Company: PTHS
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001753926-25-000503
Chunk: 34

Company: Pelthos Therapeutics Inc.
Filing Date: 2025-03-27
Form: 10-K
Item: Item 1
Chunk 34
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 of a product is (1) a covered benefit under its health plan; (2) safe, effective and medically necessary; (3) appropriate
for the specific patient; (4) cost-effective; and (5) neither experimental nor investigational. Reimbursement rates may vary according
to the use of the drug and the clinical setting in which it is used, may be based on reimbursement levels already set for lower
cost drugs and may be incorporated into existing payments for other services. However, one third-party payor’s determination
to provide coverage for a compound does not assure that other payors will also provide coverage for the compound. No uniform policy
of coverage and reimbursement for products exists among third-party payors, and coverage and reimbursement levels for products
can differ significantly from payor to payor.

19 

Third-party
payors are increasingly challenging the prices charged, examining the medical necessity, reviewing the cost-effectiveness of medical
products and services and imposing controls to manage costs. In order to secure coverage and reimbursement for any product that
might be approved for sale, a company may need to conduct expensive pharmaco-economic studies in order to demonstrate the cost
effectiveness of the product, which will require additional expenditure above and beyond the costs required to obtain FDA or other
comparable regulatory approvals. Third-party payors may limit coverage to specific products on an approved list, also known as
a formulary, which might not include all of the FDA-approved products for a particular indication. Moreover, the containment of
healthcare costs has become a priority of federal, state and foreign governments, and the prices of products have been a focus
in this effort. Governments have shown significant interest in implementing cost-containment programs, including price controls
or price increase penalties, restrictions on reimbursement and requirements for substitution of generic products.

In
addition, companion diagnostic tests require coverage and reimbursement separate and apart from the coverage and reimbursement
for their companion pharmaceutical products. Similar challenges to obtaining coverage and reimbursement, applicable to pharmaceutical
products, will apply to companion diagnostics.

Current
and Future Healthcare Reform Legislation

In
the United States and certain foreign jurisdictions, there have been, and likely will continue to be, a number of proposed and
adopted legislative and regulatory changes regarding the healthcare system directed at broadening the availability of healthcare,
improving the quality of healthcare, and containing or lowering the cost of healthcare. For example, in March 2010, the United
States Congress enacted the ACA, which, among other