Company: HROW
Filing Date: 2025-11-10
Form Type: 10-Q
Source: 0001493152-25-021562
Chunk: 19

Company: HARROW, INC.
Filing Date: 2025-11-10
Form: 10-Q
Item: Item 1
Chunk 19
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 ●
    Changes
    in customer mix

    ●
    Changes
    in negotiated terms with customers

    ●
    Changes
    in the volume of off-contract purchases

    ●
    Changes
    in WAC

As
necessary, NPPs are adjusted based on anticipated changes in the factors above.

The
difference between NPP and WAC is recorded as a reduction in both gross revenues in the consolidated statements of operations and accounts
receivable in the consolidated balance sheets, at the time revenue is recognized from the product sale. The Company continually monitors
chargeback activity and adjusts NPPs when the Company believes that actual selling prices will differ from current NPPs.

Government
Rebates

Government
rebates reserve consists of estimated payments due to governmental agencies for utilization of the Company’s products by beneficiaries
under such governmental programs. The two largest government programs are Medicaid and Medicare.

    12

The
Company participates in the Medicaid Drug Rebate Program and pays rebates to the states related to Medicaid beneficiary utilization of
the Company’s products. Medicaid rebates are billed within 60-90 days of the end of the quarter in which the product was dispensed
to a Medicaid beneficiary. Medicaid rebate amounts per product unit are established by law, based on the Average Manufacturer Price (“AMP”),
which is reported on a monthly and quarterly basis, and, in the case of branded products, best price, which is reported on a quarterly
basis. Medicaid reserves are based on expected claims from state Medicaid programs. Estimates for expected claims are driven by patient
usage, sales mix, calculated AMP or best price, as well as inventory in the distribution channel that will be subject to a Medicaid rebate.
As a result of the delay between selling the products, dispensing the products and rebate billing, the Medicaid rebate reserve includes
both an estimate of outstanding claims for end-customer sales that have occurred but for which the related claim has not been billed,
as well as an estimate for future claims that will be made when inventory in the distribution channel is sold through to plan participants.
Many of the Company’s branded products are also covered under Medicare. The Company participates in the Coverage Gap Discount Program
in order for its branded products to be covered by Medicare Part D and must provide a rebate for any products sold under NDAs dispensed
to Medicare Part D beneficiaries while the beneficiaries are in the Coverage Gap phase of the benefit. This applies to all products sold
under NDAs. Estimates for these discounts are