View Filing Data

43,451

25,586

33,480

38,981

25,405

8,539

10,010

6,061

141,498

50,015

30,244

9,234

6,919

11,552

24,381

81,176

231,066

29,879

67,601

52,086

409,722

113,126

Cost of product revenues (Note F)

333,994

336,006

418,305

438,737

563,340

659,200

114,424

73,662

1,527,042

1,410,626

143,370

Costs and expenses:

75,595

^[1]

30,680

104,549

^[2]

25,918

22,936

35,285

5,404

236,742

63,625

Royalty expenses

12,120

7,856

9,874

13,293

7,191

3,121

3,902

2,666

43,143

16,880

12,730

Research and development expenses

213,109

200,161

196,544

196,371

186,438

189,052

173,604

158,612

806,185

707,706

637,416

Sales, general and administrative expenses

110,452

97,684

117,514

111,146

121,881

110,654

96,663

71,523

436,796

400,721

187,800

Restructuring expense

194

696

594

360

992

(419)

741

760

1,844

2,074

1,501

$ 91,824

$ 62,479

Income (loss) from operations

105,800

^[3]

105,800

Total costs and expenses

411,470

337,077

429,075

347,088

339,438

443,493

280,314

233,561

1,524,710

1,296,806

839,447

(77,476)

(1,071)

(10,770)

91,649

223,902

215,707

(165,890)

(159,899)

2,332

113,820

(696,077)

Interest income

497

519

560

364

197

202

1,402

1,940

1,878

1,955

Interest expense

(3,793)

(4,560)

(4,195)

(4,105)

(12,430)

(7,059)

(6,962)

(12,001)

(16,653)

(38,452)

(19,275)

Change in fair value of derivative instruments

(868)

(8,115)

(2,220)

(5,598)

(16,801)

(41,229)

Income (loss) before provision for (benefit from) income taxes

(80,772)

(5,112)

(14,405)

87,908

210,801

200,610

(174,870)

(176,096)

(12,381)

60,445

(754,626)

(2,696)

21,355

20,063

22,660

(27,842)

^[3]

24,448

38,754

19,266

Net loss (income) attributable to noncontrolling Interest (Alios)

(78,076)

(26,467)

(34,468)

87,876

188,141

228,452

(199,318)

(176,096)

(51,135)

41,179

(754,626)

1,928

(31,076)

(30,463)

3,714

(29,512)

(7,342)

25,249

(55,897)

(11,605)

Net income (loss) attributable to Vertex

$ (76,148)

$ (57,543)

$ (64,931)

$ 91,590

$ 158,629

$ 221,110

$ (174,069)

$ (176,096)

$ (107,032)

$ 29,574

$ (754,626)

Net income (loss) per share attributable to Vertex common shareholders:

$ (0.35)

$ (0.27)

$ (0.31)

$ 0.44

$ 0.76

$ 1.06

$ (0.85)

$ (0.87)

$ (0.50)

$ 0.14

$ (3.77)

Shares used in per share calculations:

$ (0.35)

$ (0.27)

$ (0.31)

$ 0.43

$ 0.74

$ 1.02

$ (0.85)

$ (0.87)

$ (0.50)

$ 0.14

$ (3.77)

214,607

213,767

211,344

208,018

206,758

206,002

204,413

202,329

211,946

204,891

200,402

214,607

213,767

211,344

219,264

217,602

219,349

204,413

202,329

211,946

208,807

200,402

[1]	During the fourth quarter of 2012, the Company recorded within cost of product revenues a lower of cost or market charge of $55.2 million for excess and obsolete INCIVEK inventories. This charge resulted in a $0.25 increase in the net loss attributable to Vertex per diluted share for the fourth quarter of 2012. See Note F, "Inventories," for further information.
[2]	During the second quarter of 2012, the Company recorded within cost of product revenues a lower of cost or market charge of $78.0 million for excess and obsolete INCIVEK inventories. This charge affected net income (loss) attributable to Vertex per diluted share, net of tax, by $(0.36) for the second quarter of 2012, resulting in a net loss attributable to Vertex per diluted share in the second quarter of 2012. See Note F, "Inventories," for further information.
[3]	During the third quarter of 2011, the Company recorded an impairment charge of $105.8 million. In connection with this impairment charge, the Company recorded a benefit from income taxes of $32.7 million resulting in a net decrease in net income attributable to Vertex related to this impairment charge of $73.1 million in the third quarter of 2011.

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest [Abstract]
Net income (loss)	$ (51,135)	$ 41,179	$ (754,626)
Changes in other comprehensive income (loss):
Unrealized holding gains (losses) on marketable securities, net of tax	305	(119)	46
Foreign currency translation adjustment	198	133	(473)
Total changes in other comprehensive income (loss)	503	14	(427)
Comprehensive income (loss)	(50,632)	41,193	(755,053)
Comprehensive loss (income) attributable to noncontrolling interest (Alios)	(55,897)	(11,605)	0
Comprehensive income (loss) attributable to Vertex	$ (106,529)	$ 29,588	$ (755,053)

The change in equity [net assets] of a business enterprise during a period from transactions and other events and circumstances from non-owner sources which are attributable to the reporting entity. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners, but excludes any and all transactions which are directly or indirectly attributable to that ownership interest in subsidiary equity which is not attributable to the parent.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 8, 9, 10, 11, 12, 13, 14
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 30
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph A5
-Appendix A

Reference 4: http://www.xbrl.org/2003/role/presentationRef
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-Section 45
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Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Net Income
-URI http://asc.fasb.org/extlink&oid=6518256

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Other Comprehensive Income
-URI http://asc.fasb.org/extlink&oid=6519514

Reference 7: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 8: http://www.xbrl.org/2003/role/presentationRef
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-URI http://asc.fasb.org/extlink&oid=6508144

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 38
-Subparagraph c(3)
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

The change in equity [net assets] of a business enterprise during a period from transactions and other events and circumstances from non-owner sources which are attributable to noncontrolling interests, if any. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners, which are directly or indirectly attributable to that ownership interest in subsidiary equity which is not attributable to the parent.

The change in equity [net assets] of a business enterprise during a period from transactions and other events and circumstances from non-owner sources which are attributable to the economic entity, including both controlling (parent) and noncontrolling interests. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners, including any and all transactions which are directly or indirectly attributable to that ownership interest in subsidiary equity which is not attributable to the parent.

Adjustment that results from the process of translating subsidiary financial statements and foreign equity investments into the reporting currency of the reporting entity, net of tax.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 130
-Paragraph 24
-Subparagraph b
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 130
-Paragraph 14, 17, 19, 26
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 52
-Paragraph 13, 20, 31
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 830
-SubTopic 30
-Section 45
-Paragraph 20
-Subparagraph (b),(c)
-URI http://asc.fasb.org/extlink&oid=6915805&loc=d3e32211-110900

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-Paragraph 2
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-URI http://asc.fasb.org/extlink&oid=6920433&loc=d3e998-108581

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 38
-Subparagraph c(3)
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

This element represents Other Comprehensive Income or Loss, Net of Tax, for the period. Includes deferred gains or losses on qualifying hedges, unrealized holding gains or losses on available-for-sale securities, minimum pension liability, and cumulative translation adjustment. While for technical reasons this element has no balance attribute, the default assumption is a credit balance consistent with its label.

Appreciation or loss in value (before reclassification adjustment) of the total of unsold securities during the period being reported on, net of tax. Reclassification adjustments include: (1) the unrealized holding gain (loss), net of tax, at the date of the transfer for a debt security from the held-to-maturity category transferred into the available-for-sale category. Also includes the unrealized gain (loss) at the date of transfer for a debt security from the available-for-sale category transferred into the held-to-maturity category; (2) the unrealized gains (losses) realized upon the sale of securities, after tax; and (3) the unrealized gains (losses) realized upon the write-down of securities, after tax.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 115
-Paragraph 13
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 130
-Paragraph 24
-Subparagraph b
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
-Number 130
-Paragraph 17, 22
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
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Reference 5: http://www.xbrl.org/2003/role/presentationRef
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 38
-Subparagraph c(3)
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 29
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 38
-Subparagraph a
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph A1, A4, A5
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 5
-Subparagraph b
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
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Reference 8: http://www.xbrl.org/2003/role/presentationRef
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Cash and cash equivalents

Consolidated Balance Sheets - USD ($)
$ in Thousands

Dec. 31, 2012

Dec. 31, 2011

Current assets:

^[1]

$ 489,407

$ 475,320

Marketable securities, available for sale

^[1]

831,808

493,602

Restricted cash and cash equivalents (Alios)

^[1]

69,983

51,878

Accounts receivable, net

^[1]

143,250

183,135

^[1]

30,464

112,430

Property and equipment, net

^[1]

24,673

14,889

Total current assets

^[1]

1,589,585

1,331,254

Restricted cash

^[1]

31,934

34,090

^[1]

433,609

133,176

^[1]

663,500

^[1]

30,992

Other assets

^[1]

9,668

11,268

Total assets

^[1]

2,759,288

2,204,280

Current liabilities:

^[1]

101,292

74,642

Deferred revenues, current portion

^[1]

264,884

243,187

^[1]

27,566

45,037

Accrued restructuring expense, current portion

^[1]

4,758

4,932

Capital lease obligations, current portion

13,707

Other liabilities, current portion

^[1]

715

12,075

^[1]

19,702

12,475

Total current liabilities

^[1]

432,624

392,348

Deferred revenues, excluding current portion

^[1]

96,242

118,095

Accrued restructuring expense, excluding current portion

^[1]

18,570

21,381

Capital lease obligations, excluding current portion

15,170

Construction financing lease obligation

^[1]

400,000

Deferred tax liability

^[1]

280,367

243,707

^[1]

268,031

55,950

Other liabilities, excluding current portion

^[1]

13,902

7,287

Total liabilities

^[1]

1,524,906

1,238,768

Commitments and contingencies (Note S and Note U)

^[1]

Redeemable noncontrolling interest (Alios)

^[1]

38,530

37,036

Shareholders’ equity:

Preferred stock, $0.01 par value; 1,000,000 shares authorized; none issued and outstanding at December 31, 2012 and 2011

^[1]

Common stock, $0.01 par value; 300,000,000 shares authorized at December 31, 2012 and 2011; 217,286,868 and 209,303,995 shares issued and outstanding at December 31, 2012 and 2011, respectively

^[1]

2,149

2,072

Additional paid-in capital

^[1]

4,519,448

4,200,659

Accumulated other comprehensive loss

^[1]

(550)

(1,053)

Accumulated deficit

^[1]

(3,521,867)

(3,414,835)

Total Vertex shareholders’ equity

^[1]

999,180

786,843

Noncontrolling interest (Alios)

^[1]

196,672

141,633

Total shareholders’ equity

^[1]

1,195,852

928,476

Total liabilities and shareholders’ equity

^[1]

$ 2,759,288

$ 2,204,280

[1]

Amounts include the assets and liabilities of Vertex’s variable interest entity (“VIE”), Alios BioPharma, Inc. (“Alios”). Vertex’s interests and obligations with respect to the VIE’s assets and liabilities are limited to those accorded to Vertex in its agreement with Alios. See Note B, "Collaborative Arrangements," to these consolidated financial statements for amounts.

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2012	Dec. 31, 2011
Statement of Financial Position [Abstract]
Preferred stock, par value (usd per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	217,286,868	209,303,995
Common stock, shares outstanding	217,286,868	209,303,995

Consolidated Statements of Shareholders' Equity and Noncontrolling Interest - USD ($)
shares in Thousands, $ in Thousands

Total

Total Vertex Shareholders' Equity

Common Stock

Additional Paid-in Capital

Accumulated Other Comprehensive Income (Loss)

Accumulated Deficit

Noncontrolling Interest (Alios)

Redeemable Noncontrolling Interest (Alios)

Balance (shares) at Dec. 31, 2009

199,955

Balance at Dec. 31, 2009

$ 1,096,346

$ 1,982

$ 3,784,787

$ (640)

$ (2,689,783)

$ 0

Increase (Decrease) in Stockholders' Equity

Unrealized holding gains (losses) on marketable securities, net of tax

Foreign currency translation adjustment

(473)

Net income (loss) attributable to Vertex common shareholders

(754,626)

Convertible senior subordinated notes (due 2013) conversion (shares)

(754,626)

Issuances of common stock:

1,386

Convertible senior subordinated notes (due 2013) conversion

$ 31,565

31,565

$ 14

31,551

Benefit plans (shares)

174

2,182

Benefit plans

$ 39,991

39,991

$ 20

39,971

Balance (shares) at Dec. 31, 2010

91,124

203,523

Balance at Dec. 31, 2010

503,973

$ 2,016

3,947,433

(1,067)

(3,444,409)

Increase (Decrease) in Stockholders' Equity

Unrealized holding gains (losses) on marketable securities, net of tax

(119)

Foreign currency translation adjustment

133

Net income (loss) attributable to Vertex common shareholders

29,574

$ 41,179

29,574

11,605

Issuances of common stock:

Benefit plans (shares)

183

5,781

Benefit plans

$ 133,393

133,418

$ 56

133,362

(25)

Tax benefit from equity compensation

119,268

118,964

304

900

Alios noncontrolling interest upon consolidation

130,486

36,299

Change in liquidation value of noncontrolling interest

(737)

737

Balance (shares) at Dec. 31, 2011

209,304

Balance at Dec. 31, 2011

928,476

^[1]

786,843

$ 2,072

4,200,659

(1,053)

(3,414,835)

141,633

37,036

Increase (Decrease) in Stockholders' Equity

Unrealized holding gains (losses) on marketable securities, net of tax

305

Foreign currency translation adjustment

198

Net income (loss) attributable to Vertex common shareholders

(107,032)

$ (51,135)

(107,032)

55,897

Issuances of common stock:

Benefit plans (shares)

242

7,983

Benefit plans

$ 201,992

201,837

$ 77

201,760

155

Tax benefit from equity compensation

115,539

115,058

481

1,971

Change in liquidation value of noncontrolling interest

(1,494)

1,494

Balance (shares) at Dec. 31, 2012

217,287

Balance at Dec. 31, 2012

$ 1,195,852

^[1]

$ 999,180

$ 2,149

$ 4,519,448

$ (550)

$ (3,521,867)

$ 196,672

$ 38,530

[1]

Consolidated Statements of Cash Flows - USD ($)
$ in Thousands

12 Months Ended

Dec. 31, 2012

Dec. 31, 2011

Dec. 31, 2010

Cash flows from operating activities:

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

$ (51,135)

$ 41,179

$ (754,626)

Depreciation and amortization expense

38,191

35,041

30,459

Other non-cash based compensation expense

114,285

118,226

91,124

10,261

8,525

6,552

Secured notes (due 2012) discount amortization expense

105,800

18,409

13,589

Change in fair value of derivative instruments

16,801

41,229

Deferred income taxes

36,660

(7,501)

Loss on disposal of property and equipment

390

Write-downs of inventories to net realizable value

133,189

Other non-cash items, net

(212)

264

(31)

Changes in operating assets and liabilities, excluding the effects of the acquisition of a variable interest entity (Alios):

Accounts receivable, net

39,912

(170,606)

(2,923)

(29,925)

(111,388)

(12,259)

(1,717)

(600)

Accrued expenses and other liabilities

14,892

37,468

(1,182)

29,232

116,822

11,213

Excess tax benefit from share-based payment arrangements

(1,971)

(900)

Accrued restructuring expense

(2,985)

(3,282)

(4,422)

Net cash provided by (used in) operating activities

(11,360)

12,075

Deferred revenues

(39,324)

(71,536)

(65,863)

267,841

143,735

(635,442)

Cash flows from investing activities:

Purchases of marketable securities

(1,705,829)

(721,545)

(1,234,719)

Sales and maturities of marketable securities

1,367,927

1,016,040

1,284,806

Payment for acquisition of a variable interest entity (Alios)

(60,000)

Expenditures for property and equipment

(71,140)

(34,595)

(38,054)

Decrease (increase) in restricted cash and cash equivalents

2,156

(3,777)

Decrease (increase) in restricted cash and cash equivalents (Alios)

(18,105)

12,695

Decrease (increase) in other assets

(826)

(183)

(955)

Net cash provided by (used in) investing activities

(425,817)

212,412

7,301

Cash flows from financing activities:

Excess tax benefit from share-based payment arrangements

1,971

900

Issuances of common stock from employee benefit plans

191,721

124,862

33,434

Issuance of convertible senior subordinated notes (due 2015)

391,645

Payments to redeem secured notes (due 2012)

(155,000)

Settlement of milestone derivatives

(95,000)

Payments on capital lease obligations

(2,615)

Payments on construction financing lease obligation

(18,873)

Debt conversion costs

(22)

Net cash provided by (used in) financing activities

172,204

(124,238)

425,057

Effect of changes in exchange rates on cash

(141)

214

(377)

Net increase (decrease) in cash and cash equivalents

14,087

232,123

(203,461)

Cash and cash equivalents—beginning of period

475,320

^[1]

243,197

446,658

Cash and cash equivalents—end of period

489,407

^[1]

475,320

^[1]

243,197

Supplemental disclosure of cash flow information:

Cash paid for interest

13,400

13,512

761

Cash paid for income taxes

9,318

Conversion of convertible senior subordinated notes (due 2013) for common stock

32,071

Accrued interest offset to additional paid-in capital on conversion of convertible senior subordinated notes (due 2013)

140

Unamortized debt issuance costs of converted convertible senior subordinated notes (due 2013) offset to additional paid-in capital

624

Capitalization of construction in-process related to construction financing lease obligation

235,594

54,655

Assets acquired under capital lease obligations

$ 30,101

$ 0

[1]

Nature of Business and Accounting Policies

12 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

Nature of Business and Accounting Policies

Business

Vertex Pharmaceuticals Incorporated (“Vertex” or the “Company”) is in the business of discovering, developing, manufacturing and commercializing small molecule drugs for patients with serious diseases. The Company's two products are INCIVEK (telaprevir), which the Company markets in the United States and Canada for the treatment of adults with genotype 1 hepatitis C virus ("HCV") infection, and KALYDECO (ivacaftor), which the Company markets in the United States, Canada and Europe for the treatment of patients six years of age and older with cystic fibrosis ("CF"), who have a specific genetic mutation that is referred to as the G551D mutation.

The Company began recognizing net product revenues from sales of INCIVEK and KALYDECO, and related cost of product revenues related to INCIVEK and KALYDECO, in the second quarter of 2011 and first quarter of 2012, respectively. The Company’s collaborator, Janssen Pharmaceutica, N.V. (“Janssen”), began marketing telaprevir in its territories under the brand name INCIVO in September 2011. The Company’s net loss attributable to Vertex for 2012 was $(107.0) million, or $(0.50) per share. As of December 31, 2012, the Company had cash, cash equivalents and marketable securities of $1.3 billion. The Company expects that cash flows from the sales of its products and the royalties it expects to receive from Janssen, together with the Company’s cash, cash equivalents and marketable securities, will be sufficient to fund its operations for at least the next twelve months.

Vertex is subject to risks common to companies in its industry including, but not limited to, the dependence on revenues from its lead products, competition, uncertainty about clinical trial outcomes, uncertainties relating to pharmaceutical pricing and reimbursement, rapid technological change, uncertain protection of proprietary technology, the need to comply with government regulations, share price volatility, dependence on collaborative relationships and potential product liability.

Basis of Presentation

The consolidated financial statements reflect the operations of (i) the Company, (ii) its wholly-owned subsidiaries and (iii) Alios BioPharma, Inc. (“Alios”), a collaborator that is a variable interest entity (a “VIE”) for which the Company is deemed under applicable accounting guidance to be the primary beneficiary. All material intercompany balances and transactions have been eliminated. The Company operates in one segment, pharmaceuticals. Please refer to Note W, "Segment Information," for enterprise-wide disclosures regarding the Company’s revenues, major customers and long-lived assets by geographic area.

Use of Estimates

The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the amounts of revenues and expenses during the reported periods. Significant estimates in these consolidated financial statements have been made in connection with the calculation of revenues, inventories, research and development expenses, sales, general and administrative expenses, stock-based compensation expense, restructuring expense, the fair value of intangible assets, noncontrolling interest (Alios), income tax provision, derivative instruments and debt securities. The Company bases its estimates on historical experience and various other assumptions, including in certain circumstances future projections, that management believes to be reasonable under the circumstances. Actual results could differ from those estimates. Changes in estimates are reflected in reported results in the period in which they become known.

Revenue Recognition

Product Revenues, Net

The Company sells its products principally to a limited number of major wholesalers, as well as selected regional wholesalers and specialty pharmacy providers (collectively, its “Customers”), that subsequently resell the products to patients and health care providers. The Company recognizes net revenues from product sales upon delivery as long as (i) there is persuasive evidence that an arrangement exists between the Company and the Customer, (ii) collectibility is reasonably assured and (iii) the price is fixed or determinable.

The Company has written contracts with its Customers and delivery occurs when a Customer receives a shipment of a product. The Company evaluates the creditworthiness of each of its Customers to determine whether revenues can be recognized upon delivery, subject to satisfaction of the other requirements, or whether recognition is required to be delayed until receipt of payment. In order to conclude that the price is fixed or determinable, the Company must be able to (i) calculate its gross product revenues from sales to Customers and (ii) reasonably estimate its net product revenues. The Company calculates gross product revenues based on the price that the Company charges its Customers. The Company estimates its net product revenues by deducting from its gross product revenues (a) trade allowances, such as invoice discounts for prompt payment and customer fees, (b) estimated government and private payor rebates, chargebacks and discounts, such as Medicaid reimbursements, (c) estimated reserves for expected product returns and (d) estimated costs of incentives offered to certain indirect customers, including patients.

Trade Allowances: The Company generally provides invoice discounts on product sales to its Customers for prompt payment and pays fees for distribution services, such as fees for certain data that Customers provide to the Company. The payment terms for sales to Customers generally include a 2% discount for payment within 30 days. The Company expects that, based on its experience, its Customers will earn these discounts and fees, and deducts the full amount of these discounts and fees from its gross product revenues and accounts receivable at the time such revenues are recognized.

Rebates, Chargebacks and Discounts: The Company contracts with Medicaid, other government agencies and various private organizations (collectively, its “Third-party Payors”) so that products will be eligible for purchase by, or partial or full reimbursement from, such Third-party Payors. The Company estimates the rebates, chargebacks and discounts it will provide to Third-party Payors and deducts these estimated amounts from its gross product revenues at the time the revenues are recognized. For each product, the Company estimates the aggregate rebates, chargebacks and discounts that it will provide to Third-party Payors based upon (i) the Company’s contracts with these Third-party Payors, (ii) the government-mandated discounts applicable to government-funded programs and (iii) information obtained from the Company’s Customers and other third parties regarding the payor mix for such product.

Product Returns: The Company estimates the amount of each product that will be returned and deducts these estimated amounts from its gross revenues at the time the revenues are recognized. The Company’s Customers have the right to return unopened unprescribed packages beginning six months prior to the labeled expiration date and ending twelve months after the labeled expiration date. To date product returns have been minimal and, based on inventory levels held by its Customers and its distribution model, the Company believes that returns of its products will continue to be minimal.

Other Incentives: Other incentives that the Company offers to indirect customers include co-pay mitigation rebates provided by the Company to commercially insured patients who have coverage and who reside in states that permit co-pay mitigation programs. The Company’s co-pay mitigation programs are intended to reduce each participating patient’s portion of the financial responsibility for a product’s purchase price to a specified dollar amount. Based upon the terms of the Company's co-pay mitigation programs, the Company estimates average co-pay mitigation amounts for each of its products in order to establish its accruals for co-pay mitigation rebates and deducts these estimated amounts from its gross product revenues at the later of the date (i) the revenues are recognized or (ii) the incentive is offered. The Company’s co-pay mitigation rebates are subject to expiration.

The following table summarizes activity in each of the product revenue allowance and reserve categories for the years ended December 31, 2012 and 2011:



	Trade Allowances			Rebates, Chargebacks and Discounts			Product Returns			Other Incentives			Total
	(in thousands)
2012
Beginning Balance	$	11,162		$	52,659		$	340		$	5,202		$	69,363
Provision related to current period sales	55,913			216,942			2,067			19,103			294,025
Adjustments related to prior period sales	29			3,883			1,498			72			5,482
Credits/payments made	(61,688		)	(209,924		)	(1,053		)	(20,812		)	(293,477		)
Ending Balance	$	5,416		$	63,560		$	2,852		$	3,565		$	75,393

2011
Beginning Balance	$	—		$	—		$	—		$	—		$	—
Provision related to current period sales	38,228			75,145			553			9,692			123,618
Credits/payments made	(27,066		)	(22,486		)	(213		)	(4,490		)	(54,255		)
Ending Balance	$	11,162		$	52,659		$	340		$	5,202		$	69,363

Royalty Revenues

The Company’s royalty revenues on commercial sales of INCIVO (telaprevir) by Janssen are based on net sales of licensed products in licensed territories as provided by Janssen. The Company recognizes royalty revenues in the period the sales occur. The Company has sold its rights to receive certain royalties on sales of an HIV protease inhibitor (fosamprenavir) and recognizes the revenues related to this sale as royalty revenues. In the circumstance where the Company has sold its rights to future royalties under a license agreement and also maintains continuing involvement in the royalty arrangement (but not significant continuing involvement in the generation of the cash flows payable to the purchaser of the future royalty rights), the Company defers recognition of the proceeds it receives for the royalty stream and recognizes these deferred revenues over the life of the license agreement pursuant to the units-of-revenue method. The Company’s estimates regarding the estimated remaining royalty payments due to the purchaser have changed in the past and may change in the future.

Collaborative Revenues

The Company also recognizes revenues generated through collaborative research, development and/or commercialization agreements. The terms of these agreements typically include payment to the Company of one or more of the following: nonrefundable, up-front license fees; development and commercial milestone payments; funding of research and/or development activities; payments for services the Company provides through its third-party manufacturing network; and royalties on net sales of licensed products. Each of these types of payments results in collaborative revenues, except for revenues from royalties on net sales of licensed products, which are classified as royalty revenues.

Agreements Entered into prior to January 1, 2011

Collaborative research, development and/or commercialization agreements entered into prior to January 1, 2011 that contain multiple elements of revenue are divided into separate units of accounting if certain criteria are met, including whether the delivered element has stand-alone value to the collaborator and whether there is objective and reliable evidence of the fair value of the undelivered obligation(s). The Company allocates consideration it receives among the separate units either on the basis of each unit’s fair value or using the residual method, and applies the applicable revenue recognition criteria to each of the separate units.

Up-front License Fees

The Company recognizes revenues from nonrefundable, up-front license fees on a straight-line basis over the contracted or estimated period of performance, which is typically the period over which the research and development is expected to occur or manufacturing services are expected to be provided. In order to estimate the period of performance, the Company is required to make estimates regarding the drug development and commercialization timelines for drugs and drug candidates being developed pursuant to the applicable agreement. The Company’s estimates regarding the period of performance under its collaboration agreements did not change during 2012, but have changed in the past and may change in the future.

Milestone Payments

At the inception of each agreement that includes research and development milestone payments, the Company evaluates whether each milestone is substantive on the basis of the contingent nature of the milestone, specifically reviewing factors such as the scientific and other risks that must be overcome to achieve the milestone, as well as the level of effort and investment required. The Company recognizes revenues related to substantive milestones in full in the period in which the substantive milestone is achieved if payment is reasonably assured. If a milestone is not considered substantive, the Company recognizes the applicable milestone payment over the period of performance. Commercial milestone payments are recognized in full upon achievement, if payment is reasonably assured.

Research and Development Activities/Manufacturing Services

Under certain of its collaboration agreements, the Company is entitled to reimbursement from its collaborators for specified research and development expenses and/or is entitled to payments for specified manufacturing services that the Company provides through its third-party manufacturing network. The Company considers the nature and contractual terms of the arrangement and the nature of the Company’s business operations in order to determine whether research and development funding will result in collaborative revenues or an offset to research and development expenses. The Company typically recognizes the revenues related to these reimbursable expenses and recognizes the revenues related to the manufacturing services in the period in which it incurred the reimbursable expenses or provided the manufacturing services.

Agreements Entered into or Materially Modified on or after January 1, 2011

On January 1, 2011, updated guidance on the recognition of revenues for agreements with multiple deliverables became effective and applies to any agreements entered into or materially modified by the Company on or after January 1, 2011. This updated guidance (i) relates to whether multiple deliverables exist, how the deliverables in a revenue arrangement should be separated and how the consideration should be allocated; (ii) requires companies to allocate revenues in an arrangement using management’s best estimate of selling prices of deliverables if a vendor does not have vendor-specific objective evidence or third-party evidence of selling price; and (iii) eliminates the use of the residual method and requires companies to allocate revenues using the relative selling price method. Subsequent to December 31, 2010, the Company has not entered into any material agreements or material modifications to existing agreements that would be accounted for by the Company pursuant to this updated guidance. If the Company enters into or materially modifies an agreement with multiple deliverables, this updated guidance could have a material effect on the Company’s consolidated financial statements in future periods.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of money market funds and marketable securities. The Company places these investments with highly rated financial institutions, and, by policy, limits the amounts of credit exposure to any one financial institution. These amounts at times may exceed federally insured limits. The Company has not experienced any credit losses in these accounts and does not believe it is exposed to any significant credit risk on these funds. The Company has no foreign exchange contracts, option contracts or other foreign exchange hedging arrangements.

The Company also is subject to credit risk from its accounts receivable related to its product sales and collaborators. The majority of the Company's accounts receivable arises from product sales in the United States. The Company evaluates the creditworthiness of each of its customers and has determined that all of its material customers are creditworthy. To date, the Company has not experienced significant losses with respect to the collection of its accounts receivable. The Company believes that its allowance for doubtful accounts was adequate at December 31, 2012. Please refer to Note W, "Segment Information," for further information.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. Cash equivalents consist principally of money market funds and debt securities.

Restricted Cash

Restricted cash consists of balances held in deposit with certain banks predominantly to collateralize conditional stand-by letters of credit in the names of the Company’s landlords pursuant to certain operating lease agreements. The Company also separately discloses on its consolidated balance sheets restricted cash and cash equivalents (Alios). Please refer to Note B, "Collaborative Arrangements," for further information.

Marketable Securities

The Company's marketable securities consist of investments in U.S. Treasuries, government-sponsored enterprise securities and high-grade corporate bonds and commercial paper that are classified as available-for-sale. The Company classifies marketable securities available to fund current operations as current assets on its consolidated balance sheets. Marketable securities are classified as long-term assets on the consolidated balance sheets if (i) they have been in an unrealized loss position for longer than one year and (ii) the Company has the ability and intent to hold them (a) until the carrying value is recovered and (b) such holding period may be longer than one year. The Company's marketable securities are stated at fair value with their unrealized gains and losses included as a component of accumulated other comprehensive income (loss), which is a separate component of shareholders’ equity, until such gains and losses are realized. The fair value of these securities is based on quoted prices for identical or similar assets. If a decline in the fair value is considered other-than-temporary, based on available evidence, the unrealized loss is transferred from other comprehensive income (loss) to the consolidated statements of operations.

The Company reviews investments in marketable securities for other-than-temporary impairment whenever the fair value of an investment is less than the amortized cost and evidence indicates that an investment’s carrying amount is not recoverable within a reasonable period of time. To determine whether an impairment is other-than-temporary, the Company considers whether it has an intent to sell, or whether it is more likely than not that the Company will be required to sell, the investment before recovery of the investment’s amortized cost basis. Evidence considered in this assessment includes reasons for the impairment, compliance with the Company’s investment policy, the severity and the duration of the impairment and changes in value subsequent to year end. Please refer to Note E, "Marketable Securities," for further information.

There were no charges recorded for other-than-temporary declines in fair value of marketable securities in 2012, 2011 or 2010. Realized gains and losses are determined using the specific identification method and are included in interest income in the consolidated statements of operations. There were no gross realized gains or losses recognized in 2012, 2011 or 2010.

Stock-based Compensation Expense

The Company expenses the fair value of employee stock options and other forms of stock-based employee compensation over the associated employee service period on a straight-line basis. For awards with performance conditions, the Company estimates the likelihood of satisfaction of the performance conditions, which affects the period over which the expense is recognized, and recognizes the expense using the accelerated attribution model. Stock-based compensation expense is determined based on the fair value of the award at the grant date, including estimated forfeitures, and is adjusted each period to reflect actual forfeitures and the outcomes of certain performance conditions. Please refer to Note M, "Stock-based Compensation Expense," for further information.

Research and Development Expenses

The Company expenses as incurred all research and development expenses, including amounts funded by research and development collaborations. The Company capitalizes nonrefundable advance payments made by the Company for research and development activities and expenses the payments as the related goods are delivered or the related services are performed.

Research and development expenses are comprised of costs incurred by the Company in performing research and development activities, including salary and benefits; stock-based compensation expense; laboratory supplies and other direct expenses; contractual services costs, including clinical trial and pharmaceutical development costs; expenses associated with drug supplies that are not being capitalized; and infrastructure costs, including facilities costs and depreciation expense.

Advertising Expenses

The Company expenses the costs of advertising, including promotional expenses, as incurred. Advertising expenses, recorded in sales, general and administrative expenses, were $58.6 million, $30.8 million and $0 in 2012, 2011 and 2010, respectively.

Inventories

The Company values its inventories at the lower of cost or market. The Company determines the cost of its inventories, which includes amounts related to materials and manufacturing overhead, on a first-in, first-out basis. The Company performs an assessment of the recoverability of capitalized inventory during each reporting period, and writes down any excess and obsolete inventories to their realizable value in the period in which the impairment is first identified. Shipping and handling costs incurred for inventory purchases are capitalized and recorded upon sale in cost of product revenues in the consolidated statements of operations. Shipping and handling costs incurred for product shipments are recorded as incurred in cost of product revenues in the consolidated statements of operations.

The Company capitalizes inventories produced in preparation for initiating sales of a drug candidate when the related drug candidate is considered to have a high likelihood of regulatory approval and the related costs are expected to be recoverable through sales of the inventories. In determining whether or not to capitalize such inventories, the Company evaluates, among other factors, information regarding the drug candidate’s safety and efficacy, the status of regulatory submissions and communications with regulatory authorities and the outlook for commercial sales, including the existence of current or anticipated competitive drugs and the availability of reimbursement. In addition, the Company evaluates risks associated with manufacturing the drug candidate and the remaining shelf-life of the inventories. Please refer to Note F, "Inventories," for further information.

Property and Equipment

Property and equipment are recorded at cost. Depreciation expense is provided using the straight-line method over the estimated useful life of the related asset, generally four to seven years for furniture and equipment and three to five years for computers and software. Leasehold improvements are depreciated using the straight-line method over the lesser of the useful life of the improvements or the estimated remaining life of the associated lease. Additions and betterments to property and equipment are capitalized. Maintenance and repairs to an asset that do not improve or extend its life are charged to operations. When assets are retired or otherwise disposed of, the assets and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is reflected in the Company’s consolidated statements of operations. The Company performs an assessment of the fair value of the assets if indicators of impairment are identified during each reporting period and records the assets at the lower of the net book value or the fair value of the assets.

The Company records certain construction costs incurred by a landlord as an asset and corresponding financing obligation on the Company's consolidated balance sheets. Please refer to Note H, "Fan Pier Leases," for further information.

Capital Leases

The assets and liabilities associated with capital lease agreements are recorded at the present value of the minimum lease payments at the inception of the lease agreement. The assets are amortized using the straight-line method over the estimated useful life of the related asset or the remaining life of the associated lease. Amortization of assets that the Company leases pursuant to a capital lease is included in depreciation expense. The Company performs an assessment of the fair value of the assets if indicators of impairment are identified during each reporting period and records the assets at the lower of the net book value or the fair value of the assets. Assets recorded under capital leases are recorded within "Property and equipment, net" and liabilities related to those assets are recorded within "Capital lease obligations, current portion" and "Capital lease obligations, excluding current portion," on the Company's consolidated balance sheets.

Income Taxes

Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the income tax bases of assets and liabilities. A valuation allowance is applied against any net deferred tax asset if, based on the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company records liabilities related to uncertain tax positions in accordance with guidance that clarifies the accounting for uncertainty in income taxes recognized in a company's financial statements by prescribing a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company does not believe any such uncertain tax positions currently pending will have a material adverse effect on its consolidated financial statements, although an adverse resolution of one or more of these uncertain tax positions in any period could have a material effect on the Company's consolidated statements of operations for that period.

Financial Transaction Expenses

Issuance costs incurred to complete the Company’s convertible senior subordinated note offerings and the financial transactions that the Company entered into in September 2009 were deferred and included in other assets on the Company’s consolidated balance sheets. The issuance costs are amortized using the effective interest rate method over the term of the related debt or financial instrument. The amortization expense related to the issuance costs is included in interest expense on the consolidated statements of operations.

The Company defers direct and incremental costs associated with the sale of its rights to future royalties. These costs are included in other assets on the Company’s consolidated balance sheets and are amortized in the same manner and over the same period during which the related deferred revenues are recognized as royalty revenues. The amortization expense related to these transaction expenses is included in royalty expenses on the Company's consolidated statements of operations. Expenses incurred in connection with common stock issuances are recorded as an offset to additional paid-in capital on the Company's consolidated balance sheets.

Business Combinations

The Company assigns the value of consideration, including contingent consideration, transferred in business combinations to the appropriate accounts on the Company's consolidated balance sheet based on its fair value as of the effective date of the transaction. The Company accounted for its collaboration with Alios (the "Alios Collaboration") as a business combination as of June 13, 2011 (the effective date of the Company's collaboration agreement with Alios) as discussed in the "Variable Interest Entities" policy described below. Increases in the fair value of the contingent payments pursuant to collaborations accounted for as business combinations result in a decrease in net income attributable to Vertex (or an increase in net loss attributable to Vertex) on a dollar-for-dollar basis. Transaction costs and any restructuring costs associated with these transactions are expensed as incurred.

Variable Interest Entities

The Company reviews each collaboration agreement pursuant to which the Company licenses assets owned by a collaborator in order to determine whether or not the collaborator is a VIE. If the collaborator is a VIE, the Company assesses whether or not the Company is the primary beneficiary of that VIE based on a number of factors, including (i) which party has the power to direct the activities that most significantly affect the VIE’s economic performance, (ii) the parties’ contractual rights and responsibilities pursuant to the collaboration agreement and (iii) which party has the obligation to absorb losses or the right to receive benefits from the VIE. If the Company determines it is the primary beneficiary of a VIE, the Company consolidates the statements of operations and financial condition of the VIE into the Company’s consolidated financial statements. The Company consolidates Alios’ financial statements by (A) eliminating all intercompany balances and transactions and (B) allocating the noncontrolling interest in Alios between redeemable noncontrolling interest (Alios) and noncontrolling interest (Alios) on the Company's consolidated balance sheet and reflecting net loss (income) attributable to noncontrolling interest (Alios) in the Company’s consolidated statement of operations.

The Company re-evaluates the Alios Collaboration each reporting period in order to determine if there are changes in circumstances that would result in the Company ceasing to consolidate the statements of operations and financial condition of Alios into the Company’s consolidated financial statements. If Alios ceases to be a VIE or if the Company is no longer Alios’ primary beneficiary, the Company would deconsolidate Alios.

As of June 13, 2011, December 31, 2011 and December 31, 2012, the Company evaluated the Alios Collaboration and determined that Alios is a VIE and that the Company is Alios’ primary beneficiary. Please refer to Note B, "Collaborative Arrangements," for further information.

Fair Value of In-process Research and Development Assets and Contingent Payments in Business Combinations

The Company estimates the fair value of assets, including the fair value of in-process research and development assets and contingent payments pursuant to collaborations accounted for as business combinations, from the perspective of a market participant, using a variety of methods. The present-value models used to estimate the fair values of research and development assets and contingent payments pursuant to collaborations incorporate significant assumptions, including: assumptions regarding the probability of obtaining marketing approval and/or achieving relevant development milestones for a drug candidate; estimates regarding the timing of and the expected costs to develop a drug candidate; estimates of future cash flows from potential product sales and/or the potential to achieve certain commercial milestones with respect to a drug candidate; and the appropriate discount and tax rates.

In-process Research and Development Assets

The Company records the fair value of in-process research and development assets as of the transaction date. Each of these assets is accounted for as an indefinite-lived intangible asset and maintained on the Company’s consolidated balance sheet until either the project underlying it is completed or the asset becomes impaired. If a project is completed, the carrying value of the related intangible asset is amortized as a part of cost of product revenues over the remaining estimated life of the asset beginning in the period in which the project is completed. If the asset becomes impaired or is abandoned, the carrying value of the related intangible asset is written down to its fair value and an impairment charge is recorded in the period in which the impairment occurs. In-process research and development assets are tested for impairment on an annual basis as of October 1, and more frequently if indicators are present or changes in circumstances suggest that impairment may exist. Please refer to Note I, "Intangible Assets and Goodwill," for further information.

Goodwill

The difference between the purchase price and the fair value of assets acquired and liabilities assumed in a business combination is allocated to goodwill. Goodwill is evaluated for impairment on an annual basis as of October 1, and more frequently if indicators are present or changes in circumstances suggest that impairment may exist. Please refer to Note I, "Intangible Assets and Goodwill," for further information.

Derivative Instruments and Embedded Derivatives

The Company has entered into financial transactions involving free-standing derivative instruments and embedded derivatives. The embedded derivatives are required to be bifurcated from the host instruments because the derivatives are not clearly and closely related to the host instruments. The Company determines the fair value of each derivative instrument or embedded derivative on the date of issuance and at the end of each quarterly period. The estimates of the fair value of these derivatives, particularly with respect to derivatives related to the achievement of milestones in the development of telaprevir, included significant assumptions regarding the estimates market participants would make in order to evaluate these derivatives. Please refer to Note K, "Convertible Senior Subordinated Notes," and Note N, "September 2009 Financial Transactions," for further information.

Restructuring Expense

The Company records costs and liabilities associated with exit and disposal activities based on estimates of fair value in the period the liabilities are incurred. In periods subsequent to the initial measurement, the Company measures changes to the liability using the credit-adjusted risk-free discount rate applied in the initial period. The Company evaluates and adjusts these liabilities as appropriate for changes in circumstances at least on a quarterly basis. Please refer to Note Q, "Restructuring Expense," for further information.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss), which includes foreign currency translation adjustments and unrealized gains and losses on certain marketable securities. For purposes of comprehensive income (loss) disclosures, the Company does not record tax provisions or benefits for the net changes in foreign currency translation adjustment, as the Company intends to permanently reinvest undistributed earnings in its foreign subsidiaries.

Foreign Currency Translation and Transactions

All material consolidated entities have the U.S. dollar as their functional currency. Non-U.S. dollar functional currency subsidiaries have assets and liabilities translated into U.S. dollars at rates of exchange in effect at the end of the year. Revenue and expense amounts are translated using the average exchange rates for the period. Net unrealized gains and losses resulting from foreign currency translation are included in accumulated other comprehensive income (loss), which is a separate component of shareholders’ equity. Included in accumulated other comprehensive income (loss) are net unrealized losses related to foreign currency translation of $0.7 million, $0.9 million and $1.1 million at December 31, 2012, 2011, and 2010, respectively. Net foreign currency exchange transaction gains or losses are included in net income (loss) on the Company’s consolidated statement of operations. Net transaction gains were $0.4 million for 2012 and net transaction losses were $0.7 million and $0.1 million in 2011 and 2010, respectively.

Net Income (Loss) Per Share Attributable to Vertex Common Shareholders

Basic and diluted net income per share attributable to Vertex common shareholders are presented in conformity with the two-class method required for participating securities. Under the two-class method, earnings are allocated to (i) Vertex common shares, excluding shares of restricted stock that have been issued but have not yet vested, and (ii) participating securities, based on their respective weighted-average shares outstanding for the period. Shares of unvested restricted stock have the non-forfeitable right to receive dividends on an equal basis with other outstanding common stock. As a result, these unvested shares of restricted stock are considered participating securities that must be included in the calculation of basic and diluted net income per share attributable to Vertex common shareholders using the two-class method. Potentially dilutive shares result from the assumed exercise of outstanding stock options (the proceeds of which are then assumed to have been used to repurchase outstanding stock using the treasury stock method) and the assumed conversion of convertible notes.

Basic net loss per share attributable to Vertex common shareholders is based upon the weighted-average number of common shares outstanding during the period, excluding restricted stock that has been issued but is not yet vested. Diluted net loss per share attributable to Vertex common shareholders is based upon the weighted-average number of common shares outstanding during the period plus additional weighted-average common equivalent shares outstanding during the period when the effect is dilutive.

Recent Accounting Pronouncements

In the first quarter of 2012, the Company retrospectively adopted amended guidance issued in June 2011 by the Financial Accounting Standards Board ("FASB") that resulted in two separate, but consecutive, statements of operations and comprehensive income (loss) that affected the presentation of the Company's consolidated financial statements.

In the third quarter of 2012, the FASB issued amended guidance applicable to annual impairment tests of indefinite-lived intangible assets. The FASB added an optional qualitative assessment for determining whether an indefinite-lived intangible asset is impaired. Prior to this guidance, companies were required to perform an annual impairment test that included a calculation of the fair value of the asset and a comparison of that fair value with its carrying value. If the carrying value exceeded the fair value, an impairment was recorded. The amended guidance allows a company the option to perform a qualitative assessment, considering both negative and positive evidence, regarding the potential impairment of the indefinite-lived intangible asset. If, based on the qualitative analysis, a company determines that it is more likely than not that the fair value of such an asset exceeds its carrying value, the company would be permitted to conclude that the indefinite-lived intangible asset was not impaired without a quantitative calculation of the fair value of the asset. Otherwise, the company would perform the quantitative calculation of the fair value and the comparison with the carrying value. This amended guidance will be effective for annual impairment tests performed by the Company for the year ending December 31, 2013.

The Company did not adopt any new accounting pronouncements during 2012 that had a material effect on the Company’s consolidated financial statements.

Collaborative Arrangements

12 Months Ended

Dec. 31, 2012

Collaborative Arrangements

Collaborative Arrangements

Janssen Pharmaceutica, N.V.

In 2006, the Company entered into a collaboration agreement with Janssen for the development, manufacture and commercialization of telaprevir, which Janssen began marketing under the brand name INCIVO in certain of its territories in September 2011. Under the collaboration agreement, Janssen agreed to be responsible for 50% of the drug development costs incurred under the development program for the parties’ territories (North America for the Company, and the rest of the world, other than specified countries in Asia, for Janssen) and has exclusive rights to commercialize telaprevir in its territories including Europe, South America, the Middle East, Africa and Australia.

Janssen pays the Company a tiered royalty averaging in the mid-20% range as a percentage of net sales of INCIVO in Janssen’s territories. Janssen is required under the agreement to use diligent efforts to maximize net sales of INCIVO in its territories through its commercial marketing, pricing and contracting strategies. In addition, Janssen is responsible for certain third-party royalties on net sales of INCIVO in its territories.

Janssen made a $165.0 million up-front license payment to the Company in 2006. The up-front license payment is being amortized over the Company’s estimated period of performance under the collaboration agreement. As of December 31, 2012, there were $43.5 million in deferred revenues related to this up-front license payment that the Company expects to recognize over the remaining estimated period of performance.

Under the collaboration agreement, Janssen agreed to make contingent milestone payments for successful development, approval and launch of telaprevir as a product in its territories. At the inception of the agreement, the Company determined that all of these contingent milestones were substantive and would result in revenues in the period in which the milestone was achieved. The Company has earned $350.0 million of these contingent milestone payments, including a $50.0 million milestone payment earned in the first quarter of 2011 in connection with the European Medicines Agency’s acceptance of the marketing authorization application for INCIVO and an aggregate of $200.0 million in milestone payments earned in the third quarter of 2011 related to the approval of INCIVO by the European Commission and the launch of INCIVO in the European Union. The Company does not expect to receive any further milestone payments under this agreement.

Under the Janssen collaboration agreement, each party incurs internal and external reimbursable expenses related to the telaprevir development program and is reimbursed by the other party for 50% of these expenses. The Company recognizes the full amount of the reimbursable costs it incurs as research and development expenses on its consolidated statements of operations. The Company recognizes the amounts that Janssen is obligated to pay the Company with respect to reimbursable expenses, net of reimbursable expenses incurred by Janssen, as collaborative revenues. During 2012 and 2011, Janssen incurred more reimbursable costs than the Company, and the net amounts payable by the Company to reimburse Janssen were recorded as a reduction of collaborative revenues.

Each of the parties is responsible for drug supply in its territories. During the three years ended December 31, 2012, the Company provided Janssen certain services through the Company’s third-party manufacturing network for telaprevir. Reimbursements from Janssen for these manufacturing services were recorded as collaborative revenues.

Janssen may terminate the collaboration agreement upon the later of (i) one year’s advance notice and (ii) such period as may be required to assign and transfer to the Company specified filings and approvals. The agreement also may be terminated by either party for a material breach by the other, subject to notice and cure provisions. Unless earlier terminated, the agreement will continue in effect until the expiration of Janssen’s royalty obligations, which expire on a country-by-country basis on the later of (a) the last-to-expire patent covering INCIVO or (b) ten years after the first commercial sale in the country. In the European Union, the Company has a patent covering the composition-of-matter of INCIVO that expires in 2026.

During the three years ended December 31, 2012, the Company recognized the following revenues attributable to the Janssen collaboration:



	2012			2011			2010
	(in thousands)
Royalty revenues	$	117,592		$	20,289		$	—
Collaborative revenues:
Amortized portion of up-front payment	$	12,428		$	12,428		$	12,428
Milestone revenues	—			250,000			—
Net reimbursement (payment) for telaprevir development costs	(3,507		)	(8,418		)	9,245
Reimbursement for manufacturing services	7,257			20,383			9,077
Total collaborative revenues attributable to the Janssen collaboration	$	16,178		$	274,393		$	30,750
Total revenues attributable to the Janssen collaboration	$	133,770		$	294,682		$	30,750

Mitsubishi Tanabe Pharma Corporation

The Company has a collaboration agreement (the “MTPC Agreement”) with Mitsubishi Tanabe Pharma Corporation ("Mitsubishi Tanabe") pursuant to which Mitsubishi Tanabe has a fully-paid license to manufacture and commercialize TELAVIC (the brand name under which Mitsubishi Tanabe is marketing telaprevir) in Japan and other specified countries in Asia. In September 2011, Mitsubishi Tanabe obtained approval to market TELAVIC in Japan.

The parties entered into the MTPC Agreement in 2004 and amended it in 2009. Pursuant to the MTPC Agreement, Mitsubishi Tanabe provided financial and other support for the development and commercialization of telaprevir, made a $105.0 million payment in connection with the 2009 amendment of the collaboration agreement and made a $65.0 million commercial milestone payment recognized as collaborative revenues in the fourth quarter of 2011. There are no further payments under this collaboration agreement. Mitsubishi Tanabe is responsible for its own development and manufacturing costs in its territory.

Mitsubishi Tanabe may terminate the MTPC Agreement at any time without cause upon 60 days’ prior written notice to the Company. The MTPC Agreement also may be terminated by either party for a material breach by the other, subject to notice and cure provisions. Unless earlier terminated, the MTPC Agreement will continue in effect until the expiration of the last-to-expire patent covering telaprevir in Mitsubishi Tanabe's territories. In Japan, the Company has a patent covering the composition-of-matter of telaprevir that expires in 2021.

The $105.0 million payment that the Company received in the third quarter of 2009 in connection with the amendment to the MTPC Agreement was a nonrefundable, up-front license fee, and revenues related to the 2009 payment were recognized on a straight-line basis over the period of performance of the Company’s obligations under the amended agreement. The final deferred revenues related to the 2009 up-front license payment were recognized in April 2012. In connection with the amendment to the MTPC Agreement, the Company supplied manufacturing services to Mitsubishi Tanabe, until April 2012, through the Company’s third-party manufacturing network for telaprevir.

During the three years ended December 31, 2012, the Company recognized the following collaborative revenues attributable to the Mitsubishi Tanabe collaboration:



	2012		2011		2010
	(in thousands)
Amortized portion of up-front payments	$	12,744	$	38,232	$	38,232
Milestone revenues	485		68,515		—
Payments for manufacturing services	5,650		14,928		43,636
Total collaborative revenues attributable to the Mitsubishi Tanabe collaboration	$	18,879	$	121,675	$	81,868

Cystic Fibrosis Foundation Therapeutics Incorporated

In April 2011, the Company entered into an amendment (the “April 2011 Amendment”) to its existing collaboration agreement with Cystic Fibrosis Foundation Therapeutics Incorporated (“CFFT”) pursuant to which CFFT agreed to provide financial support for (i) development activities for VX-661, a corrector compound discovered under the collaboration, and (ii) additional research and development activities directed at discovering new corrector compounds.

The Company entered into the original collaboration agreement with CFFT in 2004 and amended it several times prior to 2011 to, among other things, provide partial funding for its cystic fibrosis drug discovery and development efforts. In 2006, the Company received a $1.5 million milestone payment from CFFT. There are no additional milestones payable by CFFT to the Company pursuant to the collaboration agreement, as amended. Under the April 2011 Amendment, CFFT agreed to provide the Company with up to $75.0 million in funding over approximately five years for corrector-compound research and development activities. The Company retains the right to develop and commercialize KALYDECO (ivacaftor), VX-809, VX-661 and any other compounds discovered during the course of the research collaboration with CFFT. The Company recognized collaborative revenues from this collaboration of $17.0 million, $13.7 million and $0, respectively, in 2012, 2011 and 2010.

In the original agreement, as amended prior to the April 2011 Amendment, the Company agreed to pay CFFT tiered royalties calculated as a percentage, ranging from single digits to sub-teens, of annual net sales of any approved drugs discovered during the research term that ended in 2008, including KALYDECO, VX-809 and VX-661. The April 2011 Amendment provides for a tiered royalty in the same range on net sales of corrector compounds discovered during the research term that began in 2011. In the third quarter of 2012, CFFT earned a commercial milestone payment from the Company upon achievement of certain sales levels for KALYDECO, which was reflected in the Company's cost of product revenues for 2012. The Company is obligated to make one additional commercial milestone payment upon achievement of certain sales levels of KALYDECO. The Company also is obligated to make a total of two one-time commercial milestone payments upon achievement of certain sales levels for corrector compounds.

The Company began marketing KALYDECO in the United States in the first quarter of 2012 and began marketing KALYDECO in certain countries in the European Union in the third quarter of 2012. The Company has royalty obligations to CFFT for each compound commercialized pursuant to this collaboration until the expiration of patents covering that compound. The Company has patents in the United States and European Union covering the composition-of-matter of ivacaftor that expire in 2027 and 2025, respectively, subject to potential patent life extensions. CFFT may terminate its funding obligations under the collaboration, as amended, in certain circumstances, in which case there will be a proportional adjustment to the royalty rates and commercial milestone payments for certain corrector compounds. The collaboration also may be terminated by either party for a material breach by the other, subject to notice and cure provisions.

Alios BioPharma, Inc.

License and Collaboration Agreement

In June 2011, the Company entered into a license and collaboration agreement (the “Alios Agreement”) with Alios, a privately-held biotechnology company. The Company and Alios are collaborating on the research, development and commercialization of an HCV nucleotide analogue discovered by Alios, VX-135, which is designed to act on the HCV polymerase. In the third quarter of 2012, the Company ended the development of ALS-2158, a second HCV nucleotide analogue discovered by Alios and licensed to the Company pursuant to the Alios Agreement, because a Phase 1 clinical trial demonstrated that there was insufficient antiviral activity to warrant proceeding with further clinical development of that compound.

Alios and the Company began clinical development of ALS-2200 (now formulated as VX-135) and ALS-2158 in December 2011. The Company is responsible for all costs related to development, commercialization and manufacturing of each compound licensed to the Company pursuant to the Alios Agreement, provided funding to Alios to conduct the Phase 1 clinical trials for ALS-2200 and ALS-2158 and is providing funding for a research program directed to the discovery of additional HCV nucleotide analogues that act on the HCV polymerase.

Under the terms of the Alios Agreement, the Company received exclusive worldwide rights to ALS-2200 (VX-135) and ALS-2158, and has the option to select additional compounds discovered in the research program. Upon entering into the Alios Agreement, the Company paid Alios a $60.0 million up-front payment. As of December 31, 2012, Alios had earned an aggregate of $60.0 million in development milestone payments pursuant to the Alios Agreement, including a $25.0 million milestone payment in 2012. The Alios Agreement provides for development milestone payments to Alios of up to an additional $312.5 million if VX-135 is approved and commercialized. The Alios Agreement also provides for additional development milestone payments to Alios if a second HCV nucleotide analogue is approved and commercialized. In addition, Alios is eligible to receive commercial milestone payments of up to $750.0 million, as well as tiered royalties on net sales of approved drugs.

The Company may terminate the Alios Agreement (i) upon 30 days’ notice to Alios if the Company ceases development after VX-135 has experienced a technical failure and/or (ii) upon 60 days’ notice to Alios at any time after the Company completes specified Phase 2a clinical trials. The Alios Agreement also may be terminated by either party for a material breach by the other, and by Alios for the Company’s inactivity or if the Company challenges certain Alios patents, in each case subject to notice and cure provisions. Unless earlier terminated, the Alios Agreement will continue in effect until the expiration of the Company’s royalty obligations, which expire on a country-by-country basis on the later of (a) the date the last-to-expire patent covering a licensed product expires or (b) ten years after the first commercial sale in the country.

Alios is continuing to operate as a separate entity, is engaged in other programs directed at developing novel drugs that are not covered by the Alios Agreement and maintains ownership of the underlying patent rights that are licensed to the Company pursuant to the Alios Agreement. Under applicable accounting guidance, the Company has determined that Alios is a VIE, that Alios is a business and that the Company is Alios’ primary beneficiary. The Company based these determinations on, among other factors, the significance to Alios of the licensed compounds and on the Company’s power, through the joint steering committee for the licensed compounds established under the Alios Agreement, to direct the activities that most significantly affect the economic performance of Alios.

Accordingly, the Company consolidated Alios’ statements of operations and balance sheet with the Company’s consolidated financial statements beginning on June 13, 2011. However, the Company’s interests in Alios are limited to those accorded to the Company in the Alios Agreement. In particular, the Company did not acquire any equity interest in Alios, any interest in Alios’ cash and cash equivalents or any control over Alios’ activities that do not relate to the Alios Agreement. Alios does not have any right to the Company’s assets except as provided in the Alios Agreement.

Intangible Assets and Goodwill

As of December 31, 2012 and 2011, the Company had $250.6 million of intangible assets and $4.9 million of goodwill related to the Alios Collaboration. Please refer to Note I, "Intangible Assets and Goodwill," for further information.

Noncontrolling Interest (Alios)

The Company records noncontrolling interest (Alios) on two lines on its consolidated balance sheets. The noncontrolling interest (Alios) is reflected on two separate lines because Alios has both common shareholders and preferred shareholders that are entitled to redemption rights in certain circumstances. The Company records net loss (income) attributable to noncontrolling interest (Alios) on its consolidated statements of operations, reflecting Alios' net loss (income) for the reporting period, adjusted for changes in the fair value of contingent milestone and royalty payments, which is evaluated each reporting period. A summary of net loss (income) attributable to noncontrolling interest (Alios) for the two years ended December 31, 2012 is as follows:



	2012			2011
	(in thousands)
Loss (income) before provision for (benefit from) income taxes	$	20,044		$	9,536
Decrease (increase) in fair value of contingent milestone and royalty payments	(114,970		)	(69,950		)
Provision for (benefit from) income taxes	39,029			48,809
Net loss (income) attributable to noncontrolling interest (Alios)	$	(55,897	)	$	(11,605	)

The Company uses present-value models to determine the estimated fair value of the contingent milestone and royalty payments, based on assumptions regarding the probability of achieving the relevant milestones, estimates regarding the time to develop drug candidates, estimates of future product sales and the appropriate discount and tax rates. The Company bases its estimate of the probability of achieving the relevant milestones on industry data for similar assets and its own experience. The discount rates used in the valuation model represent a measure of credit risk associated with settling the liability. Significant judgment is used in determining the appropriateness of these assumptions at each reporting period. Changes in these assumptions could have a material effect on the fair value of the contingent milestone and royalty payments.

In 2012 and 2011, the fair value of the contingent milestone payments and royalties payable by Vertex to Alios related to the in-licensed HCV nucleotide analogue program increased by $115.0 million and $70.0 million, respectively, due to the advancement of the Company's HCV nucleotide program in 2011 and 2012, including the positive data the Company received in 2012 from a Phase 1 clinical trial that evaluated ALS-2200. If VX-135 continues to advance in clinical development, the Company expects it will record additional increases in the fair value of the contingent milestone and royalty payments in future periods. Changes in the fair value of these contingent milestone and royalty payments, and the effects of these changes on net income (loss) attributable to Vertex, were material in 2012 and 2011 and may be material in future periods.

Alios Balance Sheet Information

The following table summarizes items related to Alios included in the Company’s consolidated balance sheets:



	As of December 31,
	2012		2011
	(in thousands)
Restricted cash and cash equivalents (Alios)	$	69,983	$	51,878
Prepaid expenses and other current assets	672		2,299
Property and equipment, net	1,728		1,925
Intangible assets	250,600		250,600
Goodwill	4,890		4,890
Other assets	861		133
Accounts payable	1,054		4,132
Accrued expenses	6,099		4,304
Income taxes payable (Alios)	715		12,075
Deferred tax liability	152,781		116,121
Other liabilities, excluding current portion	910		1,030
Redeemable noncontrolling interest (Alios)	38,530		37,036
Noncontrolling interest (Alios)	196,672		141,633

The Company has recorded Alios’ cash and cash equivalents as restricted cash and cash equivalents (Alios) because (i) the Company does not have any interest in or control over Alios’ cash and cash equivalents and (ii) the Alios Agreement does not provide for these assets to be used for the development of the assets that the Company licensed from Alios pursuant to the Alios Agreement. Assets recorded as a result of consolidating Alios’ financial condition into the Company’s consolidated balance sheets do not represent additional assets that could be used to satisfy claims against the Company’s general assets.

Research and Development Funding

The Company’s collaborators funded portions of the Company’s research and development programs related to specific drugs, drug candidates and research targets, including, in 2012 and 2011, telaprevir, VX-661 and research directed toward identifying additional corrector compounds for the treatment of cystic fibrosis, and in 2010, telaprevir. The Company’s collaborative revenues, including amortization of up-front license fees and milestone revenues, were $52.1 million, $409.7 million and $113.1 million, respectively, in 2012, 2011 and 2010. The Company’s research and development expenses allocated to programs in which a collaborator funded at least a portion of the research and development expenses were approximately $133 million, $146 million and $156 million, respectively, in 2012, 2011 and 2010.

Net Income (Loss) Per Share Attributable to Vertex Common Shareholders

12 Months Ended

Dec. 31, 2012

Earnings Per Share [Abstract]

Net Income (Loss) Per Share Attributable to Vertex Common Stockholders

Net Income (Loss) Per Share Attributable to Vertex Common Shareholders

The following table sets forth the computation of basic and diluted net income (loss) per share for the three years ended December 31, 2012:



	2012			2011			2010
	(in thousands, except per share amounts)
Basic net income (loss) attributable to Vertex per common share calculation:
Net income (loss) attributable to Vertex common shareholders	$	(107,032	)	$	29,574		$	(754,626	)
Less: Undistributed earnings allocated to participating securities	—			(291		)	—
Net income (loss) attributable to Vertex common shareholders—basic	$	(107,032	)	$	29,283		$	(754,626	)
Basic weighted-average common shares outstanding	211,946			204,891			200,402
Basic net income (loss) attributable to Vertex per common share	$	(0.50	)	$	0.14		$	(3.77	)
Diluted net income (loss) attributable to Vertex per common share calculation:
Net income (loss) attributable to Vertex common shareholders	$	(107,032	)	$	29,574		$	(754,626	)
Less: Undistributed earnings allocated to participating securities	—			(285		)	—
Net income (loss) attributable to Vertex common shareholders—diluted	$	(107,032	)	$	29,289		$	(754,626	)
Weighted-average shares used to compute basic net income (loss) per common share	211,946			204,891			200,402
Effect of potentially dilutive securities:
Stock options	—			3,863			—
Other	—			53			—
Weighted-average shares used to compute diluted net income (loss) per common share	211,946			208,807			200,402
Diluted net income (loss) attributable to Vertex per common share	$	(0.50	)	$	0.14		$	(3.77	)

The Company did not include the securities described in the following table in the computation of the diluted net income (loss) attributable to Vertex per common share calculations because the effect would have been anti-dilutive during each such period:



	2012	2011	2010
	(in thousands)
Stock options	19,726	9,626	21,293
Convertible senior subordinated notes	8,192	8,192	8,192
Unvested restricted stock and restricted stock units	2,350	8	1,950

Fair Value Measurements

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value Measurements

The fair value of the Company’s financial assets and liabilities reflects the Company’s estimate of amounts that it would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from sources independent from the Company) and to minimize the use of unobservable inputs (the Company’s assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:



Level 1:	Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2:	Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
Level 3:	Unobservable inputs based on the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability.

The Company’s investment strategy is focused on capital preservation. The Company invests in instruments that meet the credit quality standards outlined in the Company’s investment policy. This policy also limits the amount of credit exposure to any one issue or type of instrument. As of December 31, 2012, the Company’s investments were in a money market fund, short-term U.S. Treasury securities, short-term government-sponsored enterprise securities, corporate debt securities and commercial paper.

As of December 31, 2012, all of the Company’s financial assets that were subject to fair value measurements were valued using observable inputs. The Company’s financial assets valued based on Level 1 inputs consisted of a money market fund, U.S. Treasury securities and government-sponsored enterprise securities. The Company’s financial assets valued based on Level 2 inputs consisted of corporate debt securities and commercial paper, which consist of investments in highly-rated investment-grade corporations. During 2012, 2011 and 2010, the Company did not record an other-than-temporary impairment charge related to its financial assets. The Company’s noncontrolling interest (Alios) includes the fair value of the contingent milestone and royalty payments, which is valued based on Level 3 inputs. Please refer to Note B, "Collaborative Arrangements," for further information.

The following table sets forth the Company’s financial assets (excluding Alios’ cash equivalents) subject to fair value measurements:



	Fair Value Measurements as of December 31, 2012
			Fair Value Hierarchy
	Total		Level 1		Level 2		Level 3
	(in thousands)
Financial assets carried at fair value:
Cash equivalents:
Money market funds	$	268,463	$	268,463	$	—	$	—
Marketable securities:
U.S. Treasury securities	111,350		111,350		—		—
Government-sponsored enterprise securities	440,225		440,225		—		—
Commercial paper	225,449		—		225,449		—
Corporate debt securities	54,784		—		54,784		—
Restricted cash	31,934		31,934		—		—
Total	$	1,132,205	$	851,972	$	280,233	$	—

Alios’ cash equivalents of $68.7 million as of December 31, 2012 consisted of money market funds, which are valued based on Level 1 inputs.

As of December 31, 2012, the Company had $400.0 million in aggregate principal amount of 3.35% convertible senior subordinated notes due 2015 (the “2015 Notes”) on its consolidated balance sheet. As of December 31, 2012, these 2015 Notes had a fair value of approximately $444 million based on Level 2 inputs.

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 44A, 44B
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15C, 15D
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15A
-Subparagraph a-d
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15B
-Subparagraph a, b
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 3, 10, 14, 15
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 157
-Paragraph 32, 33, 34
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 159
-Paragraph 17-22, 27, 28
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19207-110258

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13537-108611

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 28
-URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13433-108611

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 30
-URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 16
-URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13504-108611

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19296-110258

Cash and Cash Equivalents [Abstract]

Marketable Securities

12 Months Ended

Dec. 31, 2012

Marketable Securities

A summary of the Company’s cash, cash equivalents and marketable securities is shown below:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
December 31, 2012
Cash and cash equivalents:
Cash and money market funds	$	489,407	$	—	$	—		$	489,407
Total cash and cash equivalents	$	489,407	$	—	$	—		$	489,407
Marketable securities:
U.S. Treasury securities (due within 1 year)	$	111,350	$	2	$	(2	)	$	111,350
Government-sponsored enterprise securities (due within 1 year)	440,181		49		(5		)	440,225
Commercial paper (due within 1 year)	225,294		155		—			225,449
Corporate debt securities (due within 1 year)	15,429		1		(1		)	15,429
Corporate debt securities (due after 1 year through 5 years)	39,358		10		(13		)	39,355
Total marketable securities	$	831,612	$	217	$	(21	)	$	831,808
Total cash, cash equivalents and marketable securities	$	1,321,019	$	217	$	(21	)	$	1,321,215
December 31, 2011
Cash and cash equivalents:
Cash and money market funds	$	362,035	$	—	$	—		$	362,035
Government-sponsored enterprise securities	113,302		—		(17		)	113,285
Total cash and cash equivalents	$	475,337	$	—	$	(17	)	$	475,320
Marketable securities:
U.S. Treasury securities (due within 1 year)	$	22,105	$	2	$	—		$	22,107
Government-sponsored enterprise securities (due within 1 year)	471,589		8		(102		)	471,495
Total marketable securities	$	493,694	$	10	$	(102	)	$	493,602
Total cash, cash equivalents and marketable securities	$	969,031	$	10	$	(119	)	$	968,922

Alios’ $70.0 million and $51.9 million, respectively, of cash and money market funds as of December 31, 2012 and 2011, recorded on the Company’s consolidated balance sheets in “Restricted cash and cash equivalents (Alios),” are not included in the above table.

Inventories

12 Months Ended

Dec. 31, 2012

Inventory Disclosure [Abstract]

Property, Plant and Equipment [Abstract]

The Company began capitalizing inventory costs for INCIVEK on January 1, 2011 and inventory costs for KALYDECO on January 1, 2012. The following table sets forth the Company's inventories by product:



	As of December 31,
	2012		2011
	(in thousands)
INCIVEK	$	22,792	$	112,430
KALYDECO	7,672		—
Total	$	30,464	$	112,430

The following table sets forth the Company’s inventories by type:



	As of December 31,
	2012		2011
	(in thousands)
Raw materials	$	3,754	$	32,213
Work-in-process	11,317		47,010
Finished goods	15,393		33,207
Total	$	30,464	$	112,430

In 2012, the Company recorded within cost of product revenues an aggregate of $133.2 million in lower of cost or market charges for excess and obsolete INCIVEK inventories. The Company's aggregate of $133.2 million in charges in 2012 for excess and obsolete INCIVEK inventories were the result of a $78.0 million charge during the second quarter of 2012 and a $55.2 million charge during the fourth quarter of 2012. The charges and corresponding inventory write-downs were based on the Company's analysis of its INCIVEK inventory levels in relation to its commercial outlook for INCIVEK. The aggregate of $133.2 million in lower of cost or market charges for excess and obsolete INCIVEK inventories affected the net income (loss) attributable to Vertex per diluted share, net of tax, by $(0.61) in 2012.

The field of treatment of HCV infection is highly competitive and characterized by rapid technological advances. In order to determine the amount of the inventory charges, the Company considered, among other factors, (i) decreases in demand for INCIVEK during 2012 and the Company's expectation that demand would decrease further in the future, (ii) the potential development by the Company of other drugs and combination treatments for HCV infection, including pursuant to collaboration agreements to evaluate VX-135 in combination with drug candidates controlled by third parties, that make it unlikely that INCIVEK will play a role in future combination therapies, (iii) the placement of a Boxed Warning on the INCIVEK prescribing information in December 2012, (iv) the potential development by the Company's competitors of other drugs and combination treatments for HCV infection, (v) positive results reported in 2012 from clinical trials of drug candidates being developed by the Company and its competitors and (vi) the initiation by the Company's competitors of additional Phase 2 and Phase 3 clinical trials evaluating drug candidates for the treatment of HCV infection.

Property and Equipment

12 Months Ended

Dec. 31, 2012

Property and Equipment

Property and equipment, net consisted of the following:



	As of December 31,
	2012			2011
	(in thousands)
Furniture and equipment	$	173,766		$	151,961
Leasehold improvements	123,770			107,169
Software	101,276			56,923
Computers	40,779			33,116
Construction-in-process	290,703			55,070
Total property and equipment, gross	730,294			404,239
Less: accumulated depreciation	(296,685		)	(271,063		)
Total property and equipment, net	$	433,609		$	133,176

Construction-in-process as of December 31, 2012 and 2011, included $290.7 million and $55.1 million, respectively, related to construction costs for the buildings at Fan Pier in Boston, Massachusetts. Please refer to Note H, "Fan Pier Leases," for further information.

Total property and equipment, gross, as of December 31, 2012 and 2011, included $30.1 million and $0, respectively, for property and equipment recorded under capital leases. Accumulated depreciation, as of December 31, 2012 and 2011, included $1.1 million and $0, respectively, of accumulated depreciation for property and equipment recorded under capital leases.

The Company recorded depreciation expense of $35.7 million, $28.9 million and $27.9 million, respectively, in 2012, 2011 and 2010.

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

Fan Pier Leases	12 Months Ended
Fan Pier Leases	Dec. 31, 2012
Fan Pier Leases [Abstract]
Fan Pier Leases	Fan Pier Leases In the second quarter of 2011, the Company entered into two leases, pursuant to which the Company agreed to lease approximately 1.1 million square feet of office and laboratory space in two buildings (the "Buildings") that the landlord is building at Fan Pier in Boston, Massachusetts (the “Fan Pier Leases”). The Company expects to commence lease payments in December 2013 and to make payments for the period ending 15 years from the commencement date. The Company has an option to extend the term of the Fan Pier Leases for an additional ten years. Because the Company is involved in the construction project, including having responsibility to pay for a portion of the costs of finish work and structural elements of the Buildings, the Company is deemed for accounting purposes to be the owner of the Buildings during the construction period. Accordingly, the Company has recorded project construction costs incurred by the landlord as an asset and a related financing obligation in “Property and equipment, net” and “Construction financing lease obligation,” respectively, on the Company’s consolidated balance sheets. The Company bifurcates its future lease payments pursuant to the Fan Pier Leases into (i) a portion that is allocated to the Buildings and (ii) a portion that is allocated to the land on which the Buildings are being constructed, which is recorded as rental expense. Although the Company will not begin making lease payments pursuant to the Fan Pier Leases until the commencement date, the portion of the lease obligations allocated to the land is treated for accounting purposes as an operating lease that commenced in the second quarter of 2011. Once the landlord completes the construction of the Buildings, the Company will evaluate the Fan Pier Leases in order to determine whether or not the Fan Pier Leases meet the criteria for “sale-leaseback” treatment. If the Fan Pier Leases meet the “sale-leaseback” criteria, the Company will remove the asset and the related liability from its consolidated balance sheet and treat the Fan Pier Leases as either operating or capital leases based on the Company’s assessment of the accounting guidance. The Company expects that upon completion of construction of the Buildings the Fan Pier Leases will not meet the “sale-leaseback” criteria. If the Fan Pier Leases do not meet “sale-leaseback” criteria, the Company will treat the Fan Pier Leases as a financing obligation and will depreciate the asset over its estimated useful life.

Intangible Assets and Goodwill	12 Months Ended
Intangible Assets and Goodwill	Dec. 31, 2012
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets and Goodwill	Intangible Assets and Goodwill Intangible Assets As of December 31, 2012 and 2011, the Company's intangible assets consisted of indefinite-lived in-process research and development assets of (i) $250.6 million related to its HCV nucleotide analogue program, which includes the HCV nucleotide analogue VX-135 and included the HCV nucleotide analogue ALS-2158 and (ii) $412.9 million related to VX-222. The Company collaborates with Alios on research and development activities related to the HCV nucleotide program and acquired VX-222 when it acquired ViroChem Pharma Inc. ("ViroChem") in March 2009. Each of these research and development assets relate to drug candidates that are being developed for the treatment of HCV infection. The Company tests its intangible assets for impairment on an annual basis as of October 1, and more frequently if indicators are present or changes in circumstance suggest that impairment may exist. Events that could result in an impairment, or trigger an interim impairment assessment, include the receipt of additional clinical or nonclinical data regarding the Company's drug candidate or a potentially competitive drug candidate, changes in the clinical development program for a drug candidate or new information regarding potential sales for the drug. The field of HCV infection treatment is highly competitive and characterized by rapid technological advances, and several of the Company's competitors are conducting Phase 3 clinical trials evaluating their drug candidates for the treatment of genotype 1 HCV infection, including clinical trials evaluating all-oral combinations and combinations that include pegylated-interferon and ribavirin. There can be no assurance that the Company will be able to successfully develop VX-135 or VX-222. If the fair value of VX-135 or VX-222 becomes impaired as the result of unfavorable safety or efficacy data from any ongoing or future clinical trial or because of any other information regarding the prospects of successfully developing or commercializing VX-135 or VX-222, the Company would incur significant charges in the period in which the impairment occurs. Alios Collaboration In June 2011, the Company recorded $250.6 million of intangible assets on its consolidated balance sheet based on the Company's estimate of the fair value of Alios' HCV nucleotide analogue program, including the intellectual property related to ALS-2200 and ALS-2158. In the third quarter of 2012, after the Company discontinued the development of ALS-2158, the Company evaluated the Alios HCV nucleotide analogue program for impairment. The Company determined that there was no impairment to the program in the third quarter of 2012 because of the advancement of ALS-2200 (now formulated as VX-135). No impairment has been found with respect to the HCV nucleotide analogue program since the effective date of the Alios Agreement. ViroChem Acquisition As of December 31, 2010, the intangible assets acquired from ViroChem that were reflected on the Company's consolidated balance sheet related to two drug candidates, VX-222 and VX-759. VX-222 and VX-759 had estimated fair values on the acquisition date and December 31, 2010 of $412.9 million and $105.8 million, respectively. In the third quarter of 2011, the Company determined that the fair value of VX-759 had become impaired and that its fair value was zero. As a result, the Company recorded an impairment charge in 2011 of $105.8 million that was reflected as an intangible asset impairment charge on the Company's consolidated statement of operations. In connection with this impairment charge, the Company recorded a benefit from income taxes of $32.7 million. The Company has tested the fair value of VX-222 on an annual basis since the acquisition date and no impairment has been identified. As of October 1, 2012, the Company estimated the fair value that would be attributed to VX-222 by a market participant based on probability weighted present-value models involving updated assumptions and estimates regarding the status of the VX-222 development program, the potential future cash flows from sales of VX-222 and an appropriate discount rate. When the Company updated its assumptions, it considered among other factors, the following: (i) the Company continues to evaluate VX-222 in Phase 2 clinical trials and believes that a treatment regimen containing VX-222 in combination with other direct-acting antivirals such as VX-135 can be developed for patients with genotype 1 HCV infection, (ii) the Company's competitors initiated several Phase 2 and Phase 3 clinical trials during the second half of 2012 that include treatment arms with non-nucleoside HCV polymerase inhibitors in combination with other direct-acting antivirals that could potentially be competitive in the market for the treatment of HCV infection and (iii) the Company believes that in the future several competitive treatment regimens will be available to treat patients with genotype 1 HCV infection. Using these updated assumptions, the Company determined that as of October 1, 2012, a market participant would assign a fair value to VX-222 exceeding the value reflected on the consolidated balance sheet. Accordingly, the Company determined that the value of VX-222 was not impaired as of October 1, 2012. There were no indicators of impairment as of December 31, 2012. A deferred tax liability related to ViroChem of $127.6 million recorded as of December 31, 2012 and 2011 primarily relates to the tax effect of future amortization or impairments associated with VX-222, which are not deductible for tax purposes. Goodwill As of December 31, 2012 and 2011, goodwill of $31.0 million was recorded on the Company's consolidated balance sheets. There was no change to goodwill during the year ended December 31, 2012.

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

Accrued Expenses

12 Months Ended

Dec. 31, 2012

Payables and Accruals [Abstract]

Accrued Expenses

Accrued expenses consisted of the following:



	As of December 31,
	2012		2011
	(in thousands)
Research, development and commercial contract costs	$	63,960	$	66,426
Payroll and benefits	62,140		57,453
Product revenue allowances	69,936		58,201
Royalty payable	29,007		28,603
Unrecognized tax benefits	4,106		4,360
Interest	3,395		3,363
Professional fees	11,226		12,785
Other	21,114		11,996
Total	$	264,884	$	243,187

Convertible Senior Subordinated Notes Convertible Senior Subordinated Notes	12 Months Ended
	Dec. 31, 2012
Debt Disclosure [Abstract]
Convertible Senior Subordinated Notes	Convertible Senior Subordinated Notes Convertible Senior Subordinated Notes (due 2015) In September 2010, the Company completed an offering of $400.0 million in aggregate principal amount of 2015 Notes. This offering resulted in $391.6 million of net proceeds to the Company. The underwriting discount of $8.0 million and other expenses of $0.4 million were recorded as debt issuance costs and are included in other assets on the Company’s consolidated balance sheets. The 2015 Notes were issued pursuant to and are governed by the terms of an indenture (as supplemented, the “Indenture”). The 2015 Notes are convertible at any time, at the option of the holder, into common stock at a price equal to approximately $48.83 per share, or 20.4794 shares of common stock per $1,000 principal amount of the 2015 Notes, subject to adjustment. The 2015 Notes bear interest at the rate of 3.35% per annum, and the Company is required to make semi-annual interest payments on the outstanding principal balance of the 2015 Notes on April 1 and October 1 of each year. The 2015 Notes mature on October 1, 2015. Prior to October 1, 2013, if the closing price of the Company’s common stock has exceeded 130% of the then applicable conversion price for at least 20 trading days within a period of 30 consecutive trading days, the Company may redeem the 2015 Notes at its option, in whole or in part, at a redemption price equal to 100% of the principal amount of the 2015 Notes to be redeemed. If the Company elects to redeem the 2015 Notes prior to October 1, 2013, or the holder elects to convert the 2015 Notes into shares of the Company's common stock after receiving notice of such redemption, the Company will be obligated to make an additional payment, payable in cash or, subject to certain conditions, shares of the Company’s common stock, so that the Company’s total interest payments on the 2015 Notes being redeemed and such additional payment shall equal three years of interest. On or after October 1, 2013, the Company may redeem the 2015 Notes at its option, in whole or in part, at the redemption prices stated in the Indenture plus accrued and unpaid interest, if any, to, but excluding, the redemption date. Holders may require the Company to repurchase some or all of their 2015 Notes upon the occurrence of certain fundamental changes of Vertex, as set forth in the Indenture, at 100% of the principal amount of the 2015 Notes to be repurchased, plus any accrued and unpaid interest, if any, to, but excluding, the repurchase date. If a fundamental change occurs that is also a specific type of change of control under the Indenture, the Company will pay a make-whole premium upon the conversion of the 2015 Notes in connection with any such transaction by increasing the applicable conversion rate on such 2015 Notes. The make-whole premium will be in addition to, and not in substitution for, any cash, securities or other assets otherwise due to holders of the 2015 Notes upon conversion. The make-whole premium will be determined by reference to the Indenture and is based on the date on which the fundamental change becomes effective and the price paid, or deemed to be paid, per share of the Company’s common stock in the transaction constituting the fundamental change, subject to adjustment. Based on the Company’s evaluation of the 2015 Notes, the Company determined that the 2015 Notes contain a single embedded derivative. This embedded derivative relates to potential penalty interest payments that could be imposed on the Company for a failure to comply with its securities reporting obligations pursuant to the 2015 Notes. This embedded derivative required bifurcation because it was not clearly and closely related to the host instrument. The Company has determined that the value of this embedded derivative was nominal as of September 28, 2010, the issue date of the 2015 Notes, December 31, 2011, and December 31, 2012. Convertible Senior Subordinated Notes (due 2013) On January 1, 2010, the Company had outstanding $32.1 million in aggregate principal amount of 4.75% convertible senior subordinated notes due 2013. In the first quarter of 2010, holders of these notes converted these notes into 1,386,006 shares of newly issued common stock.

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

Common Stock, Preferred Stock and Equity Plans

Common Stock, Preferred Stock and Equity Plans

12 Months Ended

Dec. 31, 2012

Common Stock, Preferred Stock and Equity Plans

The Company is authorized to issue 300,000,000 shares of common stock. Holders of common stock are entitled to one vote per share. Holders of common stock are entitled to receive dividends, if and when declared by the Company’s Board of Directors, and to share ratably in the Company’s assets legally available for distribution to the Company’s shareholders in the event of liquidation. Holders of common stock have no preemptive, subscription, redemption or conversion rights. The holders of common stock do not have cumulative voting rights.

The Company is authorized to issue 1,000,000 shares of preferred stock in one or more series and to fix the powers, designations, preferences and relative participating, option or other rights thereof, including dividend rights, conversion rights, voting rights, redemption terms, liquidation preferences and the number of shares constituting any series, without any further vote or action by the Company's shareholders. As of December 31, 2012 and 2011, the Company had no shares of preferred stock issued or outstanding.

Stock and Option Plans

The purpose of each of the Company’s stock and option plans is to attract, retain and motivate its employees, consultants and directors. Awards granted under these plans can be incentive stock options (“ISOs”), nonstatutory stock options (“NSOs”), restricted stock (“RSs”), restricted stock units (“RSUs”) or other equity-based awards, as specified in the individual plans.

Shares issued under all of the Company’s plans are funded through the issuance of new shares. The following table contains information about the Company’s equity plans:



			As of December 31, 2012
Title of Plan	Group Eligible	Type of Award Granted	Awards Outstanding	Additional Awards Authorized for Grant
2006 Stock and Option Plan	Employees, Non-employee Directors and Consultants	NSO, ISO, RS and RSU	20,551,584	5,751,677
1996 Stock and Option Plan	Employees, Non-employee Directors, Advisors and Consultants	NSO, ISO and RS	1,524,010	—
Total			22,075,594	5,751,677

All options granted under the Company’s 2006 Stock and Option Plan (“2006 Plan”) and 1996 Stock and Option Plan were granted with an exercise price equal to the fair value of the underlying common stock on the date of grant. As of December 31, 2012, the only stock and option plan under which the Company makes new equity awards is the Company’s 2006 Plan. Under the 2006 Plan, no stock options can be awarded with an exercise price less than the fair market value on the date of grant. The Company’s shareholders approved increases in the number of shares authorized for issuance pursuant to the 2006 Plan of 3,000,000 shares and 12,000,000 shares, respectively, in 2012 and 2010.

During the three years ended December 31, 2012, grants to current employees and directors had a grant date that was the same as the date the award was approved by the Company’s Board of Directors. During the three years ended December 31, 2012, for grants to new employees and directors, the date of grant for awards was the employee’s first day of employment or the date the director was elected to the Company’s Board of Directors. All options awarded under the Company’s stock and option plans expire not more than ten years from the grant date.

During the three years ended December 31, 2012, all shares of outstanding restricted stock and restricted stock units have been granted at price equal to $0.01, the par value of the Company’s common stock. Vesting of options, restricted stock and restricted stock units generally is ratable over specified periods, usually four years, and is determined by the Company’s Board of Directors.

The following table summarizes information related to the outstanding and exercisable options during the year ended December 31, 2012:



	Stock Options		Weighted-average Exercise Price		Weighted-average Remaining Contractual Life	Aggregate Intrinsic Value
	(in thousands)		(per share)		(in years)	(in thousands)
Outstanding at December 31, 2011	20,923		$	34.23
Granted	6,043		43.80
Exercised	(5,856	)	29.51
Forfeited	(1,310	)	41.01
Expired	(74	)	39.47
Outstanding at December 31, 2012	19,726		$	38.09	7.15	$	107,016
Exercisable at December 31, 2012	10,849		$	34.54	5.93	$	84,297
Total exercisable or expected to vest at December 31, 2012	18,782		$	37.83	7.06	$	104,931

The aggregate intrinsic value in the table above represents the total pre-tax amount, net of exercise price, that would have been received by option holders if all option holders had exercised all options with an exercise price lower than the market price on December 31, 2012, which was $41.20 based on the average of the high and low price of the Company’s common stock on that date.

The total intrinsic value (the amount by which the fair market value exceeded the exercise price) of stock options exercised during 2012, 2011 and 2010 was $148.7 million, $90.5 million and $10.5 million, respectively. The total cash received by the Company as a result of employee stock option exercises during 2012, 2011 and 2010 was $172.8 million, $109.6 million and $22.2 million, respectively.

The following table summarizes information about stock options outstanding and exercisable at December 31, 2012:



	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted-average Remaining Contractual Life	Weighted-average Exercise Price		Number Exercisable	Weighted-average Exercise Price
	(in thousands)	(in years)	(per share)		(in thousands)	(per share)
$ 9.07–$20.00	1,000	3.12	$	15.38	1,000	$	15.38
$20.01–$30.00	1,415	6.35	$	29.30	1,039	$	29.11
$30.01–$40.00	12,590	6.86	$	36.09	7,770	$	35.29
$40.01–$50.00	2,331	9.32	$	48.04	216	$	46.92
$50.01–$60.00	2,328	8.68	$	53.41	816	$	54.18
$60.01–$64.30	62	9.34	$	63.17	8	$	63.14

The following table summarizes the restricted stock activity of the Company during the year ended December 31, 2012:



	Restricted Stock		Weighted-average Grant-date Fair Value
	(in thousands)		(per share)
Unvested at December 31, 2011	2,100		$	37.13
Granted	1,428		45.46
Vested	(998	)	35.11
Cancelled	(260	)	40.09
Unvested at December 31, 2012	2,270		$	42.92

The total fair value of restricted stock that vested during 2012, 2011 and 2010 (measured on the date of vesting) was $41.1 million, $34.6 million and $20.1 million, respectively.

Employee Stock Purchase Plan

The Company has an employee stock purchase plan (the “ESPP”). The ESPP permits eligible employees to enroll in a twelve-month offering period comprising two six-month purchase periods. Participants may purchase shares of the Company’s common stock, through payroll deductions, at a price equal to 85% of the fair market value of the common stock on the first day of the applicable twelve-month offering period, or the last day of the applicable six-month purchase period, whichever is lower. Purchase dates under the ESPP occur on or about May 14 and November 14 of each year. In 2012, the Company's shareholders approved an increase in the number of shares of common stock authorized for issuance pursuant to the ESPP of 2,500,000. As of December 31, 2012, there were 2,280,000 shares of common stock authorized for issuance pursuant to the ESPP.

In 2012, the following shares were issued to employees under the ESPP:



	Year Ended December 31, 2012
	(in thousands, except per share amount)
Number of shares	702
Average price paid per share		$26.71

Stock-based Compensation Expense

12 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-based Compensation Expense

The Company recognizes share-based payments to employees as compensation expense using the fair value method. The fair value of stock options and shares purchased pursuant to the ESPP is calculated using the Black-Scholes option pricing model. The fair value of restricted stock and restricted stock units typically is based on the intrinsic value on the date of grant. Stock-based compensation, measured at the grant date based on the fair value of the award, is typically recognized as expense ratably over the service period. The expense recognized over the service period includes an estimate of awards that will be forfeited.

The effect of stock-based compensation expense during the three years ended December 31, 2012 was as follows:



	2012		2011		2010
	(in thousands)
Stock-based compensation expense by line item:
Research and development expenses	$	71,533	$	75,574	$	65,198
Sales, general and administrative expenses	42,752		42,652		25,926
Total stock-based compensation expense included in costs and expenses	$	114,285	$	118,226	$	91,124

During 2012 and 2011, the Company capitalized $1.3 million and $1.0 million, respectively, of stock-based compensation expense to inventories, all of which was attributable to employees who supported the Company’s manufacturing operations for the Company's products.

The stock-based compensation expense by type of award during the three years ended December 31, 2012 was as follows:



	2012			2011			2010
	(in thousands)
Stock-based compensation expense by type of award:
Stock options	$	79,047		$	83,098		$	64,005
Restricted stock and restricted stock units	29,194			30,708			22,960
ESPP share issuances	7,298			5,462			4,159
Less stock-based compensation expense capitalized to inventories	(1,254		)	(1,042		)	—
Total stock-based compensation expense included in costs and expenses	$	114,285		$	118,226		$	91,124

The following table sets forth the Company’s unrecognized stock-based compensation expense, net of estimated forfeitures, as of December 31, 2012 by type of award and the weighted-average period over which that expense is expected to be recognized:



	As of December 31, 2012
	Unrecognized Expense Net of Estimated Forfeitures	Weighted-average Recognition Period
	(in thousands)	(in years)
Type of award:
Stock options	$156,225	2.69
Restricted stock and restricted stock units	68,094	2.58
ESPP share issuances	5,661	0.65

Stock Options

The Company issues stock options with service conditions, which are generally the vesting periods of the awards. In 2009, the Company also issued, to certain members of senior management, stock options with performance conditions that vested upon the satisfaction of the performance conditions by the end of the first quarter of 2012. The Company uses the Black-Scholes option pricing model to estimate the fair value of stock options at the grant date. The Black-Scholes option pricing model uses the option exercise price as well as estimates and assumptions related to the expected price volatility of the Company’s stock, the rate of return on risk-free investments, the expected period during which the options will be outstanding, and the expected dividend yield for the Company’s stock to estimate the fair value of a stock option on the grant date. The options granted during 2012, 2011 and 2010 had a weighted-average grant-date fair value per share of $19.72, $20.88 and $18.52, respectively.

The fair value of each option granted during 2012, 2011 and 2010 was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:



	2012		2011		2010
Expected stock price volatility	47.93	%	49.53	%	52.17	%
Risk-free interest rate	0.95	%	2.09	%	2.44	%
Expected term of options (in years)	5.78		5.74		5.71
Expected annual dividends	—		—		—

The weighted-average valuation assumptions were determined as follows:


•	Expected stock price volatility: Options to purchase the Company’s stock with remaining terms of greater than one year are regularly traded in the market. Expected stock price volatility is calculated using the trailing one month average of daily implied volatilities prior to grant date.


•	Risk-free interest rate: The Company bases the risk-free interest rate on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate with the assumed expected option term.

•

Expected term of options: The expected term of options represents the period of time options are expected to be outstanding. The Company uses historical data to estimate employee exercise and post-vest termination behavior. The Company believes that all groups of employees exhibit similar exercise and post-vest termination behavior and therefore does not stratify employees into multiple groups in determining the expected term of options.


•	Expected annual dividends: The estimate for annual dividends is $0.00 because the Company has not historically paid, and does not intend for the foreseeable future to pay, a dividend.

Restricted Stock and Restricted Stock Units

The Company issues restricted stock and restricted stock units with service conditions, which are generally the vesting periods of the awards. The Company also issues, to certain members of senior management, restricted stock and restricted stock units that vest upon the earlier of the satisfaction of (i) a performance condition or (ii) a service condition.

Employee Stock Purchase Plan

The weighted-average fair value of each purchase right granted during 2012, 2011 and 2010 was $12.90, $9.80 and $10.19, respectively. The following table reflects the weighted-average assumptions used in the Black-Scholes option pricing model for 2012, 2011 and 2010:



	2012		2011		2010
Expected stock price volatility	46.90	%	51.32	%	43.92	%
Risk-free interest rate	0.16	%	0.08	%	0.24	%
Expected term (in years)	0.74		0.72		0.71
Expected annual dividends	—		—		—

The expected stock price volatility for ESPP offerings is based on implied volatility. The Company bases the risk-free interest rate on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate with the assumed expected term. The expected term represents purchases and purchase periods that take place within the offering period. The expected annual dividends estimate is $0.00 because the Company has not historically paid, and does not for the foreseeable future intend to pay, a dividend.

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph 64, 65, A240
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 93-6
-Paragraph 53
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 14

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 50
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 40
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929

September 2009 Financial Transactions

September 2009 Financial Transactions

12 Months Ended

Dec. 31, 2012

September 2009 Financial Transactions

2012 Notes

In September 2009, the Company sold $155.0 million in aggregate of secured notes due 2012 (the “2012 Notes”) for an aggregate of $122.2 million pursuant to a note purchase agreement with Olmsted Park S.A. (the “Purchaser”). The 2012 Notes were issued at a discount and did not pay current interest prior to maturity. The 2012 Notes were scheduled to mature on October 31, 2012, subject to earlier mandatory redemption to the extent that specified milestone events set forth in the Company’s collaboration with Janssen occurred prior to October 31, 2012. In February 2011, the Company received a milestone payment of $50.0 million and subsequently redeemed $50.0 million of 2012 Notes pursuant to their terms. The remaining $105.0 million of 2012 Notes were redeemed on October 31, 2011, with the proceeds of milestone payments received from Janssen in October 2011. The 2012 Notes contained an embedded derivative related to the potential mandatory redemption or early repayment of the 2012 Notes at the face amount prior to their maturity date. The fair value of this embedded derivative was evaluated quarterly, with changes in the fair value of the embedded derivative resulting in a corresponding gain or loss. The Company recorded quarterly interest expense related to the 2012 Notes using the effective interest rate method.

Sale of Contingent Milestone Payments

In September 2009, the Company entered into two purchase agreements with the Purchaser pursuant to which the Company sold its rights to an aggregate of $95.0 million in contingent milestone payments under the Janssen agreement related to the launch of telaprevir in the European Union, for nonrefundable payments totaling $32.8 million. The Purchaser received the $95.0 million in milestone payments from Janssen in the fourth quarter of 2011. The Company determined that this sale of a future revenue stream should be accounted for as a liability. The fair value of the rights sold to the Purchaser pursuant to the purchase agreements was evaluated each reporting period until the payments were received in the fourth quarter of 2011, with changes in the fair value of the derivative instruments based on the probability of achieving the milestones, the timing of achieving the milestones or discount rates resulting in a corresponding gain or loss.

Expenses Related to September 2009 Financial Transactions

The table below sets forth the total expenses related to the September 2009 financial transactions for 2012, 2011 and 2010:



	2012		2011			2010
	(in thousands)
Expenses and Losses (Gains):
Interest expense related to 2012 Notes	$	—	$	21,687		$	15,068
Change in fair value of embedded derivative related to 2012 Notes	—		(400		)	1,637
Change in fair value of free-standing derivatives related to the sale of milestone payments	—		17,201			39,592
Total September 2009 financial transaction expenses	$	—	$	38,488		$	56,297

Sale of HIV Protease Inhibitor Royalty Stream	12 Months Ended
Sale of HIV Protease Inhibitor Royalty Stream	Dec. 31, 2012
Sale of HIV Protease Inhibitor Royalty Stream
Sale of HIV Protease Inhibitor Royalty Stream	Sale of HIV Protease Inhibitor Royalty Stream In 2008, the Company sold to a third party its rights to receive royalty payments from GlaxoSmithKline plc, net of royalty amounts to be earned by and due to a third party, for a one-time cash payment of $160.0 million. These royalty payments relate to net sales of HIV protease inhibitors, which had been developed pursuant to a collaboration agreement between the Company and GlaxoSmithKline plc. As of December 31, 2012, the Company had $80.3 million in deferred revenues related to the one-time cash payment, which it is recognizing over the life of the collaboration agreement with GlaxoSmithKline plc based on the units-of-revenue method. In addition, the Company continues to recognize royalty revenues equal to the amount of the third-party subroyalty and an offsetting royalty expense for the third-party subroyalty payment.

Income Taxes

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Income Taxes

The components of income (loss) before provision for (benefit from) income taxes during the three years ended December 31, 2012 consisted of the following:



	2012			2011			2010
	(in thousands)
United States	$	256,816		$	343,515		$	(719,859	)
Foreign	(269,197		)	(283,070		)	(34,767		)
Income (loss) before provision for (benefit from) income taxes	$	(12,381	)	$	60,445		$	(754,626	)

The components of provision for (benefit from) income taxes during the three years ended December 31, 2012 consisted of the following:



	2012			2011			2010
	(in thousands)
Current taxes:
United States	$	2,057		$	22,275		$	—
Foreign	(1,865		)	(561		)	—
State	1,902			8,655			—
Total current taxes	$	2,094		$	30,369		$	—
Deferred taxes:
United States	$	31,308		$	19,629		$	—
Foreign	—			(32,692		)	—
State	5,352			1,960			—
Total deferred taxes	$	36,660		$	(11,103	)	$	—
Provision for (benefit from) income taxes	$	38,754		$	19,266		$	—

The Company’s federal statutory income tax rates for 2012, 2011 and 2010 were 35%, 35% and 34%, respectively. The Company had income from operations in 2012 and 2011 and incurred losses from operations in 2010. The Company recorded a valuation allowance against its net operating losses and other net deferred tax assets due to uncertainties related to the realizability of these tax assets.

The difference between the Company’s “expected” tax provision (benefit), as computed by applying the U.S. federal corporate tax rate to income (loss) before provision for (benefit from) income taxes, and actual tax is reconciled as follows:



	2012			2011			2010
	(in thousands)
Income (loss) before provision for (benefit from) income taxes	$	(12,381	)	$	60,445		$	(754,626	)
Expected tax provision (benefit)	(4,333		)	21,156			(256,574		)
State taxes, net of federal benefit	7,075			10,624			(46,108		)
Foreign rate differential	62,425			43,629			632
Tax credits	(1,980		)	(51,086		)	(23,292		)
Unbenefited operating losses	(30,364		)	(6,286		)	322,551
Non-deductible expenses	3,198			1,953			2,158
Rate change	3,275			—			—
Other	(542		)	(724		)	633
Provision for (benefit from) income taxes	$	38,754		$	19,266		$	—

For federal income tax purposes, as of December 31, 2012, the Company has net operating loss carryforwards of approximately $2.6 billion and tax credits of $98.0 million, which may be used to offset future federal income and tax liability, respectively. For state income tax purposes, the Company has net operating loss carryforwards of approximately $1.5 billion and tax credits of $60.3 million, which may be used to offset future state income and tax liability, respectively. These operating loss carryforwards began to expire in 2006, and the tax credit carryforwards began to expire in 2005. After consideration of all the evidence, both positive and negative, the Company continues to maintain a valuation allowance for the full amount of the 2012 deferred tax asset because it is more likely than not that the deferred tax asset will not be realized. In future periods, if management determines that it is more likely than not that the deferred tax asset will be realized, (i) the valuation allowance would be decreased, (ii) a portion or all of the deferred tax asset would be reflected on the Company’s consolidated balance sheet and (iii) the Company would record non-cash benefits in its consolidated statements of operations related to the reflection of the deferred tax asset on its consolidated balance sheet.

Unrecognized tax benefits during the two years ended December 31, 2012 consisted of the following:



	2012			2011
	(in thousands)
Unrecognized tax benefits beginning of year	$	4,360		$	2,374
Gross change for current year positions	598			2,569
Increase for prior period positions	—			—
Decrease for prior period positions	—			—
Decrease due to settlements and payments	—			—
Decrease due to statute limitations	(852		)	(583		)
Unrecognized tax benefits end of year	$	4,106		$	4,360

The Company had gross unrecognized tax benefits of $4.1 million and $4.4 million, respectively, as of December 31, 2012 and 2011. At December 31, 2012, $4.1 million represented the amount of unrecognized tax benefits that, if recognized, would result in a reduction of the Company’s effective tax rate. In 2013, it is reasonably possible that the Company will reduce the balance of its unrecognized tax benefits by $0.3 million due to the application of statute of limitations and settlements with taxing authorities, all of which would reduce the Company’s effective tax rate.

Deferred tax assets and liabilities are determined based on the difference between financial statement and tax bases using enacted tax rates in effect for the year in which the differences are expected to reverse. The components of the deferred taxes were as follows:



	As of December 31,
	2012			2011
	(in thousands)
Deferred tax assets:
Net operating loss	$	777,687		$	870,367
Tax credit carryforwards	147,074			167,759
Property and equipment	10,701			15,537
Intangibles	63,353			71,076
Deferred revenues	44,867			59,939
Stock-based compensation	83,979			90,563
Inventories	56,564			23,883
Accrued expenses	27,945			30,636
Unrealized loss	—			245
Gross deferred tax assets	1,212,170			1,330,005
Valuation allowance	(1,211,561		)	(1,329,775		)
Total deferred tax assets	609			230
Deferred tax liabilities:
Unrealized gain	(376		)	—
Contingent milestone and royalty payment obligation	(50,904		)	(14,241		)
Acquired intangibles	(229,696		)	(229,696		)
Net deferred tax liabilities	$	(280,367	)	$	(243,707	)

Generally, tax return deductions are allowable on stock-based compensation plans but may arise in different amounts and periods from when stock-based compensation expense is recognized in the financial statements. If the tax return deduction for an award exceeds the cumulative stock-based compensation expense recognized in the financial statements, any excess tax benefit is recognized as additional paid-in capital when the deduction reduces income tax payable. The net tax amount of the unrealized excess tax benefits as of December 31, 2012 was approximately $115 million. As of December 31, 2012, the gross amount of this excess tax deduction in the net operating loss carryforward was approximately $525 million.

The valuation allowance decreased by $118.2 million from December 31, 2011 to December 31, 2012 because the Company utilized net operating losses in 2012 to offset taxable income.

The Company files United States federal income tax returns and income tax returns in various state, local and foreign jurisdictions. The Company is no longer subject to any tax assessment from an income tax examination in the United States before 2007 and any other major taxing jurisdiction for years before 2005, except where the Company has net operating losses or tax credit carryforwards that originate before 2005. The Company is currently under examination by Revenue Quebec for the year ended March 11, 2009 and the year ended December 31, 2007. No adjustments have been reported. The Company is not under examination by any other jurisdictions for any tax year.

The Company currently intends to reinvest the total amount of its unremitted earnings, which have not been significant to date, in the local international jurisdiction or to repatriate the earnings only when tax-effective. As a result, the Company has not provided for U.S. federal income taxes on the unremitted earnings of its international subsidiaries. Upon repatriation of those earnings, in the form of dividends or otherwise, the Company would be subject to U.S. federal income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the various foreign countries. Determination of the amount of the unrecognized deferred U.S. federal income tax liability is not practical due to the complexity associated with this hypothetical calculation; however, unrecognized foreign tax credits would be available to reduce some portion of the U.S. federal income tax liability.

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph h
-Article 4

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 136, 172
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 43, 44, 45, 46, 47, 48, 49
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(h))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319

Restructuring and Related Activities [Abstract]

Restructuring Expense

12 Months Ended

Dec. 31, 2012

Restructuring Expense


	Restructuring Expense

In June 2003, Vertex adopted a plan to restructure its operations to coincide with its increasing internal emphasis on advancing drug candidates through clinical development to commercialization. The restructuring was designed to re-balance the Company’s relative investments in research and development to better support the Company’s long-term strategy. At that time, the restructuring plan included a workforce reduction, write-offs of certain assets and a decision not to occupy approximately 290,000 square feet of specialized laboratory and office space in Cambridge, Massachusetts under lease to Vertex (the “Kendall Square Lease”). The Kendall Square Lease commenced in January 2003 and has a 15-year term. In the second quarter of 2005, the Company revised its assessment of its real estate requirements and decided to use approximately 120,000 square feet of the facility subject to the Kendall Square Lease (the “Kendall Square Facility”) for its operations, beginning in 2006. The remaining rentable square footage of the Kendall Square Facility currently is subleased to third parties.

The Company’s initial estimate of its liability for net ongoing costs associated with the Kendall Square Lease obligation was recorded in the second quarter of 2003 at fair value. The restructuring expense incurred from the second quarter of 2003 through the end of the first quarter of 2005 (i.e., immediately prior to the Company’s decision to use a portion of the Kendall Square Facility for its operations) relates to the estimated incremental net ongoing lease obligations associated with the entire Kendall Square Facility, together with imputed interest costs relating to the restructuring liability. The restructuring expense incurred in the period beginning in the second quarter of 2005 relates only to the portion of the Kendall Square Facility that the Company is not occupying and does not intend to occupy for its operations. The remaining lease obligations, which are associated with the portion of the Kendall Square Facility that the Company occupies and uses for its operations, are recorded as rental expense in the period incurred. The Company reviews its assumptions and estimates quarterly and updates its estimates of this liability as changes in circumstances require. The expense and liability recorded is calculated using probability-weighted discounted cash-flows of the Company’s estimated ongoing lease obligations, including contractual rental and build-out commitments, net of estimated sublease rentals, offset by related sublease costs.

In estimating the expense and liability under its Kendall Square Lease obligation, the Company estimated (i) the costs to be incurred to satisfy rental and build-out commitments under the lease (including operating costs), (ii) the lead-time necessary to sublease the space, (iii) the projected sublease rental rates, and (iv) the anticipated durations of subleases. The Company uses a credit-adjusted risk-free rate of approximately 10% to discount the estimated cash flows. The Company reviews its estimates and assumptions on at least a quarterly basis, intends to continue such reviews until the termination of the Kendall Square Lease, and will make whatever modifications the Company believes necessary, based on the Company’s best judgment, to reflect any changed circumstances. The Company’s estimates have changed in the past, and may change in the future, resulting in additional adjustments to the estimate of the liability. Changes to the Company’s estimate of the liability are recorded as additional restructuring expense/(credit). In addition, because the Company’s estimate of the liability includes the application of a discount rate to reflect the time-value of money, the Company records imputed interest costs related to the liability each quarter. These costs are included in restructuring expense (credit) on the Company’s consolidated statements of operations.

The activity related to restructuring and other liability for 2003 was as follows:



	Charge in 2003		Cash payments in 2003			Non-cash write-off in 2003			Liability as of December 31, 2003
	(in thousands)
Lease restructuring and other operating lease expense	$	84,726	$	(15,200	)	$	—		$	69,526
Employee severance, benefits and related costs	2,616		(2,616		)	—			—
Leasehold improvements and asset impairments	4,482		—			(4,482		)	—
Total	$	91,824	$	(17,816	)	$	(4,482	)	$	69,526

In 2003, the lease restructuring and other operating lease expense included $78.7 million of lease restructuring expense and $6.0 million of lease operating expense incurred prior to the decision not to occupy the Kendall Square Facility. The restructuring accrual as of December 31, 2003 related only to the lease restructuring expense.

The activity related to restructuring for 2004 through 2012 was as follows:



	2012			2011			2010			2004-2012
	(in thousands)
Liability, beginning of the period	$	26,313		$	29,595		$	34,017		$	69,526
Cash payments	(14,853		)	(14,904		)	(14,759		)	(163,697		)
Cash received from subleases	10,024			9,548			8,836			65,038
Credit for portion of facility Vertex decided to occupy in 2005	—			—			—			(10,018		)
Restructuring expense	1,844			2,074			1,501			62,479
Liability, end of the period	$	23,328		$	26,313		$	29,595		$	23,328

In each period, the Company records lease restructuring expense attributable to imputed interest related to the restructuring liability. In certain periods, the restructuring expense also reflects the revision of certain key estimates and assumptions about building operating expenses and sublease income.

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

Compensation and Retirement Disclosure [Abstract]

Employee Benefits

12 Months Ended

Dec. 31, 2012

Employee Benefits

The Company has a 401(k) retirement plan (the “Vertex 401(k) Plan”) in which substantially all of its permanent U.S. employees are eligible to participate. Participants may contribute up to 60% of their annual compensation to the Vertex 401(k) Plan, subject to statutory limitations. The Company may declare discretionary matching contributions to the Vertex 401(k) Plan that are payable in Vertex common stock. The match is paid in the form of fully vested interests in a Vertex common stock fund. Employees have the ability to transfer funds from the stock fund invested in Vertex common stock, subject to certain restrictions. As of December 31, 2012, 854,000 shares of common stock remained available for grant under the Vertex 401(k) Plan. The Company declared matching contributions to the Vertex 401(k) Plan as follows:



	2012		2011		2010
	(in thousands)
Discretionary matching contributions during the year ended December 31,	$	10,261	$	8,619	$	6,552
Shares issued during the year ended December 31,	242		183		174
Shares issuable as of the year ended December 31,	53		62		42

The entire disclosure for pension and other postretirement benefits.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
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Commitments

12 Months Ended

Dec. 31, 2012

Commitments

Commitments

The Company leases its facilities and certain equipment and software. The Company’s facility leases have terms through 2028. The leases of the Company’s current primary facilities in Cambridge were extended in 2009 through December 2015. In 2011, the Company entered into leases for buildings being constructed at Fan Pier in Boston, Massachusetts, which will become the Company's new corporate headquarters. The Company expects to commence lease payments in December 2013 and to make payments for the period ending 15 years from the commencement date. The Company has an option to extend the term of the Fan Pier Leases for an additional ten years. Please refer to Note H, "Fan Pier Leases," for additional information regarding this commitment.

The term of the Kendall Square Lease began on January 1, 2003. The Company occupies and uses for its operations approximately 120,000 square feet of the Kendall Square Facility. The Company has sublease arrangements in place for the remaining rentable square footage of the Kendall Square Facility, with terms that expire in April 2015 and August 2015. Rent payments pursuant to the Kendall Square Lease will be subject to increase in May 2013, based on changes in an inflation index. These increases are treated as contingent rentals. The Kendall Square Lease will expire in 2018, and the Company has the option to extend the term for two consecutive terms of 10 years each. Please refer to Note Q, "Restructuring Expense," for further information.

As of December 31, 2012, future minimum commitments under the Fan Pier Leases, facility operating leases with terms of more than one year and expected sublease income under the Company’s subleases for the Kendall Square Facility were as follows:



Year	Fan Pier Leases		Kendall Square Lease		Kendall Sublease Income			Other Operating Leases		Total Lease Commitments (Net of Sublease Income)
	(in thousands)
2013	$	83,304	$	18,338	$	(8,495	)	$	43,165	$	136,312
2014	67,206		18,338		(8,495		)	35,375		112,424
2015	67,206		18,338		(3,976		)	27,909		109,477
2016	67,206		18,338		—			9,916		95,460
2017	67,206		18,338		—			8,904		94,448
Thereafter	814,404		6,113		—			30,610		851,127
Total minimum lease payments	$	1,166,532	$	97,803	$	(20,966	)	$	155,879	$	1,399,248

During 2012, 2011 and 2010, rental expense was $57.1 million, $49.4 million and $46.6 million, respectively, of which $11.6 million, $11.2 million and $11.6 million, respectively, related to the Kendall Square Facility and $6.6 million, $3.9 million and $0, respectively, related to the Fan Pier land lease. Please refer to Note H, "Fan Pier Leases," for further information.

In 2012, the Company entered into various agreements for the lease of equipment and software licenses, expiring in 2015. The leases were accounted for as capital leases. The capital leases bear interest at rates of approximately 4% per year. The following table sets forth the Company’s future minimum payments due under capital leases as of December 31, 2012:



Year	(in thousands)
2013	$	14,502
2014	9,005
2015	6,537
Total payments	30,044
Less: amount representing interest	(1,167		)
Present value of payments	$	28,877

In addition, the Company has committed to make potential future milestone and royalty payments pursuant to the Alios Agreement. Payments generally become due and payable upon the achievement of certain developmental, regulatory and/or commercial milestones. Please refer to Note B, "Collaborative Arrangements," for further information.

In September 2010, the Company issued $400.0 million in aggregate principal of 2015 Notes. Please refer to Note K, "Convertible Senior Subordinated Notes," for further information.

Legal Proceedings

12 Months Ended

Dec. 31, 2012

Legal Proceedings [Abstract]

Legal Proceedings


	Legal Proceedings

On September 6, 2012, a purported shareholder class action, City of Bristol Pension Fund v. Vertex Pharmaceuticals Incorporated, et al., was filed in the United States District Court for the District of Massachusetts, naming the Company and certain of the Company's current and former officers and directors of the Company as defendants. The lawsuit alleges that the Company made material misrepresentations and/or omissions of material fact in the Company's disclosures during the period from May 7, 2012 through June 28, 2012, all in violation of Section 10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. By order dated December 12, 2012, the court appointed the City of Bristol lead plaintiff and appointed the City of Bristol's attorneys lead counsel. The plaintiffs filed an amended complaint on February 11, 2013. The plaintiffs seek unspecified monetary damages on behalf of the putative class and an award of costs and expenses, including attorney's fees, as well as disgorgement of the proceeds from certain individual defendants' sales of our common stock. The Company believes that this action is without merit and intends to defend it vigorously. As of December 31, 2012, the Company has not recorded any reserves for this purported class action.

Contingencies	12 Months Ended
Contingencies	Dec. 31, 2012
Commitments and Contingencies Disclosure [Abstract]
Contingencies	Contingencies The Company has certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a reserve for contingent liabilities when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. There were no material contingent liabilities accrued as of December 31, 2012 or 2011.

Guarantees	12 Months Ended
Guarantees	Dec. 31, 2012
Guarantees [Abstract]
Guarantees	Guarantees As permitted under Massachusetts law, the Company’s Articles of Organization and By-laws provide that the Company will indemnify certain of its officers and directors for certain claims asserted against them in connection with their service as an officer or director. The maximum potential amount of future payments that the Company could be required to make under these indemnification provisions is unlimited. However, the Company has purchased directors’ and officers’ liability insurance policies that could reduce its monetary exposure and enable it to recover a portion of any future amounts paid. No indemnification claims currently are outstanding, and the Company believes the estimated fair value of these indemnification arrangements is minimal. The Company customarily agrees in the ordinary course of its business to indemnification provisions in agreements with clinical trial investigators and sites in its drug development programs, sponsored research agreements with academic and not-for-profit institutions, various comparable agreements involving parties performing services for the Company, and its real estate leases. The Company also customarily agrees to certain indemnification provisions in its drug discovery, development and commercialization collaboration agreements. With respect to the Company’s clinical trials and sponsored research agreements, these indemnification provisions typically apply to any claim asserted against the investigator or the investigator’s institution relating to personal injury or property damage, violations of law or certain breaches of the Company’s contractual obligations arising out of the research or clinical testing of the Company’s compounds or drug candidates. With respect to lease agreements, the indemnification provisions typically apply to claims asserted against the landlord relating to personal injury or property damage caused by the Company, to violations of law by the Company or to certain breaches of the Company’s contractual obligations. The indemnification provisions appearing in the Company’s collaboration agreements are similar to those for the other agreements discussed above, but in addition provide some limited indemnification for its collaborator in the event of third-party claims alleging infringement of intellectual property rights. In each of the cases above, the indemnification obligation generally survives the termination of the agreement for some extended period, although the Company believes the obligation typically has the most relevance during the contract term and for a short period of time thereafter. The maximum potential amount of future payments that the Company could be required to make under these provisions is generally unlimited. The Company has purchased insurance policies covering personal injury, property damage and general liability that reduce its exposure for indemnification and would enable it in many cases to recover all or a portion of any future amounts paid. The Company has never paid any material amounts to defend lawsuits or settle claims related to these indemnification provisions. Accordingly, the Company believes the estimated fair value of these indemnification arrangements is minimal. The Company entered into an underwriting agreement with Merrill Lynch, Pierce, Fenner & Smith Incorporated dated September 23, 2010 (the “Underwriting Agreement”), relating to the public offering and sale of the 2015 Notes. The Underwriting Agreement requires the Company to indemnify the underwriter against any loss it may suffer by reason of the Company’s breach of any representation or warranty relating to the public offering, the Company’s failure to perform certain covenants in the Underwriting Agreement, the inclusion of any untrue statement of material fact in the prospectus used in connection with the offering, the omission of any material fact needed to make those materials not misleading, and any actions taken by the Company or its representatives in connection with the offering. The representations, warranties, covenants and indemnification provisions in the Underwriting Agreement are of a type customary in agreements of this sort. The Company believes the estimated fair value of this indemnification arrangement is minimal.

Segment Information

12 Months Ended

Dec. 31, 2012

Segment Reporting [Abstract]

Segment Information

The Company operates in one segment, pharmaceuticals. Enterprise-wide disclosures about revenues, significant customers, and property and equipment, net by location are presented below.

Revenues by Product

Product revenues, net consisted of the following:



	2012		2011		2010
	(in thousands)
INCIVEK	$	1,161,813	$	950,889	$	—
KALYDECO	171,645		—		—
Total product revenues, net	$	1,333,458	$	950,889	$	—

Revenues by Geographic Location

The following table summarizes total revenues from external customers and collaborators by geographic region. Product revenues are attributed to countries based on the location of the customer. Collaborative revenues are attributed to the operations of the Company in the United States. Royalty revenues are attributed to countries based on the location of the collaborator.



	2012		2011		2010
	(in thousands)
United States	$	1,373,516	$	1,389,568	$	143,370
Outside of the United States
Europe	129,786		20,289		—
Other	23,740		769		—
Total revenues outside of the United States	153,526		21,058		—
Total revenues	$	1,527,042	$	1,410,626	$	143,370

Significant Customers

The following table summarizes gross revenues and accounts receivable from each of the Company’s customers who individually accounted for 10% or more of total gross revenues and/or 10% or more of total accounts receivable:



	Percent of Total Gross Revenues						Percent of Accounts Receivable
	Year Ended December 31,						As of December 31,
	2012		2011		2010		2012		2011
AmerisourceBergen Drug Corporation	32	%	25	%	—	%	22	%	35	%
McKesson Corporation	29	%	24	%	—	%	26	%	30	%
Cardinal Health Incorporated	15	%	15	%	—	%	<10	%	20	%
Janssen	<10	%	19	%	21	%	26	%	10	%
Mitsubishi Tanabe	<10	%	<10	%	57	%	—	%	<10	%

Property and Equipment, Net by Location

The following table summarizes property and equipment, net by location:



	As of December 31,
	2012		2011
	(in thousands)
United States	$	400,102	$	109,480
Outside of the United States
United Kingdom	30,622		21,377
Other	2,885		2,319
Total property and equipment, net outside of the United States	33,507		23,696
Total property and equipment, net	$	433,609	$	133,176

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Data (unaudited)

12 Months Ended

Dec. 31, 2012

Quarterly Financial Data (unaudited)



	Three Months Ended
	March 31, 2012			June 30, 2012 (1)			Sept. 30, 2012			Dec. 31, 2012 (2)
	(in thousands, except per share amounts)
Revenues:
Product revenues, net	$	375,375		$	373,273		$	303,501		$	281,309
Royalty revenues	38,981			33,480			25,586			43,451
Collaborative revenues	24,381			11,552			6,919			9,234
Total revenues	438,737			418,305			336,006			333,994
Costs and expenses:
Cost of product revenues	25,918			104,549			30,680			75,595
Royalty expenses	13,293			9,874			7,856			12,120
Research and development expenses	196,371			196,544			200,161			213,109
Sales, general and administrative expenses	111,146			117,514			97,684			110,452
Restructuring expense (credit)	360			594			696			194
Intangible asset impairment charge	—			—			—			—
Total costs and expenses	347,088			429,075			337,077			411,470
Income (loss) from operations	91,649			(10,770		)	(1,071		)	(77,476		)
Interest income	364			560			519			497
Interest expense	(4,105		)	(4,195		)	(4,560		)	(3,793		)
Change in fair value of derivative instruments	—			—			—			—
Income (loss) before provision for (benefit from) income taxes	87,908			(14,405		)	(5,112		)	(80,772		)
Provision for (benefit from) income taxes	32			20,063			21,355			(2,696		)
Net income (loss)	87,876			(34,468		)	(26,467		)	(78,076		)
Net loss (income) attributable to noncontrolling interest (Alios)	3,714			(30,463		)	(31,076		)	1,928
Net income (loss) attributable to Vertex	$	91,590		$	(64,931	)	$	(57,543	)	$	(76,148	)
Net income (loss) per share attributable to Vertex common shareholders:
Basic	$	0.44		$	(0.31	)	$	(0.27	)	$	(0.35	)
Diluted	$	0.43		$	(0.31	)	$	(0.27	)	$	(0.35	)
Shares used in per share calculations:
Basic	208,018			211,344			213,767			214,607
Diluted	219,264			211,344			213,767			214,607



	Three Months Ended
	March 31, 2011			June 30, 2011			Sept. 30, 2011 (3)			Dec. 31, 2011
	(in thousands, except per share amounts)
Revenues:
Product revenues, net	$	—		$	74,535		$	419,595		$	456,759
Royalty revenues	6,061			10,010			8,539			25,405
Collaborative revenues	67,601			29,879			231,066			81,176
Total revenues	73,662			114,424			659,200			563,340
Costs and expenses:
Cost of product revenues	—			5,404			35,285			22,936
Royalty expenses	2,666			3,902			3,121			7,191
Research and development expenses	158,612			173,604			189,052			186,438
Sales, general and administrative expenses	71,523			96,663			110,654			121,881
Restructuring expense (credit)	760			741			(419		)	992
Intangible asset impairment charge	—			—			105,800			—
Total costs and expenses	233,561			280,314			443,493			339,438
Income (loss) from operations	(159,899		)	(165,890		)	215,707			223,902
Interest income	1,402			202			77			197
Interest expense	(12,001		)	(6,962		)	(7,059		)	(12,430		)
Change in fair value of derivative instruments	(5,598		)	(2,220		)	(8,115		)	(868		)
Income (loss) before provision for (benefit from) income taxes	(176,096		)	(174,870		)	200,610			210,801
Provision for (benefit from) income taxes	—			24,448			(27,842		)	22,660
Net income (loss)	(176,096		)	(199,318		)	228,452			188,141
Net loss (income) attributable to noncontrolling interest (Alios)	—			25,249			(7,342		)	(29,512		)
Net income (loss) attributable to Vertex	$	(176,096	)	$	(174,069	)	$	221,110		$	158,629
Net income (loss) per share attributable to Vertex common shareholders:
Basic	$	(0.87	)	$	(0.85	)	$	1.06		$	0.76
Diluted	$	(0.87	)	$	(0.85	)	$	1.02		$	0.74
Shares used in per share calculations:
Basic	202,329			204,413			206,002			206,758
Diluted	202,329			204,413			219,349			217,602

(1)

During the second quarter of 2012, the Company recorded within cost of product revenues a lower of cost or market charge of $78.0 million for excess and obsolete INCIVEK inventories. This charge affected net income (loss) attributable to Vertex per diluted share, net of tax, by $(0.36) for the second quarter of 2012, resulting in a net loss attributable to Vertex per diluted share in the second quarter of 2012. See Note F, "Inventories," for further information.


(2)	During the fourth quarter of 2012, the Company recorded within cost of product revenues a lower of cost or market charge of $55.2 million for excess and obsolete INCIVEK inventories. This charge resulted in a $0.25 increase in the net loss attributable to Vertex per diluted share for the fourth quarter of 2012. See Note F, "Inventories," for further information.


(3)	During the third quarter of 2011, the Company recorded an impairment charge of $105.8 million. In connection with this impairment charge, the Company recorded a benefit from income taxes of $32.7 million resulting in a net decrease in net income attributable to Vertex related to this impairment charge of $73.1 million in the third quarter of 2011.

The entire disclosure for the quarterly financial data in the annual financial statements. The disclosure may include a tabular presentation of financial information for each fiscal quarter for the current and previous year, including revenues, gross profit, income or loss before extraordinary items and earnings per share data. It also includes an indication if the information in the note is unaudited, comments on the aggregate effect of year-end adjustments, and an explanation of matters or transactions that affect comparability or are pertinent to an understanding of the information furnished.

Concentration of Credit Risk

Nature of Business and Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

Basis of Presentation

Use of Estimates

Revenue Recognition

Product Revenues, Net

The following table summarizes activity in each of the product revenue allowance and reserve categories for the years ended December 31, 2012 and 2011:



	Trade Allowances			Rebates, Chargebacks and Discounts			Product Returns			Other Incentives			Total
	(in thousands)
2012
Beginning Balance	$	11,162		$	52,659		$	340		$	5,202		$	69,363
Provision related to current period sales	55,913			216,942			2,067			19,103			294,025
Adjustments related to prior period sales	29			3,883			1,498			72			5,482
Credits/payments made	(61,688		)	(209,924		)	(1,053		)	(20,812		)	(293,477		)
Ending Balance	$	5,416		$	63,560		$	2,852		$	3,565		$	75,393

2011
Beginning Balance	$	—		$	—		$	—		$	—		$	—
Provision related to current period sales	38,228			75,145			553			9,692			123,618
Credits/payments made	(27,066		)	(22,486		)	(213		)	(4,490		)	(54,255		)
Ending Balance	$	11,162		$	52,659		$	340		$	5,202		$	69,363

Royalty Revenues

Collaborative Revenues

Agreements Entered into prior to January 1, 2011

Up-front License Fees

Milestone Payments

Research and Development Activities/Manufacturing Services

Agreements Entered into or Materially Modified on or after January 1, 2011

Cash and Cash Equivalents

Restricted Cash

Marketable Securities

Stock-based Compensation Expense

Research and Development Expenses

Advertising Expenses

Financial Transaction Expenses

Property and Equipment

Capital Leases

Income Taxes

Business Combinations

Variable Interest Entities

Fair Value of In-Process Research and Development Asset and Contingent payments in Business Combinations

Fair Value of In-process Research and Development Assets and Contingent Payments in Business Combinations

In-process Research and Development Assets

Derivative Instruments and Embedded Derivatives

Restructuring Expense

Comprehensive Income (Loss)

Foreign Currency Translation and Transactions

Net Income (Loss) Per Share Attributable to Vertex Common Stockholders

Net Income (Loss) Per Share Attributable to Vertex Common Shareholders

Recent Accounting Pronouncements

The Company did not adopt any new accounting pronouncements during 2012 that had a material effect on the Company’s consolidated financial statements.

Nature of Business and Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

Schedule of product revenues allowances and reserve categories

The following table summarizes activity in each of the product revenue allowance and reserve categories for the years ended December 31, 2012 and 2011:



	Trade Allowances			Rebates, Chargebacks and Discounts			Product Returns			Other Incentives			Total
	(in thousands)
2012
Beginning Balance	$	11,162		$	52,659		$	340		$	5,202		$	69,363
Provision related to current period sales	55,913			216,942			2,067			19,103			294,025
Adjustments related to prior period sales	29			3,883			1,498			72			5,482
Credits/payments made	(61,688		)	(209,924		)	(1,053		)	(20,812		)	(293,477		)
Ending Balance	$	5,416		$	63,560		$	2,852		$	3,565		$	75,393

2011
Beginning Balance	$	—		$	—		$	—		$	—		$	—
Provision related to current period sales	38,228			75,145			553			9,692			123,618
Credits/payments made	(27,066		)	(22,486		)	(213		)	(4,490		)	(54,255		)
Ending Balance	$	11,162		$	52,659		$	340		$	5,202		$	69,363

Collaborative Arrangements (Tables)

12 Months Ended

Dec. 31, 2012

Collaborative Arrangements

Collaborator revenues

During the three years ended December 31, 2012, the Company recognized the following revenues attributable to the Janssen collaboration:



	2012			2011			2010
	(in thousands)
Royalty revenues	$	117,592		$	20,289		$	—
Collaborative revenues:
Amortized portion of up-front payment	$	12,428		$	12,428		$	12,428
Milestone revenues	—			250,000			—
Net reimbursement (payment) for telaprevir development costs	(3,507		)	(8,418		)	9,245
Reimbursement for manufacturing services	7,257			20,383			9,077
Total collaborative revenues attributable to the Janssen collaboration	$	16,178		$	274,393		$	30,750
Total revenues attributable to the Janssen collaboration	$	133,770		$	294,682		$	30,750

During the three years ended December 31, 2012, the Company recognized the following collaborative revenues attributable to the Mitsubishi Tanabe collaboration:



	2012		2011		2010
	(in thousands)
Amortized portion of up-front payments	$	12,744	$	38,232	$	38,232
Milestone revenues	485		68,515		—
Payments for manufacturing services	5,650		14,928		43,636
Total collaborative revenues attributable to the Mitsubishi Tanabe collaboration	$	18,879	$	121,675	$	81,868

Summary of activity related to net loss (income) attributable to noncontrolling interest (Alios)

A summary of net loss (income) attributable to noncontrolling interest (Alios) for the two years ended December 31, 2012 is as follows:



	2012			2011
	(in thousands)
Loss (income) before provision for (benefit from) income taxes	$	20,044		$	9,536
Decrease (increase) in fair value of contingent milestone and royalty payments	(114,970		)	(69,950		)
Provision for (benefit from) income taxes	39,029			48,809
Net loss (income) attributable to noncontrolling interest (Alios)	$	(55,897	)	$	(11,605	)

Summary of Alios' items included in the Company's consolidated balance sheets

Alios Balance Sheet Information

The following table summarizes items related to Alios included in the Company’s consolidated balance sheets:



	As of December 31,
	2012		2011
	(in thousands)
Restricted cash and cash equivalents (Alios)	$	69,983	$	51,878
Prepaid expenses and other current assets	672		2,299
Property and equipment, net	1,728		1,925
Intangible assets	250,600		250,600
Goodwill	4,890		4,890
Other assets	861		133
Accounts payable	1,054		4,132
Accrued expenses	6,099		4,304
Income taxes payable (Alios)	715		12,075
Deferred tax liability	152,781		116,121
Other liabilities, excluding current portion	910		1,030
Redeemable noncontrolling interest (Alios)	38,530		37,036
Noncontrolling interest (Alios)	196,672		141,633

Net Income (Loss) Per Share Attributable to Vertex Common Shareholders (Tables)

12 Months Ended

Dec. 31, 2012

Earnings Per Share [Abstract]

Calculation of net income (loss) per basic and diluted share

The following table sets forth the computation of basic and diluted net income (loss) per share for the three years ended December 31, 2012:



	2012			2011			2010
	(in thousands, except per share amounts)
Basic net income (loss) attributable to Vertex per common share calculation:
Net income (loss) attributable to Vertex common shareholders	$	(107,032	)	$	29,574		$	(754,626	)
Less: Undistributed earnings allocated to participating securities	—			(291		)	—
Net income (loss) attributable to Vertex common shareholders—basic	$	(107,032	)	$	29,283		$	(754,626	)
Basic weighted-average common shares outstanding	211,946			204,891			200,402
Basic net income (loss) attributable to Vertex per common share	$	(0.50	)	$	0.14		$	(3.77	)
Diluted net income (loss) attributable to Vertex per common share calculation:
Net income (loss) attributable to Vertex common shareholders	$	(107,032	)	$	29,574		$	(754,626	)
Less: Undistributed earnings allocated to participating securities	—			(285		)	—
Net income (loss) attributable to Vertex common shareholders—diluted	$	(107,032	)	$	29,289		$	(754,626	)
Weighted-average shares used to compute basic net income (loss) per common share	211,946			204,891			200,402
Effect of potentially dilutive securities:
Stock options	—			3,863			—
Other	—			53			—
Weighted-average shares used to compute diluted net income (loss) per common share	211,946			208,807			200,402
Diluted net income (loss) attributable to Vertex per common share	$	(0.50	)	$	0.14		$	(3.77	)

Potential gross common equivalent shares



	2012	2011	2010
	(in thousands)
Stock options	19,726	9,626	21,293
Convertible senior subordinated notes	8,192	8,192	8,192
Unvested restricted stock and restricted stock units	2,350	8	1,950

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

Financial assets subject to fair value measurements (excluding restricted cash and cash equivalents (Alios))

The following table sets forth the Company’s financial assets (excluding Alios’ cash equivalents) subject to fair value measurements:



	Fair Value Measurements as of December 31, 2012
			Fair Value Hierarchy
	Total		Level 1		Level 2		Level 3
	(in thousands)
Financial assets carried at fair value:
Cash equivalents:
Money market funds	$	268,463	$	268,463	$	—	$	—
Marketable securities:
U.S. Treasury securities	111,350		111,350		—		—
Government-sponsored enterprise securities	440,225		440,225		—		—
Commercial paper	225,449		—		225,449		—
Corporate debt securities	54,784		—		54,784		—
Restricted cash	31,934		31,934		—		—
Total	$	1,132,205	$	851,972	$	280,233	$	—

Marketable Securities (Tables)

12 Months Ended

Dec. 31, 2012

Cash and Cash Equivalents [Abstract]

Summary of cash, cash equivalents and marketable securities

A summary of the Company’s cash, cash equivalents and marketable securities is shown below:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
December 31, 2012
Cash and cash equivalents:
Cash and money market funds	$	489,407	$	—	$	—		$	489,407
Total cash and cash equivalents	$	489,407	$	—	$	—		$	489,407
Marketable securities:
U.S. Treasury securities (due within 1 year)	$	111,350	$	2	$	(2	)	$	111,350
Government-sponsored enterprise securities (due within 1 year)	440,181		49		(5		)	440,225
Commercial paper (due within 1 year)	225,294		155		—			225,449
Corporate debt securities (due within 1 year)	15,429		1		(1		)	15,429
Corporate debt securities (due after 1 year through 5 years)	39,358		10		(13		)	39,355
Total marketable securities	$	831,612	$	217	$	(21	)	$	831,808
Total cash, cash equivalents and marketable securities	$	1,321,019	$	217	$	(21	)	$	1,321,215
December 31, 2011
Cash and cash equivalents:
Cash and money market funds	$	362,035	$	—	$	—		$	362,035
Government-sponsored enterprise securities	113,302		—		(17		)	113,285
Total cash and cash equivalents	$	475,337	$	—	$	(17	)	$	475,320
Marketable securities:
U.S. Treasury securities (due within 1 year)	$	22,105	$	2	$	—		$	22,107
Government-sponsored enterprise securities (due within 1 year)	471,589		8		(102		)	471,495
Total marketable securities	$	493,694	$	10	$	(102	)	$	493,602
Total cash, cash equivalents and marketable securities	$	969,031	$	10	$	(119	)	$	968,922

Inventories (Tables)

12 Months Ended

Dec. 31, 2012

Inventory Disclosure [Abstract]

Schedule of Inventories by Product



	As of December 31,
	2012		2011
	(in thousands)
INCIVEK	$	22,792	$	112,430
KALYDECO	7,672		—
Total	$	30,464	$	112,430

Schedule of Inventories by Type



	As of December 31,
	2012		2011
	(in thousands)
Raw materials	$	3,754	$	32,213
Work-in-process	11,317		47,010
Finished goods	15,393		33,207
Total	$	30,464	$	112,430

Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2012

Property, Plant and Equipment [Abstract]

Schedule of Property and equipment

Property and equipment, net consisted of the following:



	As of December 31,
	2012			2011
	(in thousands)
Furniture and equipment	$	173,766		$	151,961
Leasehold improvements	123,770			107,169
Software	101,276			56,923
Computers	40,779			33,116
Construction-in-process	290,703			55,070
Total property and equipment, gross	730,294			404,239
Less: accumulated depreciation	(296,685		)	(271,063		)
Total property and equipment, net	$	433,609		$	133,176

Accrued Expenses (Tables)

12 Months Ended

Dec. 31, 2012

Payables and Accruals [Abstract]

Accrued expenses and other current liabilities

Accrued expenses consisted of the following:



	As of December 31,
	2012		2011
	(in thousands)
Research, development and commercial contract costs	$	63,960	$	66,426
Payroll and benefits	62,140		57,453
Product revenue allowances	69,936		58,201
Royalty payable	29,007		28,603
Unrecognized tax benefits	4,106		4,360
Interest	3,395		3,363
Professional fees	11,226		12,785
Other	21,114		11,996
Total	$	264,884	$	243,187

Common Stock, Preferred Stock and Equity Plans (Tables)

12 Months Ended

Dec. 31, 2012

Common Stock, Preferred Stock and Equity Plans

Stock and Stock Option Equity Plans

he following table contains information about the Company’s equity plans:



			As of December 31, 2012
Title of Plan	Group Eligible	Type of Award Granted	Awards Outstanding	Additional Awards Authorized for Grant
2006 Stock and Option Plan	Employees, Non-employee Directors and Consultants	NSO, ISO, RS and RSU	20,551,584	5,751,677
1996 Stock and Option Plan	Employees, Non-employee Directors, Advisors and Consultants	NSO, ISO and RS	1,524,010	—
Total			22,075,594	5,751,677

Outstanding and vested options

The following table summarizes information related to the outstanding and exercisable options during the year ended December 31, 2012:



	Stock Options		Weighted-average Exercise Price		Weighted-average Remaining Contractual Life	Aggregate Intrinsic Value
	(in thousands)		(per share)		(in years)	(in thousands)
Outstanding at December 31, 2011	20,923		$	34.23
Granted	6,043		43.80
Exercised	(5,856	)	29.51
Forfeited	(1,310	)	41.01
Expired	(74	)	39.47
Outstanding at December 31, 2012	19,726		$	38.09	7.15	$	107,016
Exercisable at December 31, 2012	10,849		$	34.54	5.93	$	84,297
Total exercisable or expected to vest at December 31, 2012	18,782		$	37.83	7.06	$	104,931

Stock options outstanding and exercisable

The following table summarizes information about stock options outstanding and exercisable at December 31, 2012:



	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted-average Remaining Contractual Life	Weighted-average Exercise Price		Number Exercisable	Weighted-average Exercise Price
	(in thousands)	(in years)	(per share)		(in thousands)	(per share)
$ 9.07–$20.00	1,000	3.12	$	15.38	1,000	$	15.38
$20.01–$30.00	1,415	6.35	$	29.30	1,039	$	29.11
$30.01–$40.00	12,590	6.86	$	36.09	7,770	$	35.29
$40.01–$50.00	2,331	9.32	$	48.04	216	$	46.92
$50.01–$60.00	2,328	8.68	$	53.41	816	$	54.18
$60.01–$64.30	62	9.34	$	63.17	8	$	63.14

Restricted stock activity

The following table summarizes the restricted stock activity of the Company during the year ended December 31, 2012:



	Restricted Stock		Weighted-average Grant-date Fair Value
	(in thousands)		(per share)
Unvested at December 31, 2011	2,100		$	37.13
Granted	1,428		45.46
Vested	(998	)	35.11
Cancelled	(260	)	40.09
Unvested at December 31, 2012	2,270		$	42.92

Shares issued under Employee Stock Purchase Plan

2012, the following shares were issued to employees under the ESPP:



	Year Ended December 31, 2012
	(in thousands, except per share amount)
Number of shares	702
Average price paid per share		$26.71

Stock-based Compensation Expense (Tables)

12 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-based compensation expense by line item

The effect of stock-based compensation expense during the three years ended December 31, 2012 was as follows:



	2012		2011		2010
	(in thousands)
Stock-based compensation expense by line item:
Research and development expenses	$	71,533	$	75,574	$	65,198
Sales, general and administrative expenses	42,752		42,652		25,926
Total stock-based compensation expense included in costs and expenses	$	114,285	$	118,226	$	91,124

Stock-based compensation expense by type of award

The stock-based compensation expense by type of award during the three years ended December 31, 2012 was as follows:



	2012			2011			2010
	(in thousands)
Stock-based compensation expense by type of award:
Stock options	$	79,047		$	83,098		$	64,005
Restricted stock and restricted stock units	29,194			30,708			22,960
ESPP share issuances	7,298			5,462			4,159
Less stock-based compensation expense capitalized to inventories	(1,254		)	(1,042		)	—
Total stock-based compensation expense included in costs and expenses	$	114,285		$	118,226		$	91,124

Unrecognized stock-based compensation expense, net of estimated forfeitures



	As of December 31, 2012
	Unrecognized Expense Net of Estimated Forfeitures	Weighted-average Recognition Period
	(in thousands)	(in years)
Type of award:
Stock options	$156,225	2.69
Restricted stock and restricted stock units	68,094	2.58
ESPP share issuances	5,661	0.65

Schedule of assumptions used to estimate the grant date fair value of options

The fair value of each option granted during 2012, 2011 and 2010 was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:



	2012		2011		2010
Expected stock price volatility	47.93	%	49.53	%	52.17	%
Risk-free interest rate	0.95	%	2.09	%	2.44	%
Expected term of options (in years)	5.78		5.74		5.71
Expected annual dividends	—		—		—

Schedule of assumptions used to estimate the grant date fair value employee stock purchase plan

he following table reflects the weighted-average assumptions used in the Black-Scholes option pricing model for 2012, 2011 and 2010:



	2012		2011		2010
Expected stock price volatility	46.90	%	51.32	%	43.92	%
Risk-free interest rate	0.16	%	0.08	%	0.24	%
Expected term (in years)	0.74		0.72		0.71
Expected annual dividends	—		—		—

Tabular disclosure of components of a stock option or other award plan under which equity-based compensation is awarded to employees, typically comprised of the amount of unearned compensation (deferred compensation cost), compensation expense, and changes in the quantity and fair value of the shares (or other type of equity) granted, exercised, forfeited, and issued and outstanding pertaining to that plan. Disclosure may also include nature and general terms of such arrangements that existed during the period and potential effects of those arrangements on shareholders, effect of compensation cost arising from equity-based payment arrangements on the income statement, method of estimating the fair value of the goods or services received, or the fair value of the equity instruments granted, during the period, cash flow effects resulting from equity-based payment arrangements and, for registrants that accelerate vesting of out of the money share options, reasons for the decision to accelerate.

Tabular disclosure of the allocation of equity-based compensation costs to a given line item on the balance sheet and income statement for the period. This may include the reporting line for the costs and the amount capitalized and expensed.

September 2009 Financial Transactions

September 2009 Financial Transactions (Tables)

12 Months Ended

Dec. 31, 2012

Expenses and Losses (Gains) Related to September 2009 Financial Transactions

The table below sets forth the total expenses related to the September 2009 financial transactions for 2012, 2011 and 2010:



	2012		2011			2010
	(in thousands)
Expenses and Losses (Gains):
Interest expense related to 2012 Notes	$	—	$	21,687		$	15,068
Change in fair value of embedded derivative related to 2012 Notes	—		(400		)	1,637
Change in fair value of free-standing derivatives related to the sale of milestone payments	—		17,201			39,592
Total September 2009 financial transaction expenses	$	—	$	38,488		$	56,297

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Schedule of components of income (loss) before provision for (benefit from) income taxes

The components of income (loss) before provision for (benefit from) income taxes during the three years ended December 31, 2012 consisted of the following:



	2012			2011			2010
	(in thousands)
United States	$	256,816		$	343,515		$	(719,859	)
Foreign	(269,197		)	(283,070		)	(34,767		)
Income (loss) before provision for (benefit from) income taxes	$	(12,381	)	$	60,445		$	(754,626	)

Schedule of components of provision for (benefit from) income taxes

The components of provision for (benefit from) income taxes during the three years ended December 31, 2012 consisted of the following:



	2012			2011			2010
	(in thousands)
Current taxes:
United States	$	2,057		$	22,275		$	—
Foreign	(1,865		)	(561		)	—
State	1,902			8,655			—
Total current taxes	$	2,094		$	30,369		$	—
Deferred taxes:
United States	$	31,308		$	19,629		$	—
Foreign	—			(32,692		)	—
State	5,352			1,960			—
Total deferred taxes	$	36,660		$	(11,103	)	$	—
Provision for (benefit from) income taxes	$	38,754		$	19,266		$	—

Reconciliation of the provision for (benefit from) income taxes



	2012			2011			2010
	(in thousands)
Income (loss) before provision for (benefit from) income taxes	$	(12,381	)	$	60,445		$	(754,626	)
Expected tax provision (benefit)	(4,333		)	21,156			(256,574		)
State taxes, net of federal benefit	7,075			10,624			(46,108		)
Foreign rate differential	62,425			43,629			632
Tax credits	(1,980		)	(51,086		)	(23,292		)
Unbenefited operating losses	(30,364		)	(6,286		)	322,551
Non-deductible expenses	3,198			1,953			2,158
Rate change	3,275			—			—
Other	(542		)	(724		)	633
Provision for (benefit from) income taxes	$	38,754		$	19,266		$	—

Schedule of unrecognized tax benefits

Unrecognized tax benefits during the two years ended December 31, 2012 consisted of the following:



	2012			2011
	(in thousands)
Unrecognized tax benefits beginning of year	$	4,360		$	2,374
Gross change for current year positions	598			2,569
Increase for prior period positions	—			—
Decrease for prior period positions	—			—
Decrease due to settlements and payments	—			—
Decrease due to statute limitations	(852		)	(583		)
Unrecognized tax benefits end of year	$	4,106		$	4,360

Schedule of deferred tax assets and liabilities

The components of the deferred taxes were as follows:



	As of December 31,
	2012			2011
	(in thousands)
Deferred tax assets:
Net operating loss	$	777,687		$	870,367
Tax credit carryforwards	147,074			167,759
Property and equipment	10,701			15,537
Intangibles	63,353			71,076
Deferred revenues	44,867			59,939
Stock-based compensation	83,979			90,563
Inventories	56,564			23,883
Accrued expenses	27,945			30,636
Unrealized loss	—			245
Gross deferred tax assets	1,212,170			1,330,005
Valuation allowance	(1,211,561		)	(1,329,775		)
Total deferred tax assets	609			230
Deferred tax liabilities:
Unrealized gain	(376		)	—
Contingent milestone and royalty payment obligation	(50,904		)	(14,241		)
Acquired intangibles	(229,696		)	(229,696		)
Net deferred tax liabilities	$	(280,367	)	$	(243,707	)

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

Restructuring and Related Activities [Abstract]

Restructuring Expense (Tables)

12 Months Ended

Dec. 31, 2012

Restructuring and other liabilities

The activity related to restructuring and other liability for 2003 was as follows:



	Charge in 2003		Cash payments in 2003			Non-cash write-off in 2003			Liability as of December 31, 2003
	(in thousands)
Lease restructuring and other operating lease expense	$	84,726	$	(15,200	)	$	—		$	69,526
Employee severance, benefits and related costs	2,616		(2,616		)	—			—
Leasehold improvements and asset impairments	4,482		—			(4,482		)	—
Total	$	91,824	$	(17,816	)	$	(4,482	)	$	69,526

The activity related to restructuring for 2004 through 2012 was as follows:



	2012			2011			2010			2004-2012
	(in thousands)
Liability, beginning of the period	$	26,313		$	29,595		$	34,017		$	69,526
Cash payments	(14,853		)	(14,904		)	(14,759		)	(163,697		)
Cash received from subleases	10,024			9,548			8,836			65,038
Credit for portion of facility Vertex decided to occupy in 2005	—			—			—			(10,018		)
Restructuring expense	1,844			2,074			1,501			62,479
Liability, end of the period	$	23,328		$	26,313		$	29,595		$	23,328

Employee Benefits (Tables)

12 Months Ended

Dec. 31, 2012

Compensation and Retirement Disclosure [Abstract]

Matching contributions to the Vertex 401(k) Plan

The Company declared matching contributions to the Vertex 401(k) Plan as follows:



	2012		2011		2010
	(in thousands)
Discretionary matching contributions during the year ended December 31,	$	10,261	$	8,619	$	6,552
Shares issued during the year ended December 31,	242		183		174
Shares issuable as of the year ended December 31,	53		62		42

Commitments (Tables)

12 Months Ended

Dec. 31, 2012

Commitments

Future minimum commitments under Fan Pier Leases and facilitiy operating leases with terms of more than one year, net of estimated sublease income



Year	Fan Pier Leases		Kendall Square Lease		Kendall Sublease Income			Other Operating Leases		Total Lease Commitments (Net of Sublease Income)
	(in thousands)
2013	$	83,304	$	18,338	$	(8,495	)	$	43,165	$	136,312
2014	67,206		18,338		(8,495		)	35,375		112,424
2015	67,206		18,338		(3,976		)	27,909		109,477
2016	67,206		18,338		—			9,916		95,460
2017	67,206		18,338		—			8,904		94,448
Thereafter	814,404		6,113		—			30,610		851,127
Total minimum lease payments	$	1,166,532	$	97,803	$	(20,966	)	$	155,879	$	1,399,248

Schedule of future minimum lease payments for capital leases

The following table sets forth the Company’s future minimum payments due under capital leases as of December 31, 2012:



Year	(in thousands)
2013	$	14,502
2014	9,005
2015	6,537
Total payments	30,044
Less: amount representing interest	(1,167		)
Present value of payments	$	28,877

Segment Information (Tables)

12 Months Ended

Dec. 31, 2012

Segment Reporting [Abstract]

Revenues by Product

Product revenues, net consisted of the following:



	2012		2011		2010
	(in thousands)
INCIVEK	$	1,161,813	$	950,889	$	—
KALYDECO	171,645		—		—
Total product revenues, net	$	1,333,458	$	950,889	$	—

Revenues and Property and Equipment by Location



	2012		2011		2010
	(in thousands)
United States	$	1,373,516	$	1,389,568	$	143,370
Outside of the United States
Europe	129,786		20,289		—
Other	23,740		769		—
Total revenues outside of the United States	153,526		21,058		—
Total revenues	$	1,527,042	$	1,410,626	$	143,370

The following table summarizes property and equipment, net by location:



	As of December 31,
	2012		2011
	(in thousands)
United States	$	400,102	$	109,480
Outside of the United States
United Kingdom	30,622		21,377
Other	2,885		2,319
Total property and equipment, net outside of the United States	33,507		23,696
Total property and equipment, net	$	433,609	$	133,176

Significant Customers



	Percent of Total Gross Revenues						Percent of Accounts Receivable
	Year Ended December 31,						As of December 31,
	2012		2011		2010		2012		2011
AmerisourceBergen Drug Corporation	32	%	25	%	—	%	22	%	35	%
McKesson Corporation	29	%	24	%	—	%	26	%	30	%
Cardinal Health Incorporated	15	%	15	%	—	%	<10	%	20	%
Janssen	<10	%	19	%	21	%	26	%	10	%
Mitsubishi Tanabe	<10	%	<10	%	57	%	—	%	<10	%

Tabular disclosure of the nature of a concentration, a benchmark to which it is compared, and the percentage that the risk is to the benchmark.

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Data (unaudited) (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of quarterly financial data



	Three Months Ended
	March 31, 2012			June 30, 2012 (1)			Sept. 30, 2012			Dec. 31, 2012 (2)
	(in thousands, except per share amounts)
Revenues:
Product revenues, net	$	375,375		$	373,273		$	303,501		$	281,309
Royalty revenues	38,981			33,480			25,586			43,451
Collaborative revenues	24,381			11,552			6,919			9,234
Total revenues	438,737			418,305			336,006			333,994
Costs and expenses:
Cost of product revenues	25,918			104,549			30,680			75,595
Royalty expenses	13,293			9,874			7,856			12,120
Research and development expenses	196,371			196,544			200,161			213,109
Sales, general and administrative expenses	111,146			117,514			97,684			110,452
Restructuring expense (credit)	360			594			696			194
Intangible asset impairment charge	—			—			—			—
Total costs and expenses	347,088			429,075			337,077			411,470
Income (loss) from operations	91,649			(10,770		)	(1,071		)	(77,476		)
Interest income	364			560			519			497
Interest expense	(4,105		)	(4,195		)	(4,560		)	(3,793		)
Change in fair value of derivative instruments	—			—			—			—
Income (loss) before provision for (benefit from) income taxes	87,908			(14,405		)	(5,112		)	(80,772		)
Provision for (benefit from) income taxes	32			20,063			21,355			(2,696		)
Net income (loss)	87,876			(34,468		)	(26,467		)	(78,076		)
Net loss (income) attributable to noncontrolling interest (Alios)	3,714			(30,463		)	(31,076		)	1,928
Net income (loss) attributable to Vertex	$	91,590		$	(64,931	)	$	(57,543	)	$	(76,148	)
Net income (loss) per share attributable to Vertex common shareholders:
Basic	$	0.44		$	(0.31	)	$	(0.27	)	$	(0.35	)
Diluted	$	0.43		$	(0.31	)	$	(0.27	)	$	(0.35	)
Shares used in per share calculations:
Basic	208,018			211,344			213,767			214,607
Diluted	219,264			211,344			213,767			214,607



	Three Months Ended
	March 31, 2011			June 30, 2011			Sept. 30, 2011 (3)			Dec. 31, 2011
	(in thousands, except per share amounts)
Revenues:
Product revenues, net	$	—		$	74,535		$	419,595		$	456,759
Royalty revenues	6,061			10,010			8,539			25,405
Collaborative revenues	67,601			29,879			231,066			81,176
Total revenues	73,662			114,424			659,200			563,340
Costs and expenses:
Cost of product revenues	—			5,404			35,285			22,936
Royalty expenses	2,666			3,902			3,121			7,191
Research and development expenses	158,612			173,604			189,052			186,438
Sales, general and administrative expenses	71,523			96,663			110,654			121,881
Restructuring expense (credit)	760			741			(419		)	992
Intangible asset impairment charge	—			—			105,800			—
Total costs and expenses	233,561			280,314			443,493			339,438
Income (loss) from operations	(159,899		)	(165,890		)	215,707			223,902
Interest income	1,402			202			77			197
Interest expense	(12,001		)	(6,962		)	(7,059		)	(12,430		)
Change in fair value of derivative instruments	(5,598		)	(2,220		)	(8,115		)	(868		)
Income (loss) before provision for (benefit from) income taxes	(176,096		)	(174,870		)	200,610			210,801
Provision for (benefit from) income taxes	—			24,448			(27,842		)	22,660
Net income (loss)	(176,096		)	(199,318		)	228,452			188,141
Net loss (income) attributable to noncontrolling interest (Alios)	—			25,249			(7,342		)	(29,512		)
Net income (loss) attributable to Vertex	$	(176,096	)	$	(174,069	)	$	221,110		$	158,629
Net income (loss) per share attributable to Vertex common shareholders:
Basic	$	(0.87	)	$	(0.85	)	$	1.06		$	0.76
Diluted	$	(0.87	)	$	(0.85	)	$	1.02		$	0.74
Shares used in per share calculations:
Basic	202,329			204,413			206,002			206,758
Diluted	202,329			204,413			219,349			217,602

(1)


(2)	During the fourth quarter of 2012, the Company recorded within cost of product revenues a lower of cost or market charge of $55.2 million for excess and obsolete INCIVEK inventories. This charge resulted in a $0.25 increase in the net loss attributable to Vertex per diluted share for the fourth quarter of 2012. See Note F, "Inventories," for further information.


(3)	During the third quarter of 2011, the Company recorded an impairment charge of $105.8 million. In connection with this impairment charge, the Company recorded a benefit from income taxes of $32.7 million resulting in a net decrease in net income attributable to Vertex related to this impairment charge of $73.1 million in the third quarter of 2011.

Nature of Business and Accounting Policies (Details) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2012 USD ($) $ / shares	Sep. 30, 2012 USD ($) $ / shares	Jun. 30, 2012 USD ($) $ / shares	Mar. 31, 2012 USD ($) $ / shares	Dec. 31, 2011 USD ($) $ / shares	Sep. 30, 2011 USD ($) $ / shares	Jun. 30, 2011 USD ($) $ / shares	Mar. 31, 2011 USD ($) $ / shares	Dec. 31, 2012 USD ($) mo product $ / shares	Dec. 31, 2011 USD ($) $ / shares	Dec. 31, 2010 USD ($) $ / shares
Product revenues allowances and reserve categories
Advertising Expenses									$ 58,600	$ 30,800	$ 0
Number of products \| product									2
Net income (loss) attributable to Vertex	$ (76,148)	$ (57,543)	$ (64,931)	$ 91,590	$ 158,629	$ 221,110	$ (174,069)	$ (176,096)	$ (107,032)	$ 29,574	$ (754,626)
Basic EPS \| $ / shares	$ 0.35	$ 0.27	$ 0.31	$ (0.44)	$ (0.76)	$ (1.06)	$ 0.85	$ 0.87	$ 0.50	$ (0.14)	$ 3.77
Cash, cash equivalents and marketable securities	$ 1,300,000								$ 1,300,000
Product revenues, net
Discount rate for payments made within 30 days (percent)									2.00%
Period prior to the labeled expiration date in which distributors have right to return unopened, unprescribed INCIVEK (teleprevir) (in months) \| mo									6
Period after the labeled expiration date in which distributors have right to return unopened, unprescribed INCIVEK (teleprevir) (in months) \| mo									12
Activity related to product revenues allowances and reserve categories
Balance, Beginning of Period				$ 69,363				$ 0	$ 69,363	$ 0
Provision related to current period sales									(294,025)	(123,618)
Adjustments related to prior period sales									5,482
Credits/payments made									(293,477)	(54,255)
Balance, End of Period	75,393				$ 69,363				75,393	69,363	$ 0
Trade allowances
Activity related to product revenues allowances and reserve categories
Balance, Beginning of Period				11,162				0	11,162	0
Provision related to current period sales									(55,913)	(38,228)
Adjustments related to prior period sales									29
Credits/payments made									(61,688)	(27,066)
Balance, End of Period	5,416				11,162				5,416	11,162	0
Rebates, Chargebacks and Discounts
Activity related to product revenues allowances and reserve categories
Balance, Beginning of Period				52,659				0	52,659	0
Provision related to current period sales									(216,942)	(75,145)
Adjustments related to prior period sales									3,883
Credits/payments made									(209,924)	(22,486)
Balance, End of Period	63,560				52,659				63,560	52,659	0
Product Returns
Activity related to product revenues allowances and reserve categories
Balance, Beginning of Period				340				0	340	0
Provision related to current period sales									(2,067)	(553)
Adjustments related to prior period sales									1,498
Credits/payments made									(1,053)	(213)
Balance, End of Period	2,852				340				2,852	340	0
Other Incentives
Activity related to product revenues allowances and reserve categories
Balance, Beginning of Period				$ 5,202				$ 0	5,202	0
Provision related to current period sales									(19,103)	(9,692)
Adjustments related to prior period sales									72
Credits/payments made									(20,812)	(4,490)
Balance, End of Period	$ 3,565				$ 5,202				$ 3,565	$ 5,202	$ 0

Nature of Business and Accounting Policies (Details 2) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Sales, General and Administrative Expenses
Advertising Expenses	$ 58.6	$ 30.8	$ 0.0

Nature of Business and Accounting Policies (Details 3) $ in Millions	12 Months Ended
	Dec. 31, 2012 USD ($) yr	Dec. 31, 2011 USD ($)	Dec. 31, 2010 USD ($)
Foreign Currency Translation
Foreign currency translation adjustment, net of tax \| $	$ 0.7	$ 0.9	$ 1.1
Foreign currency transaction gain (loss), before tax \| $	$ 0.4	$ (0.7)	$ (0.1)
Furniture and equipment
Property and Equipment
Property and equipment useful life, minimum (in years)	4
Property and equipment useful life, maximum (in years)	7
Computers and software
Property and Equipment
Property and equipment useful life, minimum (in years)	3
Property and equipment useful life, maximum (in years)	5

Accumulated adjustment, net of tax, that results from the process of translating subsidiary financial statements and foreign equity investments into the reporting currency from the functional currency of the reporting entity, net of reclassification of realized foreign currency translation gains or losses.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 130
-Paragraph 17, 18, 19, 22, 23, 24, 25, 26
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 45
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 52
-Paragraph 12, 13
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 52
-Paragraph 31
-Subparagraph a
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=6920043&loc=d3e637-108580

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 830
-SubTopic 30
-Section 45
-Paragraph 12
-URI http://asc.fasb.org/extlink&oid=6915805&loc=d3e32022-110900

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 830
-SubTopic 30
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6450520&loc=d3e32583-110901

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 14
-URI http://asc.fasb.org/extlink&oid=6920043&loc=d3e681-108580

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 13
-URI http://asc.fasb.org/extlink&oid=6920043&loc=d3e653-108580

The aggregate foreign currency transaction gain (loss) (both realized and unrealized) included in determining net income for the reporting period. Excludes foreign currency transactions designated as hedges of net investment in a foreign entity and intercompany foreign currency transactions that are of a long-term nature, when the entities to the transaction are consolidated, combined, or accounted for by the equity method in the reporting enterprise's financial statements. For certain enterprises, primarily banks, that are dealers in foreign exchange, foreign currency transaction gains (losses) may be disclosed as dealer gains (losses).

Collaborative Arrangements (Details)
$ in Thousands

1 Months Ended

3 Months Ended

12 Months Ended

19 Months Ended

Jun. 30, 2011

USD ($)

Apr. 30, 2011

USD ($)

Dec. 31, 2012

USD ($)

lines

Sep. 30, 2012

USD ($)

Jun. 30, 2012

USD ($)

Mar. 31, 2012

USD ($)

Dec. 31, 2011

USD ($)

Sep. 30, 2011

USD ($)

Jun. 30, 2011

USD ($)

Mar. 31, 2011

USD ($)

Sep. 30, 2009

USD ($)

Dec. 31, 2012

USD ($)

lines

payment

Dec. 31, 2011

USD ($)

Dec. 31, 2010

USD ($)

Dec. 31, 2009

Dec. 31, 2006

USD ($)

Dec. 31, 2012

USD ($)

lines

Jun. 13, 2011

USD ($)

$ 43,451

$ 25,586

$ 33,480

$ 38,981

$ 25,405

$ 8,539

$ 10,010

$ 6,061

$ 141,498

$ 50,015

$ 30,244

9,234

6,919

11,552

24,381

81,176

231,066

29,879

67,601

52,086

409,722

113,126

333,994

336,006

418,305

438,737

563,340

659,200

114,424

73,662

1,527,042

1,410,626

143,370

^[1]

663,500

$ 663,500

Net loss (income) attributable to noncontrolling interest (Alios)

(2,696)

21,355

20,063

22,660

(27,842)

^[2]

24,448

38,754

19,266

(1,928)

31,076

30,463

(3,714)

29,512

7,342

(25,249)

55,897

11,605

Restricted cash and cash equivalents (Alios)

^[1]

69,983

51,878

69,983

51,878

69,983

Property and equipment, net

^[1]

24,673

14,889

24,673

14,889

24,673

^[1]

433,609

133,176

433,609

133,176

433,609

^[1]

30,992

Other assets

^[1]

9,668

11,268

9,668

11,268

9,668

^[1]

101,292

74,642

101,292

74,642

101,292

^[1]

264,884

243,187

264,884

243,187

264,884

Other liabilities, excluding current portion

^[1]

715

12,075

715

12,075

715

Deferred tax liability

^[1]

280,367

243,707

280,367

243,707

280,367

^[1]

13,902

7,287

13,902

7,287

13,902

Redeemable noncontrolling interest (Alios)

^[1]

38,530

37,036

38,530

37,036

38,530

Noncontrolling interest (Alios)

^[1]

196,672

141,633

196,672

141,633

196,672

Research and development expense associated with collaborative programs

9,234

6,919

$ 11,552

$ 24,381

81,176

$ 231,066

$ 29,879

67,601

52,086

409,722

113,126

$ 133,000

146,000

156,000

Janssen Pharmaceutica, N.V.

Schedule of Collaborative Arrangements

Drug development costs to be paid by collaborator (as a percent)

50.00%

Tiered royalty average range, as a percentage of net sales in the Janssen territories

20.00%

Up-front license payment

$ 165,000

Deferred revenue related to up-front license payment

43,500

$ 43,500

43,500

Total contingent milestone payments earned

$ 350,000

Milestone payment earned pursuant to the collaborative agreement

$ 200,000

$ 50,000

Notice period required to terminate without cause after receipt of marketing approval (in years) | yr

Amortized portion of up-front payment

$ 117,592

20,289

12,428

Milestone revenues

250,000

Net reimbursement (payment) for telaprevir development costs

(3,507)

(8,418)

9,245

Reimbursement for manufacturing services

7,257

20,383

9,077

16,178

274,393

30,750

Deferred revenue related to up-front license payment

133,770

294,682

30,750

$ 43,500

43,500

Milestone payments

250,000

Mitsubishi Tanabe Pharma Corporation

16,178

274,393

30,750

Amortized portion of up-front payment

12,744

38,232

Milestone revenues

485

68,515

Reimbursement for manufacturing services

5,650

14,928

43,636

License fee paid upon amendment of agreement

18,879

121,675

81,868

$ 105,000

Milestone payment received

65,000

Notice period required to terminate without cause (in days) | d

Milestone payments

485

68,515

Cystic Fibrosis Foundation Therapeutics Incorporated

18,879

121,675

81,868

Milestone payment received

$ 17,000

13,700

$ 1,500

Collaborative funding

$ 75,000

Number of years over which funding will be made (in years) | yr

Number of commercial milestone payments for achievement of certain sales levels for potentiator compound such as VX-770 (in payments) | payment

Number of commercial milestone payments for achievement of certain sales levels for corrector compound such as VX-809 or VX-661 (in payments) | payment

$ 17,000

13,700

$ 0

Alios BioPharma, Inc

Development milestone payments, maximum

Milestone revenues

25,000

60,000

Up-front payment

$ 60,000

Milestone payments

$ 25,000

60,000

$ 312,500

Commercial milestone payments, maximum

$ 750,000

Notice period for termination of contract due to technical failure (in days) | d

Notice period for termination of contract after completion of clinical trials (in days) | d

Latest expiration period for royalty obligation after first commercial sale in country unless contract is terminated earlier (in years) | yr

Number of lines on balance sheet where noncontrolling interest is reported | lines

Loss (income) before provision for (benefit from) income taxes

$ 20,044

9,536

Decrease (increase) in fair value of contingent milestone and royalty payments

(114,970)

(69,950)

Net loss (income) attributable to noncontrolling interest (Alios)

39,029

48,809

(55,897)

(11,605)

Restricted cash and cash equivalents (Alios)

$ 69,983

51,878

69,983

51,878

$ 69,983

Property and equipment, net

672

2,299

672

2,299

672

1,728

1,925

1,728

1,925

1,728

Intangible assets, excluding goodwill

250,600

4,890

Other assets

861

133

861

133

861

1,054

4,132

1,054

4,132

1,054

6,099

4,304

6,099

4,304

6,099

Other liabilities, excluding current portion

715

12,075

715

12,075

715

Deferred tax liability

152,781

116,121

152,781

116,121

152,781

910

1,030

910

1,030

910

Redeemable noncontrolling interest (Alios)

38,530

37,036

38,530

37,036

38,530

Noncontrolling interest (Alios)

$ 196,672

$ 141,633

$ 196,672

$ 141,633

$ 196,672

[1]	Amounts include the assets and liabilities of Vertex’s variable interest entity (“VIE”), Alios BioPharma, Inc. (“Alios”). Vertex’s interests and obligations with respect to the VIE’s assets and liabilities are limited to those accorded to Vertex in its agreement with Alios. See Note B, "Collaborative Arrangements," to these consolidated financial statements for amounts.
[2]	During the third quarter of 2011, the Company recorded an impairment charge of $105.8 million. In connection with this impairment charge, the Company recorded a benefit from income taxes of $32.7 million resulting in a net decrease in net income attributable to Vertex related to this impairment charge of $73.1 million in the third quarter of 2011.

Net Income (Loss) Per Share Attributable to Vertex Common Shareholders (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Basic net income (loss) attributable to Vertex per common share calculation:
Net income (loss) attributable to Vertex common shareholders	$ (76,148)	$ (57,543)	$ (64,931)	$ 91,590	$ 158,629	$ 221,110	$ (174,069)	$ (176,096)	$ (107,032)	$ 29,574	$ (754,626)
Less: Undistributed earnings allocated to participating securities									0	(291)	0
Net income (loss) attributable to Vertex common shareholders—basic									$ (107,032)	$ 29,283	$ (754,626)
Weighted-average shares used to compute basic net income (loss) per common share (shares)	214,607	213,767	211,344	208,018	206,758	206,002	204,413	202,329	211,946	204,891	200,402
Basic net income (loss) attributable to Vertex per common share (usd per share)	$ (0.35)	$ (0.27)	$ (0.31)	$ 0.44	$ 0.76	$ 1.06	$ (0.85)	$ (0.87)	$ (0.50)	$ 0.14	$ (3.77)
Diluted net income (loss) attributable to Vertex per common share calculation:
Net income (loss) attributable to Vertex common shareholders	$ (76,148)	$ (57,543)	$ (64,931)	$ 91,590	$ 158,629	$ 221,110	$ (174,069)	$ (176,096)	$ (107,032)	$ 29,574	$ (754,626)
Less: Undistributed earnings allocated to participating securities									0	(285)	0
Net income (loss) attributable to Vertex common shareholders—diluted									$ (107,032)	$ 29,289	$ (754,626)
Weighted-average shares used to compute basic net income (loss) per common share (shares)	214,607	213,767	211,344	208,018	206,758	206,002	204,413	202,329	211,946	204,891	200,402
Effect of potentially dilutive securities:
Stock options (shares)									0	3,863	0
Other (shares)									0	53	0
Weighted-average shares used to compute diluted net income (loss) per common share (shares)	214,607	213,767	211,344	219,264	217,602	219,349	204,413	202,329	211,946	208,807	200,402
Diluted net income (loss) attributable to Vertex per common share (usd per share)	$ (0.35)	$ (0.27)	$ (0.31)	$ 0.43	$ 0.74	$ 1.02	$ (0.85)	$ (0.87)	$ (0.50)	$ 0.14	$ (3.77)
Stock options
Effect of potentially dilutive securities:
Antidilutive securities excluded from computation of earnings per share (in shares)									19,726	9,626	21,293
Convertible senior subordinated notes
Effect of potentially dilutive securities:
Antidilutive securities excluded from computation of earnings per share (in shares)									8,192	8,192	8,192
Unvested restricted stock and restricted stock units
Effect of potentially dilutive securities:
Antidilutive securities excluded from computation of earnings per share (in shares)									2,350	8	1,950

Fair Value Measurements (Details) $ in Thousands	Dec. 31, 2012 USD ($)
Financial assets carried at fair value:
Cash equivalents (Alios)	$ 68,700
Recurring basis \| Total
Financial assets carried at fair value:
Restricted cash	31,934
Total	1,132,205
Recurring basis \| Total \| Money market funds
Financial assets carried at fair value:
Cash equivalents:	268,463
Recurring basis \| Total \| U.S. Treasury securities
Financial assets carried at fair value:
Marketable securities:	111,350
Recurring basis \| Total \| Government-sponsored enterprise securities
Financial assets carried at fair value:
Marketable securities:	440,225
Recurring basis \| Total \| Commercial paper
Financial assets carried at fair value:
Marketable securities:	225,449
Recurring basis \| Total \| Corporate debt securities
Financial assets carried at fair value:
Marketable securities:	54,784
Recurring basis \| Level 1
Financial assets carried at fair value:
Restricted cash	31,934
Total	851,972
Recurring basis \| Level 1 \| Money market funds
Financial assets carried at fair value:
Cash equivalents:	268,463
Recurring basis \| Level 1 \| U.S. Treasury securities
Financial assets carried at fair value:
Marketable securities:	111,350
Recurring basis \| Level 1 \| Government-sponsored enterprise securities
Financial assets carried at fair value:
Marketable securities:	440,225
Recurring basis \| Level 1 \| Commercial paper
Financial assets carried at fair value:
Marketable securities:	0
Recurring basis \| Level 1 \| Corporate debt securities
Financial assets carried at fair value:
Marketable securities:	0
Recurring basis \| Level 2
Financial assets carried at fair value:
Restricted cash	0
Total	280,233
Recurring basis \| Level 2 \| Money market funds
Financial assets carried at fair value:
Cash equivalents:	0
Recurring basis \| Level 2 \| U.S. Treasury securities
Financial assets carried at fair value:
Marketable securities:	0
Recurring basis \| Level 2 \| Government-sponsored enterprise securities
Financial assets carried at fair value:
Marketable securities:	0
Recurring basis \| Level 2 \| Commercial paper
Financial assets carried at fair value:
Marketable securities:	225,449
Recurring basis \| Level 2 \| Corporate debt securities
Financial assets carried at fair value:
Marketable securities:	54,784
Recurring basis \| Level 3
Financial assets carried at fair value:
Restricted cash	0
Total	0
Recurring basis \| Level 3 \| Money market funds
Financial assets carried at fair value:
Cash equivalents:	0
Recurring basis \| Level 3 \| U.S. Treasury securities
Financial assets carried at fair value:
Marketable securities:	0
Recurring basis \| Level 3 \| Government-sponsored enterprise securities
Financial assets carried at fair value:
Marketable securities:	0
Recurring basis \| Level 3 \| Commercial paper
Financial assets carried at fair value:
Marketable securities:	0
Recurring basis \| Level 3 \| Corporate debt securities
Financial assets carried at fair value:
Marketable securities:	$ 0

Fair Value Measurements (Details 2) - USD ($)
$ in Thousands

1 Months Ended

12 Months Ended

Sep. 30, 2010

Dec. 31, 2012

Dec. 31, 2011

Sep. 30, 2011

Debt Offerings, Fair Value Disclosure

Convertible Senior Subordinated Notes 3.35 Percent Due 2015

^[1]

$ 400,000

Debt Offerings, Fair Value Disclosure

Interest rate (as a percent)

$ 400,000

3.35%

Fair value of convertible senior subordinated notes

$ 444,000

[1]

Marketable Securities (Details) - USD ($) $ in Thousands	Dec. 31, 2012	Dec. 31, 2011
Summary of cash, cash equivalents and marketable securities
Amortized Cost	$ 1,321,019	$ 969,031
Gross Unrealized Gains	217	10
Gross Unrealized Losses	(21)	(119)
Fair Value	1,321,215	968,922
Total cash and cash equivalents
Summary of cash, cash equivalents and marketable securities
Amortized Cost	489,407	475,337
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	(17)
Fair Value	489,407	475,320
Cash and money market funds
Summary of cash, cash equivalents and marketable securities
Amortized Cost	489,407	362,035
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	489,407	362,035
Government-sponsored enterprise securities
Summary of cash, cash equivalents and marketable securities
Amortized Cost		113,302
Gross Unrealized Gains		0
Gross Unrealized Losses		(17)
Fair Value		113,285
Total marketable securities
Summary of cash, cash equivalents and marketable securities
Amortized Cost	831,612	493,694
Gross Unrealized Gains	217	10
Gross Unrealized Losses	(21)	(102)
Fair Value	831,808	493,602
U.S. Treasury securities
Summary of cash, cash equivalents and marketable securities
Amortized Cost	111,350	22,105
Gross Unrealized Gains	2	2
Gross Unrealized Losses	(2)	0
Fair Value	111,350	22,107
Government-sponsored enterprise securities
Summary of cash, cash equivalents and marketable securities
Amortized Cost	440,181	471,589
Gross Unrealized Gains	49	8
Gross Unrealized Losses	(5)	(102)
Fair Value	440,225	$ 471,495
Commercial paper (due within 1 year)
Summary of cash, cash equivalents and marketable securities
Amortized Cost	225,294
Gross Unrealized Gains	155
Gross Unrealized Losses	0
Fair Value	225,449
Corporate debt securities (due within 1 year)
Summary of cash, cash equivalents and marketable securities
Amortized Cost	15,429
Gross Unrealized Gains	1
Gross Unrealized Losses	(1)
Fair Value	15,429
Corporate debt securities (due after 1 year through 5 years)
Summary of cash, cash equivalents and marketable securities
Amortized Cost	39,358
Gross Unrealized Gains	10
Gross Unrealized Losses	(13)
Fair Value	$ 39,355

Marketable Securities (Details 2) - USD ($)
$ in Thousands

Dec. 31, 2012

Dec. 31, 2011

Schedule of Available-for-sale Securities [Line Items]

Cash equivalents (Alios)

^[1]

$ 69,983

$ 51,878

[1]

Inventories-By Product (Details) - USD ($)
$ / shares in Units, $ in Thousands

3 Months Ended

12 Months Ended

Dec. 31, 2012

Jun. 30, 2012

Dec. 31, 2012

Dec. 31, 2011

Dec. 31, 2010

Product Information [Line Items]

Write-downs of inventories to net realizable value

^[1]

$ 30,464

$ 112,430

$ 55,200

$ 78,000

$ 133,189

$ 0

Write-down of inventories effect on net income (loss) per share

$ (0.25)

$ (0.36)

$ (0.61)

INCIVEK

Product Information [Line Items]

$ 22,792

112,430

KALYDECO

Product Information [Line Items]

$ 7,672

$ 0

[1]

Charge to cost of goods sold that represents the reduction of the carrying amount of inventory, generally attributable to obsolescence or market conditions.

Inventory, Work in Process

Inventories Inventories- Schedule of Inventories (Details) - USD ($)
$ in Thousands

Dec. 31, 2012

Dec. 31, 2011

Inventory Disclosure [Abstract]

Inventory, Raw Materials

$ 3,754

$ 32,213

11,317

47,010

Inventory, Finished Goods

15,393

33,207

Total

^[1]

$ 30,464

$ 112,430

[1]

Property and Equipment (Details) - USD ($)
$ in Thousands

12 Months Ended

Dec. 31, 2012

Dec. 31, 2011

Dec. 31, 2010

Less: accumulated depreciation

$ 730,294

$ 404,239

(296,685)

(271,063)

Total property and equipment, net

^[1]

433,609

133,176

Capital leased assets, gross

30,100

Capital leases accumulated depreciation

1,100

Depreciation and amortization expense

35,700

28,900

$ 27,900

Furniture and equipment

173,766

151,961

Leasehold improvements

123,770

107,169

Software

101,276

56,923

Computers

40,779

33,116

Construction-in-process

Indefinite-Lived Intangible Assets [Line Items]

$ 290,703

$ 55,070

[1]

Fan Pier Leases (Details) squarefeet in Millions	3 Months Ended	12 Months Ended
Fan Pier Leases (Details) squarefeet in Millions	Jun. 30, 2011 yr leases squarefeet	Dec. 31, 2012 squarefeet
Fan Pier Leases [Abstract]
Number of leases \| leases	2
Area of leased property (in square feet) \| squarefeet	1.1	1.1
Number of buildings under lease agreement \| leases	2
Initial term of lease agreement (in years) \| yr	15
Optional term of lease agreement (in years) \| yr	10

Intangible Assets and Goodwill (Details) - USD ($)
$ in Thousands

3 Months Ended

12 Months Ended

Dec. 31, 2012

Sep. 30, 2012

Jun. 30, 2012

Mar. 31, 2012

Dec. 31, 2011

Sep. 30, 2011

Jun. 30, 2011

Mar. 31, 2011

Dec. 31, 2012

Dec. 31, 2011

Dec. 31, 2010

^[1]

$ 663,500

Change in deferred income taxes

$ 0

$ 105,800

^[2]

$ 0

105,800

$ 0

$ 32,700

Deferred tax liability from intangible assets

229,696

Indefinite-Lived Intangible Assets [Line Items]

^[1]

30,992

VX-222Asset [Member]

Deferred tax liability from intangible assets

127,600

Research and Development Arrangement | VX-222Asset [Member]

Indefinite-Lived Intangible Assets [Line Items]

Research and Development Arrangement | VX759Asset [Member]

412,900

Indefinite-Lived Intangible Assets [Line Items]

Indefinite-Lived Intangible Assets [Line Items]

$ 105,800

Alios Bio Pharma Inc

Alios Bio Pharma Inc | Research and Development Arrangement

4,890

Indefinite-Lived Intangible Assets [Line Items]

Research, development and commercial contract costs

$ 250,600

[1]	Amounts include the assets and liabilities of Vertex’s variable interest entity (“VIE”), Alios BioPharma, Inc. (“Alios”). Vertex’s interests and obligations with respect to the VIE’s assets and liabilities are limited to those accorded to Vertex in its agreement with Alios. See Note B, "Collaborative Arrangements," to these consolidated financial statements for amounts.
[2]	During the third quarter of 2011, the Company recorded an impairment charge of $105.8 million. In connection with this impairment charge, the Company recorded a benefit from income taxes of $32.7 million resulting in a net decrease in net income attributable to Vertex related to this impairment charge of $73.1 million in the third quarter of 2011.

Accrued Expenses (Details) - USD ($)
$ in Thousands

Dec. 31, 2012

Dec. 31, 2011

Dec. 31, 2010

Accrued expenses

$ 63,960

$ 66,426

Payroll and benefits

62,140

57,453

Product revenue allowances

69,936

58,201

Royalty payable

29,007

28,603

Unrecognized tax benefits

4,106

4,360

$ 2,374

Interest

3,395

3,363

Professional fees

11,226

12,785

Other

21,114

11,996

Total

^[1]

$ 264,884

$ 243,187

[1]

Convertible Senior Subordinated Notes (Details)

1 Months Ended

12 Months Ended

Sep. 30, 2010

USD ($)

$ / shares

Jan. 31, 2010

Dec. 31, 2012

USD ($)

Dec. 31, 2011

USD ($)

Dec. 31, 2010

USD ($)

Sep. 30, 2011

USD ($)

Dec. 31, 2009

USD ($)

Convertible senior subordinated notes

^[1]

$ 400,000,000

Net proceeds from convertible debt offering

$ 0

$ 391,645,000

Convertible Senior Subordinated Notes 3.35 Percent Due 2015

Convertible senior subordinated notes

$ 400,000,000

Net proceeds from convertible debt offering

391,600,000

Underwriting discount

8,000,000

Debt issuance costs

$ 400,000

Conversion price (in dollars per share) | $ / shares

$ 48.83

Original conversion rate, number of shares to be issued per $1000 of principal (in shares) | shares

20.4794

Convertible debt principal amount, basis for exchange

$ 1,000

Interest rate (as a percent)

3.35%

Percent closing price needs to exceed the conversion price for at least 20 trading days within 30 consecutive trading days for provisional redemption (as a percent)

130.00%

Minimum number of days within 30 consecutive trading days the closing price needs to exceed the conversion price for provisional redemption (in days) | d

Total consecutive trading days during which the closing price must exceed the conversion price for at least 20 trading days for provisional redemption (in days) | d

Percentage of principal amount used in computation of provisional redemption price (as a percent)

100.00%

Total interest payments on notes being provisionally redeemed equal to interest for specified number of years (in years) | yr

Convertible Senior Subordinated Notes (due 2013)

Interest rate (as a percent)

4.75%

Convertible Senior Subordinated Notes (due 2013) | First quarter 2010 conversion

Convertible subordinated notes exchanged or converted (in shares) | shares

Senior Notes

$ 32,100,000

1,386,006

[1]

Common Stock, Preferred Stock and Equity Plans (Details) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2012 USD ($) yr $ / shares shares	Dec. 31, 2011 USD ($) $ / shares shares	Dec. 31, 2010 USD ($) shares
Share-based Compensation Arrangement by Share-based Payment Award
Common stock, shares authorized	300,000,000	300,000,000
Common Stock, Votes Per Share	1
Awards Outstanding (shares)	22,075,594
Additional awards authorized for grant (in shares)	5,751,677
Grant price of outstanding restricted stock and restricted stock units (in dollars per share) \| $ / shares	$ 0.01
Outstanding and exercisable options
Stock options outstanding at beginning of period (in shares)	20,923,000
Stock options granted (in shares)	6,043,000
Stock options exercised (in shares)	(5,856,000)
Stock options forfeited (in shares)	(1,310,000)
Stock options expired (in shares)	(74,000)
Stock options outstanding at end of period (in shares)	19,726,000	20,923,000
Stock options exercisable at end of period (in shares)	10,849,000
Total exercisable or expected to vest, stock options (in shares)	18,782,000
Weighted average Exercise Price
Weighted-average exercise price outstanding at beginning of period (usd per share) \| $ / shares	$ 34.23
Weighted average exercise price, granted (usd per share) \| $ / shares	43.80
Weighted average exercise price, exercised (usd per share) \| $ / shares	29.51
Weighted average exercise price, forfeited (usd per share) \| $ / shares	41.01
Weighted average exercise price, expired (usd per share) \| $ / shares	39.47
Weighted-average exercise price outstanding at end of period (usd per share) \| $ / shares	38.09	$ 34.23
Weighted average exercise price exercisable at the end of the period (usd per share) \| $ / shares	34.54
Total exercisable or expected to vest, weighted average exercise price (usd per share) \| $ / shares	$ 37.83
Weighted-average Remaining Contractual Life
Weighted-average Remaining Contractual Life, outstanding (in years) \| yr	7.15
Weighted-average Remaining Contractual Life, exercisable (in years) \| yr	5.93
Weighted-average Remaining Contractual Life, total exercisable or expected to vest (in years) \| yr	7.06
Aggregate Intrinsic Value
Aggregate intrinsic value, outstanding \| $	$ 107,016
Aggregate intrinsic value, exercisable \| $	84,297
Aggregate intrinsic value, total exercisable or expected to vest \| $	$ 104,931
Preferred stock, shares authorized	1,000,000	1,000,000
Total Intrinsic Value and Cash Received
Market price \| $ / shares	$ 41.20
Total intrinsic value of stock options exercised \| $	$ 148,700	$ 90,500	$ 10,500
Total cash received from employees as a result of employee stock option exercises \| $	$ 172,800	$ 109,600	$ 22,200
2006 Stock and Option Plan
Share-based Compensation Arrangement by Share-based Payment Award
Awards Outstanding (shares)	20,551,584
Additional awards authorized for grant (in shares)	5,751,677
Approved increase in number of shares authorized for issuance (in shares)	3,000,000		12,000,000
1996 Stock and Option Plan
Share-based Compensation Arrangement by Share-based Payment Award
Awards Outstanding (shares)	1,524,010
Additional awards authorized for grant (in shares)	0
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award
Approved increase in number of shares authorized for issuance (in shares)	2,500,000

Common Stock, Preferred Stock and Equity Plans (Details 2) $ / shares in Units, $ in Millions	1 Months Ended	12 Months Ended
	Dec. 31, 2012 USD ($) yr $ / shares shares	Dec. 31, 2012 yr period $ / shares shares	Dec. 31, 2011 USD ($) $ / shares shares	Dec. 31, 2010 USD ($)
Restricted stock
Restricted stock, as of the beginning of the period (in shares) \| shares		2,100,000
Restricted stock, granted (in shares) \| shares		1,428,000
Restricted stock, vested (in shares) \| shares		(998,000)
Restricted stock, cancelled (in shares) \| shares		(260,000)
Restricted stock, as of the end of the period (in shares) \| shares	2,270,000	2,270,000	2,100,000
Restricted stock, weighted-average grant-date fair value
Weighted-average grant-date fair value, as of the beginning of the period (in dollars per share)		$ 37.13
Weighted-average grant-date fair value, granted (in dollars per share)		45.46
Weighted-average grant-date fair value, vested (in dollars per share)		35.11
Weighted-average grant-date fair value, cancelled (in dollars per share)	$ 40.09	40.09
Weighted-average grant-date fair value, as of the end of the period (in dollars per share)	$ 42.92	42.92	$ 37.13
Vested in period, total fair value \| $	$ 41.1		$ 34.6	$ 20.1
Range of Exercise Prices, $9.07-$20.00
Stock options outstanding and exercisable
Exercise price, low end of range (usd per share)		9.07
Exercise price, high end of range (usd per share)		$ 20.00
Exercise price range, options outstanding (in shares) \| shares	1,000,000	1,000,000
Exercise price range, options outstanding, weighted-average remaining contractual life (in years) \| yr	3.12	3.12
Exercise price range, options outstanding, weighted-average exercise price (in dollars per share)	$ 15.38	$ 15.38
Exercise price range, options exercisable (in shares) \| shares	1,000,000	1,000,000
Exercise price range, options exercisable, weighted-average exercise price (in dollars per share)	$ 15.38	$ 15.38
Range of Exercise Prices, $20.01-$30.00
Stock options outstanding and exercisable
Exercise price, low end of range (usd per share)		20.01
Exercise price, high end of range (usd per share)		$ 30.00
Exercise price range, options outstanding (in shares) \| shares	1,415,000	1,415,000
Exercise price range, options outstanding, weighted-average remaining contractual life (in years) \| yr	6.35	6.35
Exercise price range, options outstanding, weighted-average exercise price (in dollars per share)	$ 29.30	$ 29.30
Exercise price range, options exercisable (in shares) \| shares	1,039,000	1,039,000
Exercise price range, options exercisable, weighted-average exercise price (in dollars per share)	$ 29.11	$ 29.11
Range of Exercise Prices, $30.01-$40.00
Stock options outstanding and exercisable
Exercise price, low end of range (usd per share)		30.01
Exercise price, high end of range (usd per share)		$ 40.00
Exercise price range, options outstanding (in shares) \| shares	12,590,000	12,590,000
Exercise price range, options outstanding, weighted-average remaining contractual life (in years) \| yr	6.86	6.86
Exercise price range, options outstanding, weighted-average exercise price (in dollars per share)	$ 36.09	$ 36.09
Exercise price range, options exercisable (in shares) \| shares	7,770,000	7,770,000
Exercise price range, options exercisable, weighted-average exercise price (in dollars per share)	$ 35.29	$ 35.29
Range of Exercise Prices, $40.01-$50.00
Stock options outstanding and exercisable
Exercise price, low end of range (usd per share)		40.01
Exercise price, high end of range (usd per share)		$ 50.00
Exercise price range, options outstanding (in shares) \| shares	2,331,000	2,331,000
Exercise price range, options outstanding, weighted-average remaining contractual life (in years) \| yr	9.32	9.32
Exercise price range, options outstanding, weighted-average exercise price (in dollars per share)	$ 48.04	$ 48.04
Exercise price range, options exercisable (in shares) \| shares	216,000	216,000
Exercise price range, options exercisable, weighted-average exercise price (in dollars per share)	$ 46.92	$ 46.92
Range of Exercise Prices, $50.01-$60.00
Stock options outstanding and exercisable
Exercise price, low end of range (usd per share)		50.01
Exercise price, high end of range (usd per share)		$ 60.00
Exercise price range, options outstanding (in shares) \| shares	2,328,000	2,328,000
Exercise price range, options outstanding, weighted-average remaining contractual life (in years) \| yr	8.68	8.68
Exercise price range, options outstanding, weighted-average exercise price (in dollars per share)	$ 53.41	$ 53.41
Exercise price range, options exercisable (in shares) \| shares	816,000	816,000
Exercise price range, options exercisable, weighted-average exercise price (in dollars per share)	$ 54.18	$ 54.18
Price Range From Dollars $60.01-$64.30
Stock options outstanding and exercisable
Exercise price, low end of range (usd per share)		60.01
Exercise price, high end of range (usd per share)		$ 64.30
Exercise price range, options outstanding (in shares) \| shares	62,000	62,000
Exercise price range, options outstanding, weighted-average remaining contractual life (in years) \| yr	9.34	9.34
Exercise price range, options outstanding, weighted-average exercise price (in dollars per share)	$ 63.17	$ 63.17
Exercise price range, options exercisable (in shares) \| shares	8,000	8,000
Exercise price range, options exercisable, weighted-average exercise price (in dollars per share)	$ 63.14	$ 63.14
Employee Stock Purchase Plan
Employee Stock Purchase Plan
Share purchase period range, maximum		6 months
Eligible employee purchase price percentage of fair value		85.00%
Initial offering period		12 months
Approved increase in number of shares authorized for issuance (in shares) \| shares		2,500,000
Number of shares authorized \| shares	2,280,000	2,280,000
Number of shares \| shares		702,000
Average price paid per share	$ 26.71	$ 26.71
Share-based Compensation Arrangement By Share-based Payment Award, Equity Instruments Other Than Options, Number of Share Purchase Periods \| period		2,000

Stock-based Compensation Expense (Details)	12 Months Ended
Stock-based Compensation Expense (Details)	Dec. 31, 2012 USD ($) yr $ / shares	Dec. 31, 2011 USD ($) yr $ / shares	Dec. 31, 2010 USD ($) yr $ / shares
Stock-based compensation expense:
Total stock-based compensation expense included in costs and expenses	$ 114,285,000	$ 118,226,000	$ 91,124,000
Less stock-based compensation expense capitalized to inventories	$ (1,254,000)	$ (1,042,000)
Weighted-average assumptions for options and ESPP subscriptions granted
Weighted average fair value (in dollars per share) \| $ / shares	$ 45.46
Employee Stock Purchase Plan
Weighted-average assumptions for options and ESPP subscriptions granted
Expected stock price volatility (as a percent)	46.90%	51.32%	43.92%
Risk-free interest rate (as a percent)	0.16%	0.08%	0.24%
Expected term (in years) \| yr	0.74	0.72	0.71
Expected annual dividends estimate	$ 0	$ 0	$ 0
Weighted average fair value (in dollars per share) \| $ / shares	$ 12.90	$ 9.80	$ 10.19
Stock Options:
Weighted-average assumptions for options and ESPP subscriptions granted
Expected annual dividends estimate	$ 0
Stock options
Stock-based compensation expense:
Total stock-based compensation expense included in costs and expenses	79,047,000	$ 83,098,000	$ 64,005,000
Type of award:
Unrecognized Expense, Net of Estimated Forfeitures	$ 156,225,000
Weighted-average Recognition Period (in years) \| yr	2.69
Weighted-average assumptions for options and ESPP subscriptions granted
Expected stock price volatility (as a percent)	47.93%	49.53%	52.17%
Risk-free interest rate (as a percent)	0.95%	2.09%	2.44%
Expected term (in years) \| yr	5.78	5.74	5.71
Expected annual dividends estimate	$ 0	$ 0	$ 0
Weighted-average grant-date fair value, granted (in dollars per share) \| $ / shares	$ 19.72	$ 20.88	$ 18.52
Restricted stock and restricted stock units
Stock-based compensation expense:
Total stock-based compensation expense included in costs and expenses	$ 29,194,000	$ 30,708,000	$ 22,960,000
Type of award:
Unrecognized Expense, Net of Estimated Forfeitures	$ 68,094,000
Weighted-average Recognition Period (in years) \| yr	2.58
ESPP share issuances
Stock-based compensation expense:
Total stock-based compensation expense included in costs and expenses	$ 7,298,000	5,462,000	4,159,000
Less stock-based compensation expense capitalized to inventories			0
Type of award:
Unrecognized Expense, Net of Estimated Forfeitures	$ 5,661,000
Weighted-average Recognition Period (in years) \| yr	0.65
Research and development expenses
Stock-based compensation expense:
Total stock-based compensation expense included in costs and expenses	$ 71,533,000	75,574,000	65,198,000
Sales, general and administrative expenses
Stock-based compensation expense:
Total stock-based compensation expense included in costs and expenses	$ 42,752,000	$ 42,652,000	$ 25,926,000

September 2009 Financial Transactions (Details) $ in Thousands	1 Months Ended		3 Months Ended	12 Months Ended
	Feb. 28, 2011 USD ($)	Sep. 30, 2009 USD ($) agreements	Sep. 30, 2009 USD ($)	Dec. 31, 2012 USD ($)	Dec. 31, 2011 USD ($)	Dec. 31, 2010 USD ($)	Oct. 31, 2011 USD ($)
2012 Notes
Face amount of 2012 Notes			$ 155,000
Proceeds from issuance of 2012 Notes			$ 122,200
Proceeds from milestone payment related to the acceptance of Janssen's MAA	$ 50,000
Portion of 2012 Notes redeemed upon achievement of certain approval milestone pursuant to the Janssen collaboration	$ 50,000
Earned remaining milestone payment to be received in the fourth quarter of 2011							$ 105,000
Sale of Contingent Milestone Payments
Number of purchase agreements entered into related to sale of contingent launch milestone payments pursuant to the Janssen collaboration \| agreements		2
Value of potential contingent launch milestone payments sold pursuant to the Janssen collaboration		$ 95,000
Proceeds from sale of potential contingent launch milestone payments pursuant to the Janssen collaboration		$ 32,800
Expenses and Losses (Gains):
Interest expense related to 2012 Notes				$ 0	$ 21,687	$ 15,068
Change in fair value of embedded derivative related to 2012 Notes				0	(400)	1,637
Change in fair value of free-standing derivatives related to the sale of milestone payments				0	17,201	39,592
Total September 2009 financial transaction expenses				$ 0	$ 38,488	$ 56,297

Sale of HIV Protease Inhibitor Royalty Stream (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2008	Dec. 31, 2012
Sale of HIV Protease Inhibitor Royalty Stream
Gross proceeds from sale of royalty rights receivable from GlaxoSmithKline	$ 160.0
Deferred revenues related to the one-time cash payment agreement with GlaxoSmithKline		$ 80.3

Income Taxes (Details) - USD ($)
$ in Thousands

3 Months Ended

12 Months Ended

Dec. 31, 2012

Sep. 30, 2012

Jun. 30, 2012

Mar. 31, 2012

Dec. 31, 2011

Sep. 30, 2011

Jun. 30, 2011

Mar. 31, 2011

Dec. 31, 2012

Dec. 31, 2011

Dec. 31, 2010

Components of income (loss) before provision for (benefit from) income taxes

United States

$ 256,816

$ 343,515

$ (719,859)

Foreign

(269,197)

(283,070)

(34,767)

Income (loss) before provision for (benefit from) income taxes

$ (80,772)

$ (5,112)

$ (14,405)

$ 87,908

$ 210,801

$ 200,610

$ (174,870)

$ (176,096)

(12,381)

60,445

(754,626)

Current taxes:

United States

2,057

22,275

Foreign

(1,865)

(561)

State

1,902

8,655

Total current taxes

2,094

30,369

Deferred taxes:

United States

31,308

19,629

Foreign

(32,692)

State

5,352

1,960

Total deferred taxes

36,660

(11,103)

Federal statutory income tax rate

$ (2,696)

$ 21,355

$ 20,063

$ 32

$ 22,660

$ (27,842)

^[1]

$ 24,448

$ 0

$ 38,754

$ 19,266

$ 0

[1]

During the third quarter of 2011, the Company recorded an impairment charge of $105.8 million. In connection with this impairment charge, the Company recorded a benefit from income taxes of $32.7 million resulting in a net decrease in net income attributable to Vertex related to this impairment charge of $73.1 million in the third quarter of 2011.

Income Taxes (Details 2) - USD ($)
$ in Thousands

3 Months Ended

12 Months Ended

Dec. 31, 2012

Sep. 30, 2012

Jun. 30, 2012

Mar. 31, 2012

Dec. 31, 2011

Sep. 30, 2011

Jun. 30, 2011

Mar. 31, 2011

Dec. 31, 2012

Dec. 31, 2011

Dec. 31, 2010

Tax Carryforwards

35.00%

34.00%

Reconciliation of Income Tax Expense:

Income (loss) before provision for (benefit from) income taxes

$ (80,772)

$ (5,112)

$ (14,405)

$ 87,908

$ 210,801

$ 200,610

$ (174,870)

$ (176,096)

$ (12,381)

$ 60,445

$ (754,626)

Expected tax provision (benefit)

(4,333)

21,156

(256,574)

State taxes, net of federal benefit

7,075

10,624

(46,108)

Foreign rate differential

62,425

43,629

632

Tax credits

(1,980)

(51,086)

(23,292)

Unbenefited operating losses

(30,364)

(6,286)

322,551

Non-deductible expenses

3,198

1,953

2,158

Income Tax Reconciliation, Change in Enacted Tax Rate

3,275

Other

(542)

(724)

633

Reconciliation of unrecognized tax benefits

(2,696)

$ 21,355

$ 20,063

22,660

$ (27,842)

^[1]

$ 24,448

38,754

19,266

Unrecognized tax benefits beginning of year

$ 4,360

$ 2,374

4,360

2,374

Gross change for current year positions

598

2,569

Increase for prior period positions

Decrease for prior period positions

Decrease due to settlements and payments

Decrease due to statute limitations

(852)

(583)

Uncrecognized tax benefits end of year

4,106

4,360

4,106

4,360

$ 2,374

Amount of unrecognized tax benefits that, if recognized, would result in a reduction of the Company's effective tax rate

4,100

Possible reduction in unrecognized tax benefits in next twelve months

300

Deferred tax assets:

Net operating loss

777,687

870,367

777,687

870,367

Tax credit carryforwards

147,074

167,759

147,074

167,759

Property and equipment

10,701

15,537

10,701

15,537

Intangibles

63,353

71,076

63,353

71,076

Deferred revenues

44,867

59,939

44,867

59,939

Stock-based compensation

83,979

90,563

83,979

90,563

56,564

23,883

56,564

23,883

Gross deferred tax assets

27,945

30,636

27,945

30,636

Unrealized loss

245

1,212,170

1,330,005

1,212,170

1,330,005

Valuation allowance

(1,211,561)

(1,329,775)

(1,211,561)

(1,329,775)

Total deferred tax assets

609

230

609

230

Deferred tax liabilities:

Unrealized gain

(376)

Contingent milestone and royalty payment obligation

(50,904)

(14,241)

(50,904)

(14,241)

Acquired intangibles

(229,696)

Net deferred tax liabilities

(280,367)

$ (243,707)

(280,367)

$ (243,707)

Net amount of unrealized excess tax benefits

115,000

Gross amount of excess tax deduction in net operating loss carryforward

525,000

Decreased in valuation allowance

(118,200)

Federal

Reconciliation of Income Tax Expense:

Operating Loss

2,600,000

Tax Credit

98,000

State

Reconciliation of Income Tax Expense:

Operating Loss

1,500,000

Tax Credit

$ 60,300

[1]

Restructuring Expense (Details) squarefeet in Thousands, $ in Thousands	1 Months Ended		3 Months Ended								12 Months Ended					108 Months Ended
	Jun. 30, 2003 squarefeet	Jan. 31, 2003 yr	Dec. 31, 2012 USD ($)	Sep. 30, 2012 USD ($)	Jun. 30, 2012 USD ($)	Mar. 31, 2012 USD ($)	Dec. 31, 2011 USD ($)	Sep. 30, 2011 USD ($)	Jun. 30, 2011 USD ($)	Mar. 31, 2011 USD ($)	Dec. 31, 2012 USD ($)	Dec. 31, 2011 USD ($)	Dec. 31, 2010 USD ($)	Dec. 31, 2006 squarefeet	Dec. 31, 2003 USD ($)	Dec. 31, 2012 USD ($)	Dec. 31, 2009 USD ($)	Dec. 31, 2003 USD ($)
Kendall Square Lease
Lease restructuring liability			$ 23,328				$ 26,313				$ 23,328	$ 26,313	$ 29,595		$ 69,526	$ 23,328	$ 34,017	$ 69,526
Restructuring expense			194	$ 696	$ 594	$ 360	992	$ (419)	$ 741	$ 760	1,844	2,074	1,501		91,824	62,479
Cash payments											(14,853)	(14,904)	(14,759)		(17,816)	(163,697)
Non-cash write-off in 2003															(4,482)
Liability, end of the period			$ 23,328				$ 26,313				$ 23,328	$ 26,313	$ 29,595		69,526	$ 23,328
Lease restructuring expense															78,700
Lease operating expense															6,000
Lease restructuring and other operating lease expense
Kendall Square Lease
Lease restructuring liability															69,526			69,526
Restructuring expense															84,726
Cash payments															(15,200)
Non-cash write-off in 2003															0
Liability, end of the period															69,526
Employee severance, benefits and related costs
Kendall Square Lease
Lease restructuring liability															0			0
Restructuring expense															2,616
Cash payments															(2,616)
Non-cash write-off in 2003															0
Liability, end of the period															0
Leasehold improvements and asset impairments
Kendall Square Lease
Lease restructuring liability															0			$ 0
Restructuring expense															4,482
Cash payments															0
Non-cash write-off in 2003															(4,482)
Liability, end of the period															$ 0
Kendall Square Facility
Kendall Square Lease
Leased area (in square feet) \| squarefeet	290
Lease term (in years) \| yr		15
Occupied leased area (in square feet) \| squarefeet														120
Discount rate, lease restructuring liability (as a percent)																		10.00%

Restructuring Expense (Details 2) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended				108 Months Ended
Restructuring Expense (Details 2) - USD ($) $ in Thousands	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2003	Dec. 31, 2012
Restructuring activities
Liability, beginning of the period				$ 26,313				$ 29,595	$ 26,313	$ 29,595	$ 34,017		$ 69,526
Cash payments									(14,853)	(14,904)	(14,759)	$ (17,816)	(163,697)
Cash received from subleases									10,024	9,548	8,836		65,038
Credit for portion of facility Vertex decided to occupy in 2005									0	0	0		(10,018)
Restructuring expense	$ 194	$ 696	$ 594	$ 360	$ 992	$ (419)	$ 741	$ 760	1,844	2,074	1,501	91,824	62,479
Liability, end of the period	$ 23,328				$ 26,313				$ 23,328	$ 26,313	$ 29,595	$ 69,526	$ 23,328

Amount of any reversal and other adjustment made during the period to the amount of a previously accrued liability for a specified type of restructuring cost, excluding adjustments for costs incurred during the period, costs settled during the period, and foreign currency translation adjustments.

Initial term of lease agreement (in years) | yr

Employee Benefits (Details) - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Compensation and Retirement Disclosure [Abstract]
Maximum percentage of annual compensation contributed by the participant	60.00%
Common stock shares remained available for grant	854
Matching contributions to the Vertex 401(k) Plan:
Discretionary matching contributions during the year ended December 31,	$ 10,261	$ 8,619	$ 6,552
Shares issued during the year ended December 31,	242	183	174
Shares issuable as of the year ended December 31,	53	62	42

Commitments (Details)
squarefeet in Thousands, $ in Thousands

3 Months Ended

12 Months Ended

Jun. 30, 2011

Dec. 31, 2012

USD ($)

squarefeet

term_extension

Dec. 31, 2011

USD ($)

Dec. 31, 2010

USD ($)

Sep. 30, 2011

USD ($)

Sep. 30, 2010

USD ($)

Operating lease

Optional term of lease agreement (in years) | yr

Future minimum commitments under facility leases commitments with terms of more than one year

$ 136,312

112,424

109,477

95,460

94,448

851,127

1,399,248

(8,495)

(8,495)

(3,976)

Effective interest rate (percentage)

(20,966)

Rental expense

$ 57,100

$ 49,400

$ 46,600

4.00%

^[1]

$ 400,000

400,000

2015 Notes

Future minimum commitments under facility leases commitments with terms of more than one year

$ 400,000

Fan Pier Leases

83,304

67,206

67,206

67,206

67,206

814,404

1,166,532

Optional term of lease agreement (in years) | yr

Rental expense

$ 6,600

3,900

Kendall Square Lease

Operating lease

Office space used for operation (in square feet) | squarefeet

120

Options to extend term | term_extension

Future minimum commitments under facility leases commitments with terms of more than one year

$ 18,338

18,338

18,338

18,338

18,338

6,113

97,803

Future minimum commitments under facility leases commitments with terms of more than one year

Rental expense

11,600

$ 11,200

$ 11,600

Other Operating Leases

43,165

35,375

27,909

9,916

8,904

30,610

$ 155,879

[1]

Commitments Capital Lease Financing Obligations (Details) $ in Thousands	Dec. 31, 2012 USD ($)
Capital Leases, Future Minimum Payments Due [Abstract]
2013	$ 14,502
2014	9,005
2015	6,537
Total payments	30,044
Less: amount representing interest	(1,167)
present value of payments	$ 28,877

Amount necessary to reduce net minimum lease payments to present value calculated at the lesser of the interest rate implicit in the lease (if known) or the entity's incremental borrowing rate (as defined) at inception of the lease.

Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
Segment Information (Details) - USD ($) $ in Thousands	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Revenues from external customers
Product revenues, net	$ 281,309	$ 303,501	$ 373,273	$ 375,375	$ 456,759	$ 419,595	$ 74,535	$ 0	$ 1,333,458	$ 950,889	$ 0
Total revenues	333,994	$ 336,006	$ 418,305	$ 438,737	563,340	$ 659,200	$ 114,424	$ 73,662	1,527,042	1,410,626	143,370
Property and equipment, net	433,609				133,176				433,609	133,176
United States
Revenues from external customers
Total revenues									1,373,516	1,389,568	143,370
Property and equipment, net	400,102				109,480				400,102	109,480
Outside of the United States
Revenues from external customers
Total revenues									153,526	21,058	0
Property and equipment, net	33,507				23,696				33,507	23,696
United Kingdom
Revenues from external customers
Property and equipment, net	30,622				21,377				30,622	21,377
Europe
Revenues from external customers
Total revenues									129,786	20,289	0
Other
Revenues from external customers
Total revenues									23,740	769	$ 0
Property and equipment, net	$ 2,885				$ 2,319				$ 2,885	$ 2,319
Minimum \| Revenues, Net [Member]
Revenues from external customers
Concentration risk, percentage	10.00%				10.00%				10.00%	10.00%
Minimum \| Accounts Receivable [Member]
Revenues from external customers
Threshold for disclosure percentage	10.00%				10.00%				10.00%	10.00%
Credit Concentration Risk \| Amerisource Bergen Drug Corporation \| Revenues, Net [Member]
Revenues from external customers
Concentration risk, percentage	32.00%				25.00%				32.00%	25.00%	0.00%
Credit Concentration Risk \| Amerisource Bergen Drug Corporation \| Accounts Receivable [Member]
Revenues from external customers
Concentration risk, percentage	22.00%				35.00%				22.00%	35.00%
Credit Concentration Risk \| McKesson Corporation \| Revenues, Net [Member]
Revenues from external customers
Concentration risk, percentage	29.00%				24.00%				29.00%	24.00%	0.00%
Credit Concentration Risk \| McKesson Corporation \| Accounts Receivable [Member]
Revenues from external customers
Concentration risk, percentage	26.00%				30.00%				26.00%	30.00%
Credit Concentration Risk \| Cardinal Health Incorporated \| Revenues, Net [Member]
Revenues from external customers
Concentration risk, percentage	15.00%				15.00%				15.00%	15.00%	0.00%
Credit Concentration Risk \| Cardinal Health Incorporated \| Accounts Receivable [Member]
Revenues from external customers
Concentration risk, percentage					20.00%					20.00%
Credit Concentration Risk \| Cardinal Health Incorporated \| Maximum [Member] \| Accounts Receivable [Member]
Revenues from external customers
Concentration risk, percentage	10.00%								10.00%
Credit Concentration Risk \| Janssen Pharmaceutica, N.V. \| Revenues, Net [Member]
Revenues from external customers
Concentration risk, percentage					19.00%					19.00%	21.00%
Credit Concentration Risk \| Janssen Pharmaceutica, N.V. \| Accounts Receivable [Member]
Revenues from external customers
Concentration risk, percentage	26.00%				10.00%				26.00%	10.00%
Credit Concentration Risk \| Janssen Pharmaceutica, N.V. \| Maximum [Member] \| Revenues, Net [Member]
Revenues from external customers
Concentration risk, percentage	10.00%								10.00%
Credit Concentration Risk \| Mitsubishi Tanabe Pharma Corporation \| Revenues, Net [Member]
Revenues from external customers
Concentration risk, percentage											57.00%
Credit Concentration Risk \| Mitsubishi Tanabe Pharma Corporation \| Accounts Receivable [Member]
Revenues from external customers
Concentration risk, percentage	0.00%								0.00%
Credit Concentration Risk \| Mitsubishi Tanabe Pharma Corporation \| Maximum [Member] \| Revenues, Net [Member]
Revenues from external customers
Concentration risk, percentage	10.00%				10.00%				10.00%	10.00%
Credit Concentration Risk \| Mitsubishi Tanabe Pharma Corporation \| Maximum [Member] \| Accounts Receivable [Member]
Revenues from external customers
Concentration risk, percentage					10.00%					10.00%
INCIVEK
Revenues from external customers
Product revenues, net									$ 1,161,813	$ 950,889	$ 0
KALYDECO
Revenues from external customers
Product revenues, net									$ 171,645	$ 0	$ 0

Quarterly Financial Data (unaudited) (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands

3 Months Ended

12 Months Ended

108 Months Ended

Dec. 31, 2012

Sep. 30, 2012

Jun. 30, 2012

Mar. 31, 2012

Dec. 31, 2011

Sep. 30, 2011

Jun. 30, 2011

Mar. 31, 2011

Dec. 31, 2012

Dec. 31, 2011

Dec. 31, 2010

Dec. 31, 2003

Dec. 31, 2012

Revenues:

Product revenues, net

$ 281,309

$ 303,501

$ 373,273

$ 375,375

$ 456,759

$ 419,595

$ 74,535

$ 0

$ 1,333,458

$ 950,889

$ 0

43,451

25,586

33,480

38,981

25,405

8,539

10,010

6,061

141,498

50,015

30,244

9,234

6,919

11,552

24,381

81,176

231,066

29,879

67,601

52,086

409,722

113,126

Research and development expenses

333,994

336,006

418,305

438,737

563,340

659,200

114,424

73,662

1,527,042

1,410,626

143,370

Costs and expenses:

Cost of product revenues

75,595

^[1]

30,680

104,549

^[2]

25,918

22,936

35,285

5,404

236,742

63,625

Royalty expenses

12,120

7,856

9,874

13,293

7,191

3,121

3,902

2,666

43,143

16,880

12,730

213,109

200,161

196,544

196,371

186,438

189,052

173,604

158,612

806,185

707,706

637,416

Sales, general and administrative expenses

110,452

97,684

117,514

111,146

121,881

110,654

96,663

71,523

436,796

400,721

187,800

Restructuring expense (credit)

194

696

594

360

992

(419)

741

760

1,844

2,074

1,501

$ 91,824

$ 62,479

Income (loss) from operations

105,800

^[3]

105,800

Total costs and expenses

411,470

337,077

429,075

347,088

339,438

443,493

280,314

233,561

1,524,710

1,296,806

839,447

(77,476)

(1,071)

(10,770)

91,649

223,902

215,707

(165,890)

(159,899)

2,332

113,820

(696,077)

Interest income

497

519

560

364

197

202

1,402

1,940

1,878

1,955

Interest expense

(3,793)

(4,560)

(4,195)

(4,105)

(12,430)

(7,059)

(6,962)

(12,001)

(16,653)

(38,452)

(19,275)

Change in fair value of derivative instruments

(868)

(8,115)

(2,220)

(5,598)

(16,801)

(41,229)

Income (loss) before provision for (benefit from) income taxes

(80,772)

(5,112)

(14,405)

87,908

210,801

200,610

(174,870)

(176,096)

(12,381)

60,445

(754,626)

(2,696)

21,355

20,063

22,660

(27,842)

^[3]

24,448

38,754

19,266

Net loss (income) attributable to noncontrolling Interest (Alios)

(78,076)

(26,467)

(34,468)

87,876

188,141

228,452

(199,318)

(176,096)

(51,135)

41,179

(754,626)

1,928

(31,076)

(30,463)

3,714

(29,512)

(7,342)

25,249

(55,897)

(11,605)

Net income (loss) attributable to Vertex

$ (76,148)

$ (57,543)

$ (64,931)

$ 91,590

$ 158,629

$ 221,110

$ (174,069)

$ (176,096)

$ (107,032)

$ 29,574

$ (754,626)

Net income (loss) per share attributable to Vertex common shareholders:

$ (0.35)

$ (0.27)

$ (0.31)

$ 0.44

$ 0.76

$ 1.06

$ (0.85)

$ (0.87)

$ (0.50)

$ 0.14

$ (3.77)

Shares used in per share calculations:

$ (0.35)

$ (0.27)

$ (0.31)

$ 0.43

$ 0.74

$ 1.02

$ (0.85)

$ (0.87)

$ (0.50)

$ 0.14

$ (3.77)

214,607

213,767

211,344

208,018

206,758

206,002

204,413

202,329

211,946

204,891

200,402