Compassionate Use / Expanded Access Program Cost
Recording the cost of providing drug product free of charge under an expanded access programme before regulatory approval.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Compassionate Use Programme Expense (R&D) | Expense (+) | 2,500,000.00 | - |
| Inventory (Drug Product Transferred) | Asset (-) | - | 2,500,000.00 |
💡 Accountant's Note
Expanded access (compassionate use) programmes allow seriously ill patients to access investigational drugs before approval. The drug manufacturer provides product free of charge. The cost is the manufacturing cost of the donated inventory. Classification is typically R&D expense as the programme occurs pre-approval and may generate clinical data.
Practitioner & Systems Framework
💻 ERP Architecture
Compassionate use product is tracked in the inventory system as a separate lot type — 'expanded access' inventory — to distinguish it from clinical trial and commercial inventory. When product is transferred to an expanded access patient, it is expensed at cost (typically clinical or CMO manufacturing cost). The compassionate use programme is monitored by the regulatory and medical affairs teams. Safety data collected from compassionate use patients may be incorporated into the regulatory submission — further supporting R&D classification. No revenue is recognized for compassionate use provision.
⚠️ Audit Flags
Auditors confirm that compassionate use product is correctly expensed as R&D (not COGS) and that no revenue is recognized. Test the inventory write-off is at the correct cost basis (manufacturing cost, not estimated selling price). Confirm the regulatory approval status of the drug during the compassionate use period — once approved, expanded access reverts to commercial supply at commercial pricing. Review whether the compassionate use programme creates any obligation to continue supply that would constitute a constructive liability.
📄 Required Documentation
FDA/regulatory authority expanded access authorisation, individual patient expanded access agreements, product transfer records (lot number, quantity, patient), inventory cost basis, R&D expense classification, safety reporting obligations, and number of patients on expanded access (for financial statement disclosure).
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