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Prepaid expenses belong on the balance sheet and can encompass costs such as rent, insuran

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

ce, advertising, and any other cost that normally would be expensed on your income stateme

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

t but is paid in advance of the period in which it is owed. Prepaid expenses differ from d

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

posits as they will be used up within a specific period (usually within a year) as a depos

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

t could be carried until the end of a contract when ever that might be. For example, prepa

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

d rent would be an upfront prepayment of the yearly rent, but a rental deposit would be ti

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

d in with certain contract obligations and not be an actual expense until the end of the c

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

ntract.

Should you, for example, pay for your yearly insurance premium in one lump sum th

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

n you would charge this premium to an account called Prepaid Insurance. The entry would be

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

Debit: Prepaid Insurance Expense $(amount of yearly premium)

Credit Accounts Payable or

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

Cash $(amount of yearly premium)

(Depending on method of payment)

Each month a general j

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

ournal entry would be made expensing one month’s premium cost. This entry would be as foll

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

ws:

Debit: Insurance Premium Expense $(1/12 of yearly premium)

Credit Prepaid Insurance

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

xpense $(1/12 of yearly premium)

Handling prepaid expenses in this way assures you are fo

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

lowing the rule of matching revenue with expense. You can see if you were on a calendar fi

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

cal year ending December 31st, and your insurance premium was due on November 1st to expen

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

e the entire premium in November would be inappropriate.

Although, an insurance premium i

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

the most common prepaid expense, there are several others that you might come across. Any

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

ime you pay an expense, no matter what type, that will have a timing effect on your books;

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

you should consider using a Prepaid Expense account on your balance sheet for that expense

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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