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Accounts Receivable, Sales and Allowances
 3 Months Ended
Mar. 31, 2017
Receivables [Abstract]  
Accounts Receivable, Sales and Allowances
Accounts Receivable, Sales and Allowances
 
The nature of the Company’s business inherently involves, in the ordinary course, significant amounts and substantial volumes of transactions and estimates relating to allowances for product returns, chargebacks, rebates, doubtful accounts and discounts given to customers. This is typical of the pharmaceutical industry and is not necessarily specific to the Company. Depending on the product, the end-user customer, the specific terms of national supply contracts and the particular arrangements with the Company’s wholesaler customers, certain rebates, chargebacks and other credits are deducted from the Company’s accounts receivable. The process of claiming these deductions depends on wholesalers reporting to the Company the amount of deductions that were earned under the terms of the respective agreement with the end-user customer (which in turn depends on the specific end-user customer, each having its own pricing arrangement, which entitles it to a particular deduction). This process can lead to partial payments to the Company against outstanding invoices as the wholesalers take the claimed deductions at the time of payment.
 
With the exception of the provision for doubtful accounts, which is reflected as part of selling, general and administrative expense, the provisions for the following customer reserves are reflected as a reduction of revenues in the accompanying condensed consolidated statements of comprehensive income. Additionally, with the exception of administrative fees and others, which is included as a current liability, the ending reserve balances are included in trade accounts receivable, net in the Company’s condensed consolidated balance sheets.

In the quarter ended June 30, 2016, the Company determined that in order to more closely align with internal analysis of associated reserves it would adjust the allowances disclosure to separately report rebates from chargebacks and rebates for both net trade accounts receivable and gross sale adjustments and to consolidate administrative fees and others with rebates for purposes of reporting gross sales to net revenues. As a result, information as of and for the three month period ended March 31, 2016 has been recast to reflect this disclosure change.
 
Net trade accounts receivable consists of the following (in thousands):
 
March 31,
2017
 
December 31,
2016
Gross accounts receivable (1)
$
462,013

 
$
519,175

Less reserves for:
 
 
 
Chargebacks
(77,472
)
 
(80,360
)
Rebates
(93,449
)
 
(97,935
)
Product returns
(45,660
)
 
(43,689
)
Discounts and allowances
(10,293
)
 
(12,389
)
Advertising and promotions
(641
)
 
(688
)
Doubtful accounts
(816
)
 
(960
)
Trade accounts receivable, net
$
233,682

 
$
283,154



(1) The reduction in the Gross accounts receivable balance as of March 31, 2017 when compared to the December 31, 2016 balance is due to higher Gross sales in the last two months of the fourth quarter of 2016 compared to the last two months of the first quarter of 2017.

For the three month periods ended March 31, 2017 and 2016, the Company recorded the following adjustments to gross sales (in thousands):
 
 
Three Months Ended
March 31,
 
 
2017
 
2016
Gross sales
 
$
680,534

 
$
593,392

Less adjustments for:
 
 
 
 
Chargebacks (1)
 
(280,160
)
 
(219,376
)
Rebates, administrative and other fees (1)
 
(124,378
)
 
(88,348
)
Product returns
 
(8,418
)
 
(4,286
)
Discounts and allowances
 
(12,922
)
 
(11,954
)
Advertising, promotions and others
 
(1,236
)
 
(1,081
)
Revenues, net
 
$
253,420

 
$
268,347