United states securities and exchange commission

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Orphan Drug Act
Under the U.S. Orphan Drug Act, the FDA may 
grant orphan drug designation to drugs or biologics 
intended to treat a “rare disease or condition,” which 
generally is a disease or condition that affects fewer 
than 200,000 individuals in the U.S. If a product 
which has an orphan drug designation subsequently 
receives the first FDA approval for the indication for 
which it has such designation, the product is entitled 
to orphan exclusivity, i.e., the FDA may not approve 
any other applications to market the same drug for 
the same indication for a period of seven years 
following marketing approval, except in certain very 
limited circumstances, such as if the later product is 
shown to be clinically superior to the orphan product. 
Legislation similar to the U.S. Orphan Drug Act has 
been enacted in other countries to encourage the 
research, development and marketing of medicines to 
treat, prevent or diagnose rare diseases. In the E.U., 
medicinal products that receive an orphan designation 
are entitled to 10 years of market exclusivity following 
approval, protocol assistance and access to the 
centralized procedure for marketing authorization. 
SPINRAZA has been granted orphan drug designation 
in the U.S., E.U. and Japan.
Regulation Pertaining to Pricing and 
Reimbursement
In both domestic and foreign markets, sales of 
our products depend, in part, on the availability and 
amount of reimbursement by third-party payors, 
including governments, private health plans and other 
organizations. Substantial uncertainty exists regarding 
the pricing and reimbursement of our products, and 
drug prices continue to receive significant scrutiny. 
Governments may regulate coverage, reimbursement 
and pricing of our products to control cost or affect 
utilization of our products. Challenges to our pricing 
strategies, by either government or private 
stakeholders, could harm our business. The U.S. and 
foreign governments have enacted and regularly 
consider additional reform measures that affect 
health care coverage and costs. Private health plans 
may also seek to manage cost and utilization by 
implementing coverage and reimbursement 
limitations. Other payors, including managed care 
organizations, health insurers, pharmacy benefit 
managers, government health administration 
authorities and private health insurers, seek price 
discounts or rebates in connection with the placement 
of our products on their formularies and, in some 
cases, may impose restrictions on access, coverage 
or pricing of particular drugs based on perceived 
value.
Within the U.S.
•  Medicaid: Medicaid is a joint federal and state 
program that is administered by the states for 
low income and disabled beneficiaries. Under 
the Medicaid Drug Rebate Program, we are 
required to pay a rebate for each unit of product 
reimbursed by the state Medicaid programs. The 
amount of the rebate is established by law and 
is adjusted upward if average manufacture price 
(AMP) increases more than inflation (measured 
by the Consumer Price Index - Urban). The rebate 
amount is calculated each quarter based on our 
report of current AMP and best price for each of 
our products to the Centers for Medicare & 
Medicaid Services (CMS). The requirements for 
calculating AMP and best price are complex. We 
are required to report any revisions to AMP or 
best price previously reported within a certain 
period, which revisions could affect our rebate 
liability for prior quarters. In addition, if we fail to 
provide information timely or we are found to 
have knowingly submitted false information to 
the government, the statute governing the 
Medicaid Drug Rebate Program provides for civil 
monetary penalties.
•  Medicare: Medicare is a federal program that is 
administered by the federal government. The 
program covers individuals age 65 and over as 
well as those with certain disabilities. Medicare 
Part B generally covers drugs that must be 
administered by physicians or other health care 
practitioners; are provided in connection with 
certain durable medical equipment; or are 
certain oral anti-cancer drugs and certain oral 
immunosuppressive drugs. Medicare Part B pays 
for such drugs under a payment methodology 
based on the average sales price (ASP) of the 
drugs. Manufacturers, including us, are required 
to provide ASP information to the CMS on a 
quarterly basis. The manufacturer-submitted 
information is used to calculate Medicare 
payment rates. If a manufacturer is found to 
have made a misrepresentation in the reporting 
of ASP, the governing statute provides for civil 
monetary penalties.
•  Medicare Part D provides coverage to enrolled 
Medicare patients for self-administered drugs 
(i.e., drugs that are not administered by a 
physician). Medicare Part D is administered by 
private prescription drug plans approved by the 
U.S. government. Each drug plan establishes its 
own Medicare Part D formulary for prescription 
drug coverage and pricing, which the drug plan 
may modify from time-to-time. The prescription 
drug plans negotiate pricing with manufacturers 
and pharmacies, and may condition formulary 
placement on the availability of manufacturer 

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discounts. In addition, manufacturers, including 
us, are required to provide to the CMS a 50% 
discount on brand name prescription drugs 
utilized by Medicare Part D beneficiaries when 
those beneficiaries reach the coverage gap in 
their drug benefits.
•  Federal Agency Discounted Pricing: Our products 
are subject to discounted pricing when 
purchased by federal agencies via the Federal 
Supply Schedule (FSS). FSS participation is 
required for our products to be covered and 
reimbursed by the Veterans Administration (VA), 
Department of Defense, Coast Guard and Public 
Health Service (PHS). Coverage under Medicaid, 
Medicare and the PHS pharmaceutical pricing 
program is also conditioned upon FSS 
participation. FSS pricing is intended not to 
exceed the price that we charge our most-favored 
non-federal customer for a product. In addition, 
prices for drugs purchased by the VA, 
Department of Defense (including drugs 
purchased by military personnel and dependents 
through the TriCare retail pharmacy program), 
Coast Guard and PHS are subject to a cap on 
pricing equal to 76% of the non-federal average 
manufacturer price (non-FAMP). An additional 
discount applies if non-FAMP increases more 
than inflation (measured by the Consumer Price 
Index - Urban). In addition, if we fail to provide 
information timely or we are found to have 
knowingly submitted false information to the 
government, the governing statute provides for 
civil monetary penalties.
•  340B Discounted Pricing: To maintain coverage 
of our products under the Medicaid Drug Rebate 
Program and Medicare Part B, we are required to 
extend significant discounts to certain covered 
entities that purchase products under Section 
340B of the PHS pharmaceutical pricing 
program. Purchasers eligible for discounts 
include hospitals that serve a disproportionate 
share of financially needy patients, community 
health clinics and other entities that receive 
certain types of grants under the PHSA. For all of 
our products, we must agree to charge a price 
that will not exceed the amount determined 
under statute (the “ceiling price”) when we sell 
outpatient drugs to these covered entities. In 
addition, we may, but are not required to, offer 
these covered entities a price lower than the 
340B ceiling price. The 340B discount formula is 
based on AMP and is generally similar to the 
level of rebates calculated under the Medicaid 
Drug Rebate Program. 
Outside the U.S.
Outside the U.S., our products are paid for by a 
variety of payors, with governments being the primary 
source of payment. Governments may determine or 
influence reimbursement of products and may also 
set prices or otherwise regulate pricing. Negotiating 
prices with governmental authorities can delay 
commercialization of our products. Governments may 
use a variety of cost-containment measures to control 
the cost of products, including price cuts, mandatory 
rebates, value-based pricing and reference pricing 
(i.e., referencing prices in other countries and using 
those reference prices to set a price). Budgetary 
pressures in many countries are continuing to cause 
governments to consider or implement various cost-
containment measures, such as price freezes, 
increased price cuts and rebates and expanded 
generic substitution and patient cost-sharing. 
Regulation Pertaining to Sales and Marketing
We are subject to various federal and state laws 
pertaining to health care “fraud and abuse,” including 
anti-kickback laws and false claims laws. Anti-
kickback laws generally prohibit a prescription drug 
manufacturer from soliciting, offering, receiving or 
paying any remuneration to generate business, 
including the purchase or prescription of a particular 
drug. Although the specific provisions of these laws 
vary, their scope is generally broad and there may be 
no regulations, guidance or court decisions that clarify 
how the laws apply to particular industry practices. 
There is therefore a possibility that our practices 
might be challenged under anti-kickback or similar 
laws. False claims laws prohibit anyone from 
knowingly and willingly presenting, or causing to be 
presented for payment to third-party payors (including 
Medicare and Medicaid), claims for reimbursed drugs 
or services that are false or fraudulent, claims for 
items or services not provided as claimed, or claims 
for medically unnecessary items or services. Our 
activities relating to the sale and marketing of our 
products may be subject to scrutiny under these laws. 
Violations of fraud and abuse laws may be punishable 
by criminal or civil sanctions, including fines and civil 
monetary penalties, and exclusion from federal health 
care programs (including Medicare and Medicaid). In 
the U.S., federal and state authorities are paying 
increased attention to enforcement of these laws 
within the pharmaceutical industry and private 
individuals have been active in alleging violations of 
the laws and bringing suits on behalf of the 
government under the federal civil False Claims Act. If 
we were subject to allegations concerning, or were 
convicted of violating, these laws, our business could 
be harmed.

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