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Accounts Receivable, Sales and Allowances
 9 Months Ended
Sep. 30, 2019
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 that 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/(Loss). 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.

Trade accounts receivable, net consists of the following (in thousands):
 
September 30,
2019
 
December 31,
2018
Gross accounts receivable
$
272,036

 
$
308,305

Less reserves for:
 
 
 
Chargebacks (1)
(41,092
)
 
(55,312
)
Rebates (2)
(47,478
)
 
(55,963
)
Product returns
(33,114
)
 
(35,146
)
Discounts and allowances
(5,348
)
 
(6,561
)
Advertising and promotions
(1,549
)
 
(1,574
)
Doubtful accounts
(584
)
 
(623
)
Trade accounts receivable, net
$
142,871

 
$
153,126



(1) The decrease in the Chargebacks balance as of September 30, 2019, when compared to the December 31, 2018 balance, was primarily due to decreases in wholesale acquisition cost of certain products and changes to product and customer mix.

(2) The decrease in the Rebates balance as of September 30, 2019, when compared to the December 31, 2018 balance, was primarily due to timing of payments and settlements, changes in product and customer mix, and lower failure to supply claims.

For the three and nine month periods ended September 30, 2019 and 2018, the Company recorded the following adjustments to gross sales (in thousands):
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Gross sales
$
379,022

 
$
436,700

 
$
1,303,671

 
$
1,465,052

Less adjustments for:
 
 
 
 
 
 
 
Chargebacks (1)
(141,943
)
 
(188,884
)
 
(540,055
)
 
(635,329
)
Rebates, administrative and other fees (2)
(46,212
)
 
(66,843
)
 
(188,445
)
 
(234,217
)
Product returns (3)
(5,900
)
 
(4,805
)
 
(23,273
)
 
(18,059
)
Discounts and allowances
(7,297
)
 
(8,471
)
 
(25,371
)
 
(28,654
)
Advertising, promotions and others
(1,426
)
 
(2,072
)
 
(6,355
)
 
(8,161
)
Revenues, net
$
176,244

 
$
165,625

 
$
520,172

 
$
540,632



(1) The decreases in chargebacks for the three and nine month periods ended September 30, 2019, as compared to the same periods in 2018, were due to volume declines as well as decreases in wholesale acquisition cost of certain products.

(2) The decrease in the rebates, administrative and other fees for the three month period ended September 30, 2019, compared to the same period in 2018, was mainly due to decreases in the rebate rate of certain products and lower failure to supply penalties. The decrease in the rebates, administrative and other fees for the nine month period ended September 30, 2019, compared to the same period in 2018, was primarily due to volume declines and decreases in the rebate rate of certain products.

(3) The increase in product returns for the three and nine month periods ended September 30, 2019, as compared to the same periods in 2018, were primarily due to the timing of returns processing.