agreements in certain markets for Spiriva, negatively impacted revenues by approximately $7.7 billion, or 12%, in 2012 compared to 2011.

The following table provides the significant impacts on revenues for 2012 as compared to 2011:

Income from continuing operations was $9.5 billion in 2012 compared to $8.4 billion in 2011, primarily reflecting, among other items:

• a settlement with the U.S. Internal Revenue Service and the resolution of certain foreign tax audits in 2012, all of which related to multiple tax years, which resulted in a tax benefit of approximately $1.1 billion and $310 million, respectively, representing tax and interest (see further discussion in Notes to Consolidated Financial Statements––Note 5A. Tax Matters: Taxes on Income from Continuing Operations);

• purchase accounting charges that were approximately $1.8 billion (pre-tax) lower in 2012 than 2011;

• acquisition-related costs that were approximately $1.0 billion (pre-tax) lower in 2012 than 2011; and

• charges related to our non-acquisition related cost-reduction and productivity initiatives that were approximately $645 million (pre- tax) lower in 2012 than 2011,

partially offset by:

• the loss of exclusivity of Lipitor, as well as certain other products, resulting in lower revenues and associated expenses (see also "The Loss or Expiration of Intellectual Property Rights" section of this Financial Review);

• charges for certain legal matters that were approximately $1.4 billion (pre-tax) higher in 2012 than 2011 (see further discussion in the “Costs and Expenses––Other Deductions––Net” section of this Financial Review and Notes to Consolidated Financial Statements––Note 4. Other Deductions––Net); and

• charges in 2012 associated with the separation of Zoetis of $325 million (pre-tax) (see further discussion in the “Costs and Expenses––Selling, Informational and Administrative (SI&A) Expenses" and "Other Deductions––Net” sections of this Financial Review and Notes to Consolidated Financial Statements––Note 4. Other Deductions––Net).

Also, see the “Discontinued Operations” section of this Financial Review.

Our Operating Environment

U.S. Healthcare Legislation

Principal Provisions Affecting Us

In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (together, the U.S. Healthcare Legislation, and also known as the Affordable Care Act), was enacted in the U.S. In June 2012, the U.S. Supreme Court upheld the constitutionality of the requirement in the U.S. Healthcare Legislation for Americans to have insurance (called the individual mandate) (for additional information, see the “Government Regulation and Price Constraints” section of our 2012 Annual Report on

Form 10-K). This legislation has resulted in both current and longer-term impacts on us, as discussed below.

Certain provisions of the U.S. Healthcare Legislation became effective in 2010 or in 2011, while other provisions will become effective on various dates. The principal provisions affecting us provide for the following:

• an increase, from 15.1% to 23.1%, in the minimum rebate on branded prescription drugs sold to Medicaid