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Revenue Recognition
 9 Months Ended
Sep. 30, 2020
Revenue from Contract with Customer [Abstract]  
Revenue Recognition REVENUE RECOGNITION
Product Revenue and Allowances and Accruals

The following table provides information about disaggregated revenue by product for the three and nine months ended September 30, 2020 and 2019 (in thousands):
 Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Product sales, net  
Feraheme$46,718 $44,205 $120,786 $126,294 
Makena25,860 33,949 66,079 95,483 
Intrarosa37 5,607 4,423 14,898 
Other614 23 (586)156 
Total product sales, net$73,229 $83,784 $190,702 $236,831 

Total gross product sales were offset by product sales allowances and accruals for the three and nine months ended September 30, 2020 and 2019 as follows (in thousands):
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Gross product sales$218,739 $254,073 $633,475 $704,976 
Provision for product sales allowances and accruals:    
Contractual adjustments129,966 144,108 383,003 381,633 
Governmental rebates15,544 26,181 59,770 86,512 
Total145,510 170,289 442,773 468,145 
Product sales, net$73,229 $83,784 $190,702 $236,831 

The following table summarizes the product revenue allowance and accrual activity for the three and nine months ended September 30, 2020 (in thousands):
 ContractualGovernmental 
 AdjustmentsRebatesTotal
Balance at December 31, 2019$95,221 $47,623 $142,844 
Provisions related to current period sales147,235 20,982 168,217 
Adjustments related to prior period sales(4,060)976 (3,084)
Payments/returns relating to current period sales(95,284)— (95,284)
Payments/returns relating to prior period sales(37,969)(29,646)(67,615)
Balance at March 31, 2020$105,143 $39,935 $145,078 
Provisions related to current period sales111,508 21,904 133,412 
Adjustments related to prior period sales(634)378 (256)
Payments/returns relating to current period sales(112,821)(13,913)(126,734)
Payments/returns relating to prior period sales(19,484)(10,240)(29,724)
Balance at June 30, 2020$83,712 $38,064 $121,776 
Provisions related to current period sales129,402 17,410 146,812 
Adjustments related to prior period sales565 (1,867)(1,302)
Payments/returns relating to current period sales(115,634)(14,259)(129,893)
Payments/returns relating to prior period sales(5,803)(830)(6,633)
Balance at September 30, 2020$92,242 $38,518 $130,760 

Collaboration Revenue

In July 2020, we entered into a License and Commercialization Agreement with Norgine B.V. (“Norgine”, and such agreement, the “Norgine Agreement”), pursuant to which we granted Norgine an exclusive license to develop and commercialize ciraparantag in certain countries in Europe, Australia and New Zealand (the “Norgine Territory”). We received a $30.0 million upfront payment upon signing. In addition, pursuant to the terms and conditions of the Norgine Agreement (a) Norgine will pay us one-third of the actual and reasonable out-of-pocket costs of the Phase 3 program, pursuant to a mutually agreed upon budget, (b) we are eligible to receive up to $70.0 million upon the achievement of certain regulatory milestones (of which we will pay $40.0 million to the former equity holders of Perosphere pursuant to the terms of the Perosphere Agreement (described below), (c) we are eligible to receive up to $190.0 million contingent upon meeting certain sales milestones, and (d) Norgine will pay us tiered double-digit royalties on net sales in the licensed territory. Norgine will be responsible for the regulatory filings and any clinical trials specifically required for approval of the Product in the Norgine Territory and will hold all marketing authorizations in the Norgine Territory. We will be responsible for manufacturing and supplying Norgine with its requirements of clinical and commercial product pursuant to supply agreement(s) to be entered into by the parties.

In accordance with ASC 808, we considered the nature and contractual terms of the arrangement and the nature of our business operations to determine the classification of payments under the Norgine Agreement and concluded that Norgine meets the definition of a customer. As a result, the Norgine Agreement was accounted for under ASC 606. We determined that the Norgine Agreement contains three distinct performance obligations: (i) delivery of a license granting rights to clinical data developed to date and rights to develop and commercialize ciraparantag in the Norgine Territory (the “License”), (ii) research and development services, and (iii) participation on the joint development and steering committees.

We allocated the upfront consideration to each performance obligation using the standalone selling prices based on our estimate of selling price for the License, research and development services and participation on the joint development and steering committees. To determine the standalone selling price for the License and for the participation on the joint development and joint steering committees, we used an adjusted market approach. For the License, the adjusted market approach included an assessment of the likelihood of achievement of certain regulatory milestones using third party evidence and the likelihood of regulatory approval of ciraparantag and the expected future cash flows assuming regulatory approval in the Norgine Territory, discounting these cash flows using a risk adjusted discount rate of approximately 27%. For the research and development services we determined the standalone selling pricing using a cost plus margin approach. For the joint development and joint steering committees, the adjusted market approach included an assessment of consulting rates prevalent in the marketplace.
Under Topic 606, we allocated the $30.0 million upfront payment as follows: $19.8 million to the License and $10.2 million to the research and development services. No consideration was allocated to the performance obligation related to participation on the joint development and steering committees, as its standalone selling price was not material. The amounts allocated to the licenses were recognized upon delivery of the licenses during the three months ended September 30, 2020. The amount allocated to the development services will be recognized over the course of the development work using an input method in the form of development effort relative to expected total development effort at the completion of the development services. This is based on the relative costs of the development activities incurred and expected to be incurred in the future to satisfy the performance obligation. The estimated period of performance to satisfy the performance obligation and project cost will be reviewed periodically and adjusted, as needed, to reflect our current expectations regarding the costs and timing of the deliverable. These estimates are subject to a number of assumptions and actual results could differ materially from our assumptions in future periods.

We determined that the future regulatory and sales-based milestone and sales-based royalty payments that we may be entitled to receive are variable consideration. We are using a most likely amount method for estimating the variable consideration to be received related to regulatory milestones under this arrangement. All future potential regulatory milestones were fully constrained at September 30, 2020. The sales-based milestones and royalties are subject to the sales-and-usage-based royalty exception related to a license of intellectual property and will be recorded in the period when the corresponding sale occurs.

As of September 30, 2020, deferred revenue related to the development services performance obligation amounted to $10.2 million, of which $2.5 million was included in current liabilities.
In addition, the Company incurred approximately $2.0 million of contract acquisition costs related to the Norgine Agreement. These costs are expensed as selling, general and administrative expense based on the transfer of control of the underlying performance obligations, as determined on a relative standalone selling price basis. As of September 30, 2020, the Company recorded approximately $1.3 million in selling, general and administrative expense and deferred $0.7 million as a component of other long-term assets.