34 Trade and other liabilities

 

 

 

€ million

2018

2017

Other payables

26

26

Total non-current trade and other liabilities

26

26

 

 

 

 

 

 

€ million

2018

2017

Trade payables

364

281

Invoices to receive

117

121

Taxes payable, other than income tax

57

73

Payroll and social security liabilities

184

208

Other payables

37

36

Deferred income linked to development agreements

12

18

Other deferred income

51

55

Royalties payables

91

77

Rebates/discounts and other sales allowances payable

569

549

Accrued interest

32

31

Other accrued expenses

272

275

Total current trade and other liabilities

1 786

1 724

 

 

 

The vast majority of the trade and other liabilities are classified as current and consequently the carrying amounts of the total trade and other liabilities is assumed to be a reasonable approximation of fair value.

“Rebates/discounts and other sales allowances payable” include rebates, chargebacks, discounts and accruals for product returns relating to products sold in the U.S. to various customers that are part of commercial and governmental contractual arrangements or other reimbursement programs, including the U.S. Medicaid Drug Rebate program, the U.S. Federal Medicare program and others. The sales returns and allowances are recorded in the same period as the underlying sales as a deduction to sales.

Per management assessment, the total accruals for these items are adequate, based upon currently available information and interpretation of relevant regulations.

As these deductions are based on management estimates, the actual deductions might differ from these estimates. Such differences could impact the accruals recognized in the balance sheet in future periods and consequently the level of sales recognized in the income statement in future periods, as there is often a time lag of several months between the recording of the estimate and the final accounting of the sales deductions.

The accruals are reviewed and adjusted regularly in light of contractual and legal obligations, historical trends, past experience and projected market conditions.

All returns, chargebacks, rebates and discounts that are not mentioned on the invoice are estimated, deducted from sales and presented on the balance sheet in the appropriate accrual account. The estimate for future product returns is based on several factors, including: historical return rates, expiration date by product, return rate by closed batches, actual returns processed among others, as well as any other specifically-identified anticipated returns due to known factors such as the loss of patent exclusivity, product recalls and discontinuances, or a changing competitive environment. Adjustments to these accruals may be required in the future based on revised estimates to our assumptions, which would have an impact on our consolidated results of operations. The U.S. sales return and allowance liability that is included as part of the rebates and discounts payable liability balance amounts to € 460 million as per 31 December 2018 (31 December 2017: € 445 million).