RISK FACTORS 4 high cost employer-sponsored insurance plans and the annual fee We expect that the ACA, as wel l as other healthcare reform imposed on certain health insurance providers based on market measures that may be adopted in the future, may result in more share. Further, the Bipartisan Budget Act of 2018, among other rigorous coverage criteria and lower reimbursement, and in things, amends the ACA, effective January 1, 2019, to reduce the additional downward pressure on the price that we receive for any coverage gap in most Medicare drug plans, commonly referred to approved product candidate. Any reduction in reimbursement as the “donut hole.” Congress could consider additional legislation from Medicare or other government-funded programs may to repeal or repeal and replace certain elements of the ACA. result in a similar reduction in payments from private payors. We continue to evaluate the potential impact of the ACA and its The implementation of cost containment measures or other possible repeal or replacement on our business. healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our drugs. In addition, both the Budget Control Act of 2011 and the American Moreover, we cannot predict what healthcare reform initiatives Taxpayer Relief Act of 2012, or the ATRA, have instituted, among may be adopted in the future. other things, mandatory reductions in Medicare payments to certain providers. Additional legislative proposals to reform We or our employees, principal investigators, consultants, and healthcare and government insurance programs, along with the commercial partners may violate U.S. federal and state and trend toward managed healthcare in the United States, could European Union healthcare fraud and abuse laws, false claims laws influence the purchase of medicines and reduce reimbursement and health information privacy laws. and/or coverage of our product candidates, if approved. Recently, there has been heightened governmental scrutiny over the manner In some European Union Member States, the provision of in which manufacturers set prices for their marketed products. benefits or advantages to physicians to induce or encourage the For example, there have been several recent U.S. Congressional prescription, recommendation, endorsement, purchase, supply, inquiries and proposed and enacted federal and state legislation order or use of medicinal products is prohibited. The provision of designed to, among other things, bring more transparency to drug benefits or advantages to physicians is notably governed by the pricing, review the relationship between pricing and manufacturer national anti- bribery laws of European Union Member States, patient programs, reduce the costs of drugs under Medicare and such as the U.K. Bribery Act or in France, the French Anti-Gift Act reform government program reimbursement methodologies for (French law no. 93-121 of January 27, 1993, as amended) and the drug products. At the federal level, the Trump administration’s French Sunshine Act(French law no. 2011-2012 of December 29, budget proposal for fiscal year 2019 contains further drug price 2011, as amended). Infringement of these laws could result in control measures that could be enacted during the 2019 budget substantial fines and imprisonment. process or in other future legislation, including, for example, Payments made to physicians in certain European Union Member measures to permit Medicare Part D plans to negotiate the price States must be publicly disclosed. Moreover, agreements with of certain drugs under Medicare Part B, to allow some states to physicians often must be the subject of prior notification and negotiate drug prices under Medicaid, and to eliminate cost sharing approval by the physician’s employer, his or her competent for generic drugs for low-income patients. While any proposed professional organization and/or the regulatory authorities of the measures will require authorization through additional legislation individual European Union Member States. These requirements to become effective, Congress and the Trump administration are provided in the national laws, industry codes or professional have each indicated that it will continue to seek new legislative codes of conduct, applicable in the European Union Member and/or administrative measures to control drug costs. At the States. Failure to comply with these requirements could result state level, legislatures are increasingly passing legislation and in reputational risk, public reprimands, administrative penalties, implementing regulations designed to control pharmaceutical and fines or imprisonment. biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and The collection and use of personal health data in the European marketing cost disclosure and transparency measures, and, in some Union is governed by the provisions of the Data Protection cases, designed to encourage importation from other countries and Directive. This directive imposes several requirements relating to bulk purchasing. These legislative proposals and initiatives could the consent of the individuals to whom the personal data relates, harm our ability to market any product candidates and generate the information provided to the individuals, notification of data revenues. Cost containment measures that healthcare payors processing obligations to the competent national data protection and providers are instituting and the effect of further healthcare authorities and the security and confidentiality of the personal reform could significantly reduce potential revenues from the data. The Data Protection Directive also imposes strict rules on sale of any of our product candidates approved in the future, and the transfer of personal data out of the European Union to the could cause an increase in our compliance, manufacturing, or other United States. Failure to comply with the requirements of the operating expenses. Data Protection Directive and the related national data protection GENSIGHT BIOLOGICS – 2017 Registration Document– 39