Company: ABBV
Filing Date: 2025-02-14
Form Type: 10-K
Source: 0001551152-25-000020
Chunk: 293

Company: AbbVie Inc.
Filing Date: 2025-02-14
Form: 10-K
Item: Item 7
Chunk 293
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back accruals, the company uses both internal and external data to estimate the level of inventory in the distribution channel and the rebate claims processing lag time for each type of rebate. To estimate the rebate percentage or net price, the company tracks sales by product and by customer or payer. The company evaluates inventory data reported by wholesalers, available prescription volume information, product pricing, historical experience and other factors in order to determine the adequacy of its reserves. AbbVie regularly monitors its reserves and records adjustments when rebate trends, rebate programs and contract terms, legislative changes, or other significant events indicate that a change in the reserve is appropriate. Historically, adjustments to rebate accruals have not been material to net earnings.

The following table is an analysis of the three largest accruals for rebates and chargebacks, which comprise approximately 92% of the total consolidated rebate and chargebacks recorded as reductions to revenues in 2024. (in millions)Medicaid and Medicare RebatesManaged Care RebatesWholesalerChargebacksBalance as of December 31, 2021$3,816 $3,097 $902 Provisions11,713 14,119 13,070 Payments(10,331)(12,974)(12,829)Balance as of December 31, 20225,198 4,242 1,143 Provisions15,153 23,978 14,191 Payments(15,054)(21,200)(14,162)Balance as of December 31, 20235,297 7,020 1,172 Provisions15,866 24,127 14,782 Payments(13,756)(25,622)(14,797)Balance as of December 31, 2024$7,407 $5,525 $1,157 

Other Allowances

Other allowances include cash discounts, product returns, sales incentives and other adjustments, which are accounted for as variable consideration and are recorded as a reduction to revenue in the same period the related product is sold. Reserves for cash discounts and sales incentives are readily determinable because the company's experience of payment history is fairly consistent. Product returns can be reliably estimated based on the company's historical return experience. Cash discounts totaled $2.0 billion in 2024, $2.0 billion in 2023 and $1.8 billion in 2022.

Pension and Other Post-E