Company: PHAT
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0000950170-25-034183
Chunk: 270

Company: Phathom Pharmaceuticals, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1B
Chunk 270
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 at the time of sale to the customer. Estimated chargebacks are recorded within accounts receivable, net on the balance sheets.Administration Fees: The Company engages with Pharmacy Benefit Managers, or PBMs, to administer prescription-drug plans for people with third-party insurance through a self-insured employer, health insurance plan, labor union or government plan. The Company pays PBMs “administrative fees” for their role in providing utilization data, administering rebates, and administering claims payments. The Company estimates the amount of administration fees to be paid to PBMs and adjusts the transaction price with the amount of such estimate at the time of sale to the customer. Estimated administration fees are recorded within accrued expenses on the balance sheets.Rebates: Rebates apply to:•Medicaid, managed care, and supplemental rebates to all applicable states as defined by the statutory government pricing calculation requirements under the Medicaid Drug Rebate Program, and•Medicare Part D and Commercial Managed Care rebates are paid based on the contracts with PBMs and Managed Care Organizations. Rebates are paid to these entities upon receipt of an invoice from the contracted entity which is based on the utilization of the product by the members of the contracted entity. The Company estimates the percentage of goods sold that are eligible for rebates and adjusts the transaction price for such discounts at the time of sale to the customers. Estimated rebates are recorded as accrued expenses on the balance sheets.

F-12

Coverage Gap: The Medicare Part D coverage gap, also called the donut hole, is a period of consumer payment for prescription medication costs which lies between the initial coverage limit and the catastrophic-coverage threshold, when the patient is a member of a Medicare Part D prescription-drug program administered by the Centers for Medicare & Medicaid Services. The Company estimates the percentage of goods sold under Coverage Gap and adjusts the transaction price for such discount at the time of sale to the customer. Estimated coverage gap accruals are recorded as accrued expenses on the balance sheets.The Company makes significant estimates and judgments that materially affect its recognition of net product revenue. Claims by third-party payors for rebates, chargebacks and discounts frequently are submitted to the Company significantly after the related sales, potentially resulting in adjustments in the period in which the new information becomes known. The Company will adjust its estimates based on new information, including information regarding actual rebates, chargebacks, co-pays and discounts for its products, as it becomes available.Cost of RevenueCost of revenue includes the cost of producing and distributing inventories that are related to product