Brand pharmaceutical manufacturers typically have very limited exposure to chargebacks and chargeback processing. However, it’s likely that pharmaceutical brands will have some chargebacks that come from the federal Public Health Services Program (PHS) and/or VA Federal Supply Schedule utilization. Products are typically sold to wholesalers at the full Wholesale Acquisition Cost (WAC), and manufacturers will sell product as a result of participation in several of these government programs at a reduced price. The difference between WAC and the contracted price results in a chargeback to the manufacturer.
When a wholesaler distributes products through to an entity that has a direct contract with the pharma manufacturer for a price lower than WAC, a chargeback invoice will be generated by the wholesaler and submitted back to the manufacturer for verification and credit on the wholesaler’s normal invoice from the manufacturer.