that our product candidates will be considered cost-effective. Because coverage and reimbursement determinations are made on a
payor-by-payor basis, obtaining acceptable coverage and reimbursement from one payor does not guarantee the Company will obtain
similar acceptable coverage or reimbursement from another payor. If we are unable to obtain coverage of, and adequate reimbursement
and payment levels for, our product candidates from third-party payors, physicians may limit how much or under what circumstances
they will prescribe or administer them and patients may decline to purchase them. This in turn could affect our ability to successfully
commercialize our products and impact our profitability, results of operations, financial condition and future success.
Furthermore, in many foreign countries,
particularly the countries of the European Union, the pricing of prescription drugs is subject to government control. In some non-U.S.
jurisdictions, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements governing
drug pricing vary widely from country to country. For example, the European Union provides options for its member states to restrict
the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices
of medicinal products for human use. A member state may approve a specific price for the medicinal product or it may instead adopt
a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market. We may
face competition for our product candidates from lower-priced products in foreign countries that have placed price controls on
pharmaceutical products. In addition, there may be importation of foreign products that compete with our own products, which could
negatively impact our profitability.
In the United States and other jurisdictions,
there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system
that could affect our future results of operations as we begin to directly commercialize our products.
In particular, there have been and continue
to be a number of initiatives at the U.S. federal and state level that seek to reduce healthcare costs. Initiatives to reduce the
federal deficit and to reform healthcare delivery are increasing cost-containment efforts. We anticipate that Congress, state legislatures
and the private sector will continue to review and assess alternative benefits, controls on healthcare spending through limitations
on the growth of private health insurance premiums and Medicare and Medicaid spending, the creation of large insurance purchasing
groups, price controls on pharmaceuticals and other fundamental changes to the healthcare delivery system. Any proposed or actual
changes could limit or eliminate our spending on development projects and affect our ultimate profitability.
In March 2010, the Patient Protection and
Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively, the Health Care Reform Law
was signed into law. The Health Care Reform Law has the potential to substantially change the way healthcare is financed by both
governmental and private insurers. The Health Care Reform Law among other things, established an annual, nondeductible fee on any
entity that manufactures or imports certain branded prescription drugs and biologic agents; revised the methodology by which rebates
owed by manufacturers for covered outpatient drugs under the Medicaid Drug Rebate Program are calculated; increased the minimum
Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program; extended the Medicaid Drug Rebate program to
utilization of certain injectable outpatient drugs, as well as prescriptions of individuals enrolled in Medicaid managed care organizations;
required manufacturers to offer 50% point-of-sale discounts on negotiated prices of applicable brand drugs to eligible beneficiaries
during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part
D; and implemented payment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians
and other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled payment
The future of the Health Care Reform Law
remains uncertain. In January 2017, Congress voted to adopt a budget resolution for fiscal year 2017, or the Budget Resolution,
that authorized the implementation of legislation that would repeal portions of the Health Care Reform Law. Further, on January
20, 2017, President Trump signed an Executive Order directing federal agencies with authorities and responsibilities under the
Health Care Reform Law to waive, defer, grant exemptions from, or delay the implementation of any provision of the Health Care
Reform Law that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers
of pharmaceuticals or medical devices. The practical implications of that order are unclear, and the future of the Health Care
Reform Law is uncertain. Congress also could consider subsequent legislation to replace elements of the Health Care Reform Law
that are repealed.