciation, facilities-related expenses, and other overhead costs.
These costs also include share-based compensation and salary-related expenses for direct manufacturing and indirect support personnel, quality review and release for commercial distribution, direct materials and supplies, depreciation, facilities-related expenses, and other overhead costs. Research and Development Our research and development expenses primarily include costs associated with the research and development of products and post-marketing research commitments.
Remodulin net product sales, partially offset by a $2.4 million increase in international Remodulin net product sales. The decrease in U.S. Remodulin net product sales was driven by a decrease in quantities sold, partially offset by lower gross-to-net deductions. Orenitram net product sales increased in 2022, as compared to 2021, primarily due to a price increase and lower gross-to-net deductions.
Remodulin net product sales decreased in 2023, as compared to 2022, due to a decrease in international net product sales, partially offset by an increase in U.S. Remodulin net product sales, as shown in the table below. Orenitram net product sales increased in 2023, as compared to 2022, due to a price increase and an increase in quantities sold.
Revenues The table below presents the components of total revenues (dollars in millions): Year Ended December 31, Dollar Change Percentage Change 2022 2021 2020 2022 v. 2021 2021 v. 2020 2022 v. 2021 2021 v. 2020 Net product sales: Tyvaso (1) $ 873.0 $ 607.5 $ 483.3 $ 265.5 $ 124.2 44 % 26 % Remodulin (2) 500.2 513.7 516.7 (13.5) (3.0) (3) % (1) % Orenitram 325.1 306.1 293.1 19.0 13.0 6 % 4 % Unituxin 182.9 202.3 122.9 (19.4) 79.4 (10) % 65 % Adcirca 41.3 55.9 67.3 (14.6) (11.4) (26) % (17) % Other 13.8 — — 13.8 — NM (3) NM (3) Total revenues $ 1,936.3 $ 1,685.5 $ 1,483.3 $ 250.8 $ 202.2 15 % 14 % (1) Net product sales include both the drug product and the respective inhalation devices for both Tyvaso and Tyvaso DPI.
Revenues The table below presents the components of total revenues (dollars in millions): Year Ended December 31, Dollar Change Percentage Change 2023 2022 2021 2023 v. 2022 2022 v. 2021 2023 v. 2022 2022 v. 2021 Net product sales: Tyvaso DPI (1) $ 731.1 $ 158.3 $ — $ 572.8 $ 158.3 362 % NM (3) Nebulized Tyvaso (1) 502.6 714.7 607.5 (212.1) 107.2 (30) % 18 % Total Tyvaso 1,233.7 873.0 607.5 360.7 265.5 41 % 44 % Remodulin (2) 494.8 500.2 513.7 (5.4) (13.5) (1) % (3) % Orenitram 359.4 325.1 306.1 34.3 19.0 11 % 6 % Unituxin 198.9 182.9 202.3 16.0 (19.4) 9 % (10) % Adcirca 28.9 41.3 55.9 (12.4) (14.6) (30) % (26) % Other 11.8 13.8 — (2.0) 13.8 (14) % NM (3) Total revenues $ 2,327.5 $ 1,936.3 $ 1,685.5 $ 391.2 $ 250.8 20 % 15 % 56 United Therapeutics, a public benefit corporation (1) Net product sales include both the drug product and the respective inhalation device.
In February 2021, we launched U.S. sales of the Remunity Pump, a new subcutaneous delivery system for Remodulin. • Orenitram , a tablet dosage form of treprostinil, approved by the FDA to delay disease progression and improve exercise capacity in PAH patients. • Unituxin , a monoclonal antibody approved in the United States, Canada, and Japan for treatment of high-risk neuroblastoma. • Adcirca , an oral PDE-5 inhibitor approved by the FDA to improve exercise ability in PAH patients.
In June 2023, our contract manufacturer obtained FDA clearance for a cartridge to be used with the CADD-MS3 ambulatory infusion pump for subcutaneous infusion of Remodulin. • Orenitram , an extended-release tablet dosage form of treprostinil, approved by the FDA to delay disease progression and improve exercise capacity in PAH patients. • Unituxin , a monoclonal antibody approved in the United States, Canada, and Japan for the treatment of high-risk neuroblastoma. • Adcirca , an oral PDE-5 inhibitor approved by the FDA to improve exercise ability in PAH patients.
Provisions attributed to sales in prior periods have been less than one percent of our total revenues for each of the years ended December 31, 2022, 2021, and 2020.
Provisions attributed to sales in prior periods have been less than one percent of our total revenues for each of the years ended December 31, 2023, 2022, and 2021. For a roll-forward of the liability accounts associated with our gross-to-net deductions, see the section above entitled Results of Operations—Gross-to-Net Deductions .
The increase of $204.3 million in net cash provided by operating activities for the year ended December 31, 2022, as compared to the year ended December 31, 2021, was primarily due to: (1) a $105.0 million purchase of a pediatric disease priority review voucher during the year ended December 31, 2021; and (2) a $12.9 million decrease in cash paid to settle STAP awards.
The increase of $175.5 million in net cash provided by operating activities for the year ended December 31, 2023, as compared to the year ended December 31, 2022, was primarily due to: (1) a $53.5 million decrease in cash paid to settle STAP awards; and (2) changes in other assets and liabilities.
Cash and Cash Equivalents and Marketable Investments Cash and cash equivalents and marketable investments comprise the following (dollars in millions): Year Ended December 31, Dollar Change Percentage Change 2022 2021 2022 v. 2021 2022 v. 2021 Cash and cash equivalents $ 961.2 $ 894.8 $ 66.4 7 % Marketable investments—current 1,877.5 1,035.9 841.6 81 % Marketable investments—non-current 1,316.2 1,649.9 (333.7) (20) % Total cash and cash equivalents and marketable investments $ 4,154.9 $ 3,580.6 $ 574.3 16 % Cash Flows Cash flows comprise the following (dollars in millions): Year Ended December 31, Dollar Change Percentage Change 2022 2021 2020 2022 v. 2021 2021 v. 2020 2022 v. 2021 2021 v. 2020 Net cash provided by operating activities $ 802.5 $ 598.2 $ 755.7 $ 204.3 $ (157.5) 34 % (21) % Net cash used in investing activities $ (811.5) $ (486.9) $ (738.5) $ (324.6) $ 251.6 (67) % 34 % Net cash provided by (used in) financing activities $ 75.4 $ 44.8 $ (16.9) $ 30.6 $ 61.7 68 % 365 % Operating Activities Our operating assets and liabilities consist primarily of accounts receivable, inventories, accounts payable, accrued expenses, liabilities for our STAP awards, and tax-related payables and receivables.
For information regarding the fluctuation explanations between 2022 and 2021 , see our 2022 Annual Report. 60 United Therapeutics, a public benefit corporation Cash and Cash Equivalents and Marketable Investments Cash and cash equivalents and marketable investments comprise the following (dollars in millions): Year Ended December 31, Dollar Change Percentage Change 2023 2022 2023 v. 2022 2023 v. 2022 Cash and cash equivalents $ 1,207.7 $ 961.2 $ 246.5 26 % Marketable investments—current 1,786.4 1,877.5 (91.1) (5) % Marketable investments—non-current 1,909.8 1,316.2 593.6 45 % Total cash and cash equivalents and marketable investments $ 4,903.9 $ 4,154.9 $ 749.0 18 % Cash Flows Cash flows comprise the following (dollars in millions): Year Ended December 31, Dollar Change Percentage Change 2023 2022 2021 2023 v. 2022 2022 v. 2021 2023 v. 2022 2022 v. 2021 Net cash provided by operating activities $ 978.0 $ 802.5 $ 598.2 $ 175.5 $ 204.3 22 % 34 % Net cash used in investing activities $ (719.6) $ (811.5) $ (486.9) $ 91.9 $ (324.6) 11 % (67) % Net cash (used in) provided by financing activities $ (11.9) $ 75.4 $ 44.8 $ (87.3) $ 30.6 (116) % 68 % Operating Activities Our operating assets and liabilities consist primarily of accounts receivable, inventories, accounts payable, accrued expenses, liabilities for our STAP awards, and tax-related payables and receivables.
The remainder of the increase in cash provided by operating activities was due to other changes in assets and liabilities. 2022 Annual Report 53 Investing Activities The increase of $324.6 million in net cash used in investing activities for the year ended December 31, 2022, as compared to the year ended December 31, 2021, was primarily due to: (1) a $317.2 million increase in cash used for total purchases, sales, and maturities of marketable investments; and (2) a $18.0 million increase in cash paid to purchase property, plant, and equipment.
Investing Activities The decrease of $91.9 million in net cash used in investing activities for the year ended December 31, 2023, as compared to the year ended December 31, 2022, was primarily due to a $306.3 million decrease in cash used for total purchases, sales, and maturities of marketable investments; partially offset by: (1) a $91.6 million increase in cash paid to purchase property, plant, and equipment; (2) $89.2 million in net cash paid related to the acquisitions of IVIVA and Miromatrix; and (3) $23.0 million in deposits.
Revenues Our total revenues consist primarily of sales of the commercial products noted above, together with associated sales of delivery devices (in the case of Remodulin, Tyvaso, and Tyvaso DPI).
For additional detail regarding our research and development programs, see Part I, Item 1 — Business — Research and Development. Revenues Our total revenues consist primarily of sales of the commercial products noted above, together with associated sales of administration devices (in the case of Tyvaso DPI, nebulized Tyvaso, and Remodulin).
The 2022 Credit Agreement will mature in March 2027. As of December 31, 2022, we have classified the entire $800.0 million outstanding balance as a non-current liability because we do not intend to repay any portion of this amount within one year. Refer to Note 7— Debt to our consolidated financial statements for further details.
The 2022 Credit Agreement will mature in March 2028. As of December 31, 2023, we have classified $300.0 million of the outstanding balance as a non-current liability and $400.0 million as a current liability on our consolidated balance sheet, as we intend to repay this amount within one year.
We operate in a highly competitive market in which a small number of large pharmaceutical companies control a majority of available PAH therapies. These pharmaceutical companies are well established in the market and possess greater financial, technical, and marketing resources than we do.
These pharmaceutical companies are well established in the market and possess greater financial, technical, and marketing resources than we do.
In May 2022, we also obtained FDA approval of Tyvaso DPI to treat PAH and PH-ILD, and we initiated commercial shipments of Tyvaso DPI to our distributors in June 2022. • Remodulin , a continuously-infused formulation of treprostinil, approved by the FDA for subcutaneous and intravenous administration to diminish symptoms associated with exercise in patients with PAH.
In May 2022, we also obtained FDA approval of a dry powder formulation of treprostinil for inhalation known as Tyvaso DPI to treat PAH and PH-ILD, and we initiated commercial shipments of Tyvaso DPI to our distributors in June 2022.
The increase in quantities sold was driven by the commercial launch of Tyvaso DPI in June 2022 and continued growth in the number of patients following the PH-ILD label expansion in March 2021. Remodulin net product sales decreased in 2022, as compared to 2021, due to a $15.9 million decrease in U.S.
This growth was primarily due to an increase in quantities sold, driven by the commercial launch of Tyvaso DPI in June 2022 and continued growth in utilization by PH-ILD patients. Tyvaso DPI net product sales increased in 2023, as compared to 2022, primarily due to an increase in quantities sold.
Food and Drug Administration ( FDA ) and other regulatory and government enforcement agencies, and the anticipated duration of regulatory exclusivity for our products; • The timing and outcome of ongoing litigation, including the lawsuit filed against us by Sandoz, Inc. and Liquidia PAH, LLC (formerly known as RareGen, LLC); our patent and trade secret litigation with Liquidia Technologies, Inc.
Food and Drug Administration ( FDA ) and other regulatory and government enforcement agencies related to our products and potential competitive products; • The timing and outcome of ongoing litigation, including the lawsuit filed against us by Sandoz, Inc.
Contractual Obligations As of December 31, 2022, we had the following contractual obligations (in millions): Payments Due by Period Total Less than 1 year 2-3 Years 4-5 Years More than 5 Years Operating lease obligations $ 31.7 $ 3.9 $ 7.0 $ 7.1 $ 13.7 Long-term debt obligations (1) 1,014.2 50.4 100.8 863.0 — Obligations under the STAP (2) 76.4 76.4 — — — Obligations under the SERP (3) 67.7 19.5 18.1 — 30.1 Purchase obligations (4) 654.4 464.4 150.5 25.3 14.2 Total (5) (6) $ 1,844.4 $ 614.6 $ 276.4 $ 895.4 $ 58.0 (1) Long-term debt obligations include future principal and interest payments on our adjusted variable rate obligations under the 2022 Credit Agreement, assuming contractual maturity of the 2022 Credit Agreement.
See Note 7— Debt, to our consolidated financial statements. 2023 Annual Report 61 Contractual Obligations As of December 31, 2023, we had the following contractual obligations (in millions): Payments Due by Period Total Less than 1 year 2-3 Years 4-5 Years More than 5 Years Operating lease obligations $ 32.8 $ 4.7 $ 8.5 $ 8.1 $ 11.5 Long-term debt obligations (1) 822.3 441.5 49.7 331.1 — Obligations under the STAP (2) 31.3 31.3 — — — Obligations under the SERP (3) 61.0 30.5 — 11.2 19.3 Purchase obligations (4) 772.2 586.6 150.8 26.1 8.7 Total (5) (6) $ 1,719.6 $ 1,094.6 $ 209.0 $ 376.5 $ 39.5 (1) Long-term debt obligations include future principal and interest payments on our adjusted variable rate obligations under the 2022 Credit Agreement.
As a result, sales of our treprostinil-based therapies can vary depending on the timing and magnitude of these orders and do not precisely reflect changes in patient demand. Operating Expenses We devote substantial resources to our various clinical trials and other research and development efforts, which are conducted both internally and through third parties.
As a result, sales of our treprostinil-based therapies can vary depending on the timing and magnitude of these orders and do not precisely reflect changes in patient demand.
We have entered into other license agreements under which we are required to make milestone payments upon the achievement of certain developmental and commercialization objectives and royalty payments upon the commercialization of products covered by the license agreements. Refer to Note 12— Commitments and Contingencies to our consolidated financial statements for further details.
We also pay The Scripps Research Institute a one percent royalty on sales of Unituxin. We have entered into other license agreements under which we are required to make milestone payments upon the achievement of certain developmental and commercialization objectives and royalty payments upon the commercialization of products covered by the license agreements.
The aggregate balance of $800.0 million under our 2022 Credit Agreement remained outstanding as of both December 31, 2022 and February 22, 2023. Refer to Note 7— Debt, to our consolidated financial statements.
Our aggregate outstanding balance under the 2022 Credit Agreement was $700.0 million and $800.0 million as of December 31, 2023 and 2022, respectively .
Future Prospects We anticipate that overall revenue growth over the near-term will be driven primarily by: (1) growth in sales of Tyvaso as a result of the expansion of its label to include PH-ILD; (2) growth in sales of the newly-launched Tyvaso DPI; (3) continued growth in the number of patients prescribed Orenitram following our expansion of the Orenitram label to reflect the results of the FREEDOM-EV study; and (4) modest price increases for some of our products; partially offset by further generic erosion of Adcirca sales.
The following factors, among others, have a significant impact on the amount of share-based compensation expense (benefit) recognized in connection with STAP awards from period to period: (1) volatility in the price of our common stock (specifically, increases in the price of our common stock will generally result in an increase in our liability and related compensation expense, while decreases in our stock price will generally result in a reduction in our liability and related compensation expense); and (2) decreases in the number of outstanding awards. 2023 Annual Report 55 Future Prospects We anticipate that overall revenue growth over the near-term will be driven primarily by: (1) growth in sales of the recently-launched Tyvaso DPI, and growth in sales of nebulized Tyvaso as a result of the expansion of its label to include PH-ILD; (2) continued growth in the number of patients prescribed Orenitram following our expansion of the Orenitram label to reflect the results of the FREEDOM-EV study; and (3) modest price increases for some of our products.
(2) Net product sales include sales of infusion devices, such as the Remunity Pump. (3) Calculation is not meaningful. Net product sales from our treprostinil-based products (Tyvaso, Remodulin, and Orenitram) grew by $271.0 million in 2022, as compared to 2021.
(2) Net product sales include sales of infusion devices including the Remunity Pump. (3) Calculation is not meaningful. Total Tyvaso net product sales grew 41% to $1,233.7 million in 2023, compared to $873.0 million for 2022.
For a roll-forward of the liability accounts associated with our gross-to-net deductions, see the section above entitled Results of Operations—Gross-to-Net Deductions . 2022 Annual Report 55 Share-Based Compensation Our share-based awards are classified as either liabilities (STAP awards) or as equity (stock options, restricted stock units, and rights to purchase stock under our employee stock purchase plan).
Share-Based Compensation Our share-based awards are classified as either liabilities (STAP awards) or as equity (stock options, restricted stock units, and rights to purchase stock under our employee stock purchase plan).
Refer to Note 10— Income Taxes to our consolidated financial statements for further details. 54 United Therapeutics, a public benefit corporation Obligations Under License Agreements We pay Lilly a royalty equal to ten percent of our net product sales of Adcirca, as well as milestone payments of $325,000 for each $1,000,000 in Adcirca net product sales.
We pay Lilly a royalty equal to ten percent of our net product sales of Adcirca, as well as milestone payments of $325,000 for each $1,000,000 in Adcirca net product sales. We pay a single-digit percentage royalty based on net product sales of Orenitram under our license agreement with Supernus.
General and administrative, excluding share-based compensation . The increase in general and administrative expense for the year ended December 31, 2022, as compared to the same period in 2021, was primarily due to: (1) an increase in branded prescription drug fee expense associated with sales of Tyvaso; and (2) impairment charges related to property, plant, and equipment.
The increase in general and administrative expense for the year ended December 31, 2023, as compared to the same period in 2022, was primarily due to increases in: (1) office expenses; (2) personnel expense due to growth in headcount; and (3) sponsorships and grants. 2023 Annual Report 59 Sales and marketing, excluding share-based compensation .
We are also working with a medical device manufacturer to develop new delivery systems for Remodulin. We are studying Tyvaso in patients with idiopathic pulmonary fibrosis (the TETON studies). In addition, we are developing new products to treat PAH (RemoPro and ralinepag).
In 2021, we launched a new pump for subcutaneous delivery of Remodulin, called the Remunity Pump, and are currently developing a new version of the Remunity Pump. We are also working with a medical device manufacturer to develop new delivery systems for Remodulin.
Unituxin net product sales decreased in 2022, as compared to 2021, primarily due to a decrease in quantities sold, partially offset by a price increase.
Nebulized Tyvaso net product sales decreased in 2023, as compared to 2022, driven by a decrease in U.S. nebulized Tyvaso net product sales, primarily due to a decrease in quantities sold following the commercial launch of Tyvaso DPI, partially offset by an increase in international nebulized Tyvaso net product sales, primarily due to the commercial launch of nebulized Tyvaso in Japan in December 2022, as shown in the table below.
These are referred to as gross-to-net deductions and are primarily based on estimates reflecting historical experiences as well as contractual and statutory requirements. We currently estimate our allowance for sales returns using reports from our distributors and available industry data, including our estimate of inventory remaining in the distribution channel.
(2) Net product sales include sales of infusion devices including the Remunity Pump. Gross-to-Net Deductions We recognize revenues net of: (1) rebates and chargebacks; (2) prompt pay discounts; (3) allowance for sales returns; and (4) distributor fees. These are referred to as gross-to-net deductions and are primarily based on estimates reflecting historical experiences as well as contractual and statutory requirements.
The decrease in research and development expense for the year ended December 31, 2022, as compared to the same period in 2021, was due to: (1) a $107.3 million IPR&D impairment charge related to our March 2021 decision to discontinue the U.S. development of Trevyent; (2) a $105.0 million purchase of a pediatric disease priority review voucher in January 2021, which we redeemed upon submission of our NDA for Tyvaso DPI; and (3) impairment charges related to property, plant, and equipment during 2021. 2022 Annual Report 51 Selling, General, and Administrative The table below summarizes selling, general, and administrative expense by major category (dollars in millions): Year Ended December 31, Dollar Change Percentage Change 2022 2021 2020 2022 v. 2021 2021 v. 2020 2022 v. 2021 2021 v. 2020 Category: General and administrative $ 333.2 $ 294.3 $ 241.8 $ 38.9 $ 52.5 13 % 22 % Sales and marketing 70.8 64.4 54.9 6.4 9.5 10 % 17 % Share-based compensation expense (1) 78.1 108.3 127.2 (30.2) (18.9) (28) % (15) % Total selling, general, and administrative expense $ 482.1 $ 467.0 $ 423.9 $ 15.1 $ 43.1 3 % 10 % (1) Refer to Share-Based Compensation section below for discussion.
Selling, General, and Administrative The table below summarizes selling, general, and administrative expense by major category (dollars in millions): Year Ended December 31, Dollar Change Percentage Change 2023 2022 2021 2023 v. 2022 2022 v. 2021 2023 v. 2022 2022 v. 2021 Category: General and administrative $ 374.2 $ 333.2 $ 294.3 $ 41.0 $ 38.9 12 % 13 % Sales and marketing 81.8 70.8 64.4 11.0 6.4 16 % 10 % Share-based compensation expense (1) 21.1 78.1 108.3 (57.0) (30.2) (73) % (28) % Total selling, general, and administrative expense $ 477.1 $ 482.1 $ 467.0 $ (5.0) $ 15.1 (1) % 3 % (1) See Share-Based Compensation section below for discussion.
Cost of sales, excluding share-based compensation. The increase in cost of sales for the year ended December 31, 2022, as compared to the same period in 2021, was primarily due to an increase in royalty expense and product costs for Tyvaso DPI following the commercial launch of the product in June 2022.
The increase in sales and marketing expense for the year ended December 31, 2023, as compared to the same period in 2022, was primarily due to increases in: (1) personnel expense due to growth in headcount; and (2) consulting expenses.
We are also heavily engaged in early-stage research and development of a number of organ transplantation-related technologies including regenerative medicine, 3-D organ bioprinting, xenotransplantation, and ex vivo lung perfusion. For additional detail regarding our research and development programs, see Part I, Item 1 — Business — Research and Development.
We are studying nebulized Tyvaso in patients with idiopathic pulmonary fibrosis and progressive pulmonary fibrosis (the TETON studies). In addition, we are developing a new product to treat PAH, ralinepag. We are also heavily engaged in research and development of a number of organ transplantation-related technologies including xenotransplantation, regenerative medicine, bio-artificial organs, 3-D organ bioprinting, and ex vivo lung perfusion.
Our aggregate outstanding balance under the 2022 Credit Agreement, which matures in 2027, was $800.0 million and classified as a non-current liability in our consolidated balance sheets as of December 31, 2022. See Unsecured Revolving Credit Facilities below for further details. For information regarding the fluctuation explanations between 2021 and 2020 , refer to our 2021 Annual Report.
Although our credit facility matures in 2028, we reclassified $400.0 million of the outstanding balance as a current liability on our consolidated balance sheet as of December 31, 2023 as we intend to repay this amount within one year. See Unsecured Revolving Credit Facilities below for further details.
Results of Operations This section of this Report generally discusses 2022, 2021, and 2020 items and year-to-year comparisons between 2022 and 2021.
For example, if Yutrepia is commercially launched, our Tyvaso revenues could potentially be materially adversely affected, and the impact may be more material if Yutrepia is approved for the treatment of PH-ILD. Results of Operations This section of this Report generally discusses 2023, 2022, and 2021 items and year-to-year comparisons between 2023 and 2022.
Tyvaso net product sales increased in 2022, as compared to 2021, primarily due to an increase in quantities sold and, to a lesser extent, the impact of a price increase and lower gross-to-net deductions.
Unituxin net product sales increased in 2023, as compared to 2022, primarily due to a price increase. The table below presents the breakdown of total revenues between the United States and rest-of-world ( ROW ) (in millions): Year Ended December 31, 2023 2022 2021 U.S. ROW Total U.S. ROW Total U.S.
Removed
Remodulin has also been approved in various countries outside of the United States.
Added
( Sandoz ) and Liquidia PAH, LLC (formerly known as RareGen, LLC) ( RareGen ); our patent and trade secret litigation with Liquidia Technologies, Inc.
Removed
Research and Development Our research and development expenses primarily include costs associated with the research and development of products and post-marketing research commitments.
Added
Department of Health and Human Services ( HHS ) and the U.S.
Removed
The following factors, among others, have a significant impact on the amount of share-based compensation expense (benefit) recognized in connection with STAP awards from period to period: (1) volatility in the price of our common stock (specifically, increases in the price of our common stock will generally result in an increase in our liability and related compensation expense, while decreases in our stock price will generally result in a reduction in our liability and related compensation expense); and (2) decreases in the number of outstanding awards.
Added
Nebulized Tyvaso was also approved to treat PAH in Japan in late 2022, and our Japanese distributor launched commercial sales in Japan during the second quarter of 2023, and submitted an application in December 2023 to add a PH-ILD indication.
Removed
Adcirca net product sales decreased in 2022, as compared to 2021, due to a decline in quantities sold as a result of generic competition for Adcirca and higher gross-to-net deductions. 2022 Annual Report 49 Gross-to-Net Deductions We recognize revenues net of: (1) rebates and chargebacks; (2) prompt pay discounts; (3) allowance for sales returns; and (4) distributor fees.
Added
Nebulized Tyvaso was also approved in Argentina to treat PH-ILD in February 2023. • Remodulin , a continuously-infused formulation of treprostinil, approved by the FDA for subcutaneous and intravenous administration to diminish symptoms associated with exercise in PAH patients. Remodulin has also been approved in various countries outside of the United States.
Removed
The branded prescription drug fee is a required fee imposed under the Patient Protection and Affordable Care Act of 2010, which became applicable to Tyvaso in 2021, and is now applicable to Tyvaso DPI, as a result of their approval for treatment of PH-ILD, an indication that currently does not have orphan designation from the FDA.
Added
In February 2021, we launched U.S. sales of the Remunity Pump, a new subcutaneous infusion system for Remodulin.
Removed
For the years ended December 31, 2022 and 2021, our effective income tax rates ( ETR ) were approximately 23 percent and 20 percent, respectively.
Added
We have entered into separate, non-exclusive distribution agreements with Accredo Health Group, Inc. and its affiliates ( Accredo ) and Caremark, L.L.C.
Removed
Our ETR for the year ended December 31, 2022 increased, as compared to our ETR for the year ended December 31, 2021, primarily due to an increase in valuation allowance in the current year compared to a decrease in the prior year, and an increase in the reserve for uncertain tax positions, partially offset by an increase in excess tax benefits from share-based compensation.
Added
The information we have about patient demand, the number of patients using our products, and inventory held by our distributors is based upon our review of patient utilization and inventory data provided to us by our specialty pharmaceutical distributors. 54 United Therapeutics, a public benefit corporation Operating Expenses We devote substantial resources to our various clinical trials and other research and development efforts, which are conducted both internally and through third parties.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeA 100 basis point increase in the variable interest rate component of our borrowings would increase our annual interest expense by approximately $8.0 million or 25 percent, and $8.0 million or 43 percent, for the years ended December 31, 2022 and 2021, respectively.
Biggest changeA 100-basis point increase in the variable interest rate component of our borrowings would increase our annual interest expense by approximately $7.0 million or 12 percent, and $8.0 million or 25 percent, for the years ended December 31, 2023 and 2022, respectively. See Note 7— Debt, to our consolidated financial statements. 64 United Therapeutics, a public benefit corporation
In general, as interest rates increase, the market value of a debt investment would be expected to decrease. Conversely, as interest rates decrease, the market value of a debt investment would be expected to increase. During 2022, we experienced significant volatility in the value of these investments as a direct result of the current interest rate environment.
In general, as interest rates increase, the market value of a debt investment would be expected to decrease. Conversely, as interest rates decrease, the market value of a debt investment would be expected to increase. During 2023, we experienced significant volatility in the value of these investments as a direct result of the current interest rate environment.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Investment Risk As of December 31, 2022, we have invested $3.2 billion in corporate debt securities and U.S. government and agency securities. The market value of these investments varies inversely with changes in prevailing market interest rates.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Investment Risk As of December 31, 2023, we have invested $3.8 billion in corporate debt securities and U.S. government and agency securities. The market value of these investments varies inversely with changes in prevailing market interest rates.
Interest Rate Risk As of December 31, 2022 and 2021, we had $800.0 million aggregate principal amounts outstanding under our 2022 Credit Agreement and 2018 Credit Agreement, respectively, which bears interest at a variable rate. As a result, we are subject to interest rate risk with respect to such floating-rate debt.
Interest Rate Risk As of December 31, 2023 and 2022, we had $700.0 million and $800.0 million aggregate principal amounts, respectively, outstanding under our 2022 Credit Agreement which bears interest at a variable rate. As a result, we are subject to interest rate risk with respect to such floating-rate debt.
The following table summarizes the expected maturities and weighted average interest rates as of December 31, 2022 (dollars in millions): Expected Maturity 2023 2024 2025 Available-for-sale investments $ 1,862.4 $ 1,159.5 $ 156.7 Weighted average interest rate 1.1 % 1.7 % 3.2 % During sustained periods of instability and uncertainty in the financial markets, we may be subjected to additional investment-related risks that could materially affect the value and liquidity of our investments.
The following table summarizes the expected maturities and weighted average interest rates as of December 31, 2023 (dollars in millions): Expected Maturity 2024 2025 2026 Available-for-sale investments $ 1,886.2 $ 1,477.7 $ 393.2 Weighted average interest rate 1.7 % 3.1 % 4.2 % During sustained periods of instability and uncertainty in the financial markets, we may be subjected to additional investment-related risks that could materially affect the value and liquidity of our investments.
Removed
Refer to Note 7— Debt, to our consolidated financial statements. 56 United Therapeutics, a public benefit corporation Stock Price Risk As of both December 31, 2022 and 2021, we had 0.6 million and 1.1 million awards outstanding under our Share Tracking Awards Plan, respectively. These awards are referred to as STAP awards .
Removed
STAP awards convey the right to receive in cash an amount equal to the appreciation of our common stock, which is measured as the increase in the closing price of our common stock between the dates of grant and exercise. As of December 31, 2022 and 2021, the aggregate STAP awards liability balance was $80.8 million and $102.4 million, respectively.
Removed
Estimating the fair value of STAP awards requires the use of certain inputs that can materially impact the determination of fair value and the amount of share-based compensation expense (benefit) we recognize.
Removed
Inputs used in estimating fair value include the price of our common stock, the expected volatility of the price of our common stock, the risk-free interest rate, the expected term of STAP awards, and the expected dividend yield.
Removed
As of December 31, 2022 and 2021, a one dollar change in our stock price would, holding other factors constant, increase or decrease the fair value of our STAP awards liability by approximately $0.5 million and $1.0 million, respectively.
Removed
As of December 31, 2022 and 2021, we held investments in equity securities with readily determinable fair values of $30.7 million and $70.4 million, respectively, which are included in current marketable investments in our consolidated balance sheets. Our investments in these publicly-traded equity securities are recorded at fair value and are subject to market price volatility.
Removed
Changes in the fair value of these investments are recorded in our consolidated statements of operations within other (expense) income, net . As of December 31, 2022 and 2021, a price change of 10 percent would increase or decrease the fair value of these investments by $3.1 million and $7.0 million, respectively. 2022 Annual Report 57

Other UTHR 10-K year-over-year comparisons