17 The U.S. government, state legislatur t es and foreign governments have shown significant interest in implementing cost containment programs to limit the growth of government-paid health care costs, including price-controls, restrictions on reimbursement and requirements for subs u titution of generic products for branded prescription drugs r . For example, the ACA contains provisions that may reduce the profita f bi a lity of drug r products through increased rebates for drugs r reimbursed by Medicaid programs, extension of Medicaid rebates to Medicaid managed care plans, mandatory discounts for certain Medicare Part D beneficiaries and annual fees based on pharmaceutical companies’ share of sales to federal health care programs. Adoption of general controls and measures, coupled with the tightening of restrictive policies in jurisdictions with existing controls and measures, could limit payments for pharmaceutical drugs r . The Medicaid Drug r Rebate Program requires pharmaceutical manufact f ur t ers to enter into and have in effe f ct a national rebate agreement with the Secretary r of HHS as a condition for states to receive federal matching funds for the manufact f ur t er’s outpa t tient drugs r furnished to Medicaid patients. The ACA made several changes to the Medicaid Drug r Rebate Program, including increasing pharmaceutical manufac f turers’ rebate liability by raising the minimum basic Medicaid rebate on most branded prescription drugs r from 15.1% of average manufact f ur t er price, or AMP, to 23.1% of AMP and adding a new rebate calculation for “line extensions” (i.e., new formulations, such as extended release formulations) of solid oral dosage forms of branded products, as well as potentially impacting their rebate liabi a lity by modifying the statut t ory r definition of AMP. The ACA also expanded the universe of Medicaid utilization subj u ect to drug r rebates by requiring pharmaceutical manufact f ur t ers to pay rebates on Medicaid managed care utilization and by enlarging the population potentially eligible for Medicaid drug r benefits. CMS has proposed to expand Medicaid rebate liabi a lity to the territories of the United States as well. The Medicare Prescription Drug, r Improvement, and Modernization Act of 2003, or the MMA, establ a ished the Medicare Part D program to provide a voluntary r prescription drug r benefit to Medicare beneficiaries. Under Part D, Medicare beneficiaries may enroll in prescription drug r plans offe f red by private entities that provide coverage of outpa t tient prescription drugs r . Unlike Medicare Part A and B, Part D coverage is not standardized. While all Medicare drug r plans must give at least a standard level of coverage set by Medicare, Part D prescription drug r plan sponsors are not required to pay for all covered Part D drugs r , and each drug r plan can develop its own drug r formulary r that identifie f s which drugs r it will cover and at what tier or level. However, Part D prescription drug r formularies must include drugs r within each therapeutic category r and class of covered Part D drugs r , though not necessarily all the drugs r in each category r or class. Any formulary r used by a Part D prescription drug r plan must be developed and reviewed by a pharmacy and therapeutic committee. Government payment for some of the costs of prescription drugs r may increase demand for products for which we receive marketing approval. However, any negotiated prices for our products covered by a Part D prescription drug r plan likely will be lower than the prices we might otherwise obtain. Moreover, while the MMA applies only to drug r benefits for Medicare beneficiaries, private payors ofte f n follow Medicare coverage policy and payment limitations in setting their own payment rates. Any reduction in payment that results from the MMA may result in a similar reduction in payments from non-governmental payors. For a drug r product to receive federal reimbursement under the Medicaid or Medicare Part B programs or to be sold directly to U.S. government agencies, the manufact f ur t er must extend discounts to entities eligible to participate in the 340B drug r pricing program. The required 340B discount on a given product is calculated based on the AMP and Medicaid rebate amounts reported by the manufactur t er. In 2010, the ACA expanded the types of entities eligible to receive discounted 340B pricing, although, under the current state of the law, with the exception of children’s hospitals, these newly eligible entities will not be eligible to receive discounted 340B pricing on orpha r n drugs r . In addition, as 340B drug r prices are determined based on AMP and Medicaid rebate data, the revisions to the Medicaid rebate formula and AMP definition described above could cause the required 340B discount to increase. As noted above, the marketability of any products for which we receive regulatory r approval for commercial sale may suffer if the government and third-party payors fail to provide adequate coverage and reimbursement. An increasing emphasis on cost containment measures in the United States has increased and we expect will continue to increase the pressure on pharmaceutical pricing. Coverage policies and third-party reimbursement rates may change at any time. Even if favorable coverage and reimbursement status t is attained for one or more products for which we receive regulatory r approval, less favorable coverage policies and reimbursement rates may be implemented in the future. In addition, in most foreign countries, the proposed pricing for a drug r must be approved before it may be lawful f ly marketed. The requirements governing drug r pricing and reimbursement 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 profit f ability of the company placing the medicinal product on the market. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products. Historically, products launched in the European Union do not follow price structures of the United States and generally prices tend to be significantly lower.