Company: HROW
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001641172-25-000925
Chunk: 13

Company: HARROW, INC.
Filing Date: 2025-03-27
Form: 10-K
Item: Item 1
Chunk 13
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 of that product. New drugs
approved by the FDA that are used in surgeries performed in a hospital outpatient departments or ambulatory surgical centers may
receive a transitional pass-through reimbursement under Medicare, provided they meet certain criteria, including a “not
insignificant” cost criterion. Pass-through status allows for separate payment (i.e., outside the packaged payment rate for
the surgical procedure) under Medicare Part B, which consists of Medicare reimbursement for a drug based on a defined formula for
calculating the minimum fee that a manufacturer may charge for the drug. Under current regulations of CMS, pass-through status
applies for a period of three years; which is measured from the date Medicare makes its first pass-through payment for the product.
Following the three-year period, the product would be incorporated into the cataract bundled payment system, which could
significantly reduce the pricing for that product. Temporary pass-through reimbursement for IHEEZO was awarded by CMS and made
effective in the second quarter of 2023 and temporary pass-through reimbursement for TRIESENCE was made effective April 1, 2025. Following the expiration of pass-through status, under current CMS policy, non-opioid pain
management surgical drugs when used on Medicare Part B patients in an outpatient setting can qualify for ongoing separate payments.
CMS’ current non-opioid separate payment policy, like other CMS policies, can be changed by CMS through its annual rulemaking
and comment process.

Medicaid
is a joint federal and state program that is administered by the states for low-income and disabled beneficiaries. Medicaid rebates are
based on pricing data reported by us on a monthly and quarterly basis to CMS, the federal agency that administers the Medicaid and Medicare
programs. These data include the average manufacturer price and, in the case of innovator products, the best price for each drug which,
in general, represents the lowest price available from the manufacturer to any entity in the U.S. in any pricing structure, calculated
to include all sales and associated rebates, discounts, and other price concessions. The amount of the rebate is adjusted upward if the
average manufacturer price increases at a faster rate than inflation (measured by reference to the Consumer Price Index – Urban).
The rebate was previously capped at 100% of the average manufacturer price, but effective January 1, 2024, this cap on the rebate was
removed, and our rebate liability could increase accordingly.

If we
become aware that our reporting for a prior quarter was incorrect