75% of Wholesaler Chargebacks Have Errors
September 12, 2022
Pervasive distributor deduction errors can really dilute your profits and consume manpower. This can cost you millions of dollars and really cut into your cash flow.
Our experience is that up to 75% of Rx returns and wholesaler contract chargebacks have discrepancies.
To prevent these losses, you need to reconcile these chargebacks in detail and follow through to collection. This is an extremely labor-intensive process, but we have a solution.
Carixa automation reconciliation software streamlines routine and complex deduction validation, so you don’t end up writing off monies that are rightfully yours.
We have automated the time-consuming and complex deduction-credit reconciliation process to eliminate the multi-step reconciliation cycle when the wholesaler’s chargebacks differ from your calculations. This process can be integrated or handled offline.
For example, pharmaceutical manufacturers sell prescription drugs to wholesalers at standard wholesale pricing. Chargebacks occur when the wholesalers sell those drugs to institutions that have negotiated lower contract pricing with manufacturers or are eligible for government-negotiated pricing programs such as the VA, Public Health Service, etc. The process is that the wholesaler is invoiced at the full price, and the institutional customer is invoiced by the wholesaler at the applicable contract price. The difference is charged back to the manufacturer, including the wholesaler’s margin.
When submitted to the manufacturer, the chargeback detail must be reconciled in detail to ensure that the amount correctly reflects the legitimate variance between the initial price and the ultimate contract price.
We process data from debit memos, credit memos, returns centers, and other systems to reconcile the returns discrepancies to granular SKU- NDC/lot levels to pinpoint product, quantity, and pricing errors. This assures you don’t give away your profits due to what are rampant customer overcharges.
This process can be integrated into your reverse logistics operation, or we can batch-reconcile variances by month, quarter, or year. As part of our process, customer disconnects are also identified, such as product master errors, pack size, contract data, or policy divergences.
With the amount of money involved in just these two deduction categories, this is a significant P&L opportunity…and boosting cashflow is more important than ever with today’s interest rates and revenue uncertainty.
Besides software, we offer an end-to-end managed service, including our expert deduction teams, with available gainsharing fee arrangements. Learn more.