CHICAGO – June 15, 2015 – For many years, the success of life sciences companies relied primarily on their ability to develop new drugs and overcome regulatory hurdles to increase market share. Today, a key element of profitability of life sciences companies rests in their ability to negotiate pricing with insurance companies and local governments. Recent headlines around Gilead’s launch of Solvaldi and Harvoni, specialty drugs to cure the most common type of hepatitis C, shed light on the delicate balance between charging a “fair” price for the value provided by a drug and the ability of healthcare systems to reimburse the costs of “specialty” medications. As new biotechs emerge and global spending for generic medicines rapidly grows, even well-established companies are pressured to prove the “value” that a product brings to third-party payers. This challenge was highlighted in the findings from the third annual BDO USA, LLP analysis of risk factors listed in the most recent 10-K filings of the 100 largest companies on the NASDAQ Biotechnology Index, indicating that companies are on high alert when it comes to drug reimbursement. Ninety-six percent of life sciences companies cite concerns related to reimbursement changes and their availability, including payments from Medicare and Medicaid, up from 85 percent in 2014, according to the 2015 BDO Life Sciences RiskFactor Report. This represents the single largest year-to-year change among the top 10 risk factors cited.
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