Company: SCLXW
Filing Date: 2025-05-14
Form Type: 424B3
Source: 0001193125-25-119831
Chunk: 138

Company: Scilex Holding Co
Filing Date: 2025-05-14
Form: 424B3
Chunk 138
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 or duplicate discounts. Such claims are to be resolved through an ADR panel of government
officials rendering a decision that can be appealed to a federal court. An ADR proceeding could subject a manufacturer to onerous procedural requirements and could result in additional liability. Further, any additional future changes to the
definition of average manufacturer price and the Medicaid rebate amount under the ACA or otherwise could affect our 340B ceiling price calculations and negatively affect results of operations. In recent years, two U.S. Courts of Appeals for the
Third Circuit and District of Columbia Circuits (the “Third Circuit” and “D.C. Circuit,” respectively) have ruled that, under Section 340B, manufacturers are not required to provide the discounted drugs to an unlimited
number of contract pharmacies, but can impose some contractual limitations on how products may be distributed. The Third Circuit also upheld the ADR rules. One other case is pending in the U.S. Court of Appeals for the Seventh Circuit. Various
states have also enacted laws prohibiting manufacturers from placing conditions on covered entities’ use of contract pharmacies. There is ongoing litigation over these state laws.

Civil monetary penalties can be applied if a manufacturer (i) is found to have knowingly submitted any false price or product information
to the government, (ii) is found to have made a misrepresentation in the reporting of its average sales price, (iii) fails to submit the required price data on a timely basis, or (iv) is found to have knowingly and intentionally
charged 340B covered entities more than the statutorily mandated ceiling price. CMS could also decide to terminate the Medicaid Drug Rebate Agreement, or HRSA, or to terminate the 340B

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program participation agreement, in which case federal payments may not be available under Medicaid or Medicare Part B for the manufacturer’s covered outpatient drugs.

In addition, manufacturers are required to provide to CMS a 70% discount on brand name prescription drugs utilized by Medicare Part D
beneficiaries when those beneficiaries are in the coverage gap phase of the Part D benefit design. Congress could enact legislation that sunsets this discount program and replaces it with a new manufacturer discount program. Under either program,
civil monetary penalties could be applied if a manufacturer fails to provide these discounts in the amount of 125% of the discount that was due. Furthermore, the Inflation Reduction Act of 2022 (the “IRA”), PL 117-169, seeks to limit manufacturers’ price increases for drugs reimbursed by Medicare, to not more than