Company: HROW
Filing Date: 2025-08-11
Form Type: 10-Q
Source: 0001641172-25-022980
Chunk: 20

Company: HARROW, INC.
Filing Date: 2025-08-11
Form: 10-Q
Item: Item 1
Chunk 20
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 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 based on historical experience with Medicare rebates for products. Medicare rebates are
billed quarterly for drugs dispensed to Medicare beneficiaries in the prior quarter, which is typically 120 days after the product is
shipped. As a result of the delay between selling the products, dispensing the products and rebate billing, Medicare 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 Medicare Part
D participants.

To
evaluate the adequacy of the government rebate reserves, reserves are reviewed on a quarterly basis against actual claims data to ensure
the liability is fairly stated. The Company continually monitors the government rebate reserve and adjusts estimates if it is expected
that actual government rebates may differ from established accruals. Accruals for government rebates are recorded as a reduction to gross
revenues in the consolidated statements of operations and as an increase to accrued rebates in the consolidated balance sheets.

Returns

A
returns policy is in place that allows customers to return product