definiens: shall mean, with respect to any Product, the gross amounts invoiced from the sale of such Product by Purchaser, its Affiliates and assignees to independent Third Parties in an arms - length transaction, in each case after subtracting the following to the extent specifically and solely allocated to such Product and actually taken, paid, accrued, allowed, included or allocated based on good faith estimates in the gross sales prices with respect to such sales ( and consistently applied as set forth below ): ( i ) all normal and customary discounts of any type or nature ( such as retroactive price reductions, cash discounts, volume discounts, chargebacks, allowances, rebates, returns and credits, excluding commissions for commercialization ) ; ( ii ) compulsory payments and cash rebates related to the sales of such Product paid to a govemment authority ( or agent thereof ) pursuant to governmental regulations by reason of any national or local health insurance program or similar program ( such as Medicaid and Supplemental State Program rebates, Medicare Part D Coverage Gap rebates and for Brand Drugs as required by the Patient Protection and Affordable Care Act as amended by the Health Care Education Affordability Reconciliation Act ), to the extent allowed and taken ; and ( iii ) one percent ( 1 % ) of the gross Product revenues on a monthly basis to account for freight, shipping, insurance costs, excise taxes, use taxes, sales taxes and custom duties, and/or government charges imposed on the sales of such Product . Net Sales shall be determined on an accrual basis in accordan ce with generally accepted accounting principles ( ) in the Territory ( except for those items identified in clause ( ii ) and ( iii ) above that are classified as operating expenses for GAAP purposes ), applied on a basis consistent with Purchaser 'S annual audited financial statements, with monthly Net Sales calculations in any year subject to adjustment pending completion of Purchaser 's 3 Execution Copy CONI'IDENTIi\LTllEATMEN T RE(lUESTED FOR THE HIGHLIGHTED TEXT annual audit for that year . All such discounts, allowances, credits, rebates, and other deductions shall be fairly and equitably allocated to the Product and other products of Purchaser and its Affiliates such that such Product does not bear a disproportionate portion of such deductions . For the avoidance of doubt, inclusion of the Products in Purchaser 's portfolio rebate program or substantially similar customer rebate programs shall be permitted, provided that such program does not discount the Product at a rate or percentage that is greater than the rate or percentage of discount applied to other products in the same program