How a $410M generics maker reversed $3.7M of chargebacks and rebates

The problem

Halvorsen Pharmaceuticals sells $680M gross and books $410M net. Most of the gap is chargebacks: three wholesalers file about 38,000 lines a month, each claiming a hospital's contract price. Whether a claim is valid depends on 58 contracts, 212 amendments and a monthly roster for each purchasing group, all kept on a shared drive.

Checking one line took 50 minutes, so the three-person contracts team reviewed claims above $2,500 and a small sample of the rest. More than nine in ten lines were credited as claimed.

What Seeft found

Seeft dated every contract, amendment and roster version, then checked all 456,000 lines from the past 12 months against the terms in force on each sale date.

• 8,900 lines for buyers who were not on the contract that day, $2.7M.
• 5,100 lines at an expired price tier ($1.5M) and 1,600 claims for an invoice already credited ($410K).
• One quarter of rebates paid on market share the wholesaler data did not support, $260K.

What Seeft got back

Seeft filed disputes weekly with each wholesaler, inside the 30-day window, with the roster line and contract page attached. Within 12 months, $3.4M of chargebacks was reversed and the $260K rebate was netted against the next payment.

Seeft now checks each roster and price notice the day it arrives. The invalid chargeback rate fell to 0.8 percent, worth about $3.5M a year.