Company: HROW
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001641172-25-000925
Chunk: 14

Company: HARROW, INC.
Filing Date: 2025-03-27
Form: 10-K
Item: Item 1
Chunk 14
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 or has changed as a result of recalculation of the pricing data, we
are obligated to resubmit the corrected data for up to three years after those data originally were due, which revisions could affect
our rebate liability for prior quarters. The federal Patient Protection and Affordable Care Act (the “PPACA” or “Health
Care Reform Law”) made significant changes to the Medicaid Drug Rebate program, and CMS issued a final regulation, which became
effective on April 1, 2016, to implement the changes to the Medicaid Drug Rebate program under the PPACA. Effective in 2022, CMS modified
Medicaid Drug Rebate program regulations to, among other things, permit reporting multiple best price figures with regard to value-based
purchasing arrangements and provide definitions for “line extension,” “new formulation,” and related terms with
the practical effect of expanding the scope of drugs considered to be line extensions.

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Civil
monetary penalties can be applied if we are found to have knowingly submitted any false pricing or other information to the government,
if we are found to have made a misrepresentation in the reporting of our average sales price, or if we fail to submit the required data
on a timely basis. Such conduct also could be grounds for CMS to terminate our Medicaid drug rebate agreement, in which case federal
payments may not be available under Medicaid or Medicare Part B for our covered outpatient drugs.

Federal
law requires that any company that participates in the Medicaid Drug Rebate program also participate in the Public Health Service’s
340B drug pricing program (the “340B program”) in order for federal funds to be available for the manufacturer’s drugs
under Medicaid and Medicare Part B. The 340B program, which is administered by the Health Resources and Services Administration (“HRSA”),
requires participating manufacturers to agree to charge statutorily defined covered entities no more than the 340B “ceiling price”
for the manufacturer’s covered outpatient drugs. Covered entities 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 Public Health Service Act.
The PPACA expanded the list of covered entities to include certain free-standing cancer hospitals, critical access hospitals, rural referral
centers, and sole community hospitals, but exempts “orphan drugs” from the ceiling price requirements for these covered entities.
The 340B ceiling price is calculated using a statutory formula, which is based on the average manufacturer price and Medicaid rebate