Annual Report
Conquering the “Great Unknown”
Connecting the data gaps that keep us from knowing the true price of drugs
Part 1
What is the great unknown?

As America continues to grapple with a prescription drugs affordability crisis, key stakeholders have fallen short in efforts to reduce cost burdens on providers and patients. What’s driving the problem? The answers are hidden by enormous data gaps built into the system.

The drought of actionable data creates problems for every stakeholder. We call it the “Great Unknown.”
$204 billion1
Gap between list and net drug prices
The drug channel's known unknowns:
Why do patients face wildly differing prices for the same prescription drugs?
Why is there such a growing gulf between a drug's list price and net price?
How pervasive are noncompliant drug discounts throughout the system?
What exactly is the breakdown of costs that flow through Pharmacy Benefit Managers?
The problem

If diligent scholars and top industry experts don’t have the full data to accurately analyze the true drivers of rising drug costs, or to agree on what they find—then how can policymakers begin to address the issue?

Read the full report to dive deeper into the data gaps, witness the struggle over systemic waste, and learn why many of the policy solutions for high drug costs are "shooting in the dark."
Part 2
The impact of the Great Unknown

The trouble with so much unknown is that it creates waste—and waste drives up costs. Unnecessary expenses cascade like an avalanche across the system, burying all stakeholders under the weight of extra work, higher costs and undue systemic burdens… with the greatest hardship landing on patients.
Mapping stakeholder challenges in the Great Unknown
Wildly inconsistent drug prices are a major repercussion of the Great Unknown that lands directly on patients, causing confusion over how much their medicines should cost or where they should go to get the best price–or if they’ll be able to afford their prescription drugs at all.
Patients feel the weight of the Unknown
  • Americans pay 2.5 times as much for prescription drugs than patients in comparable countries.2
  • Patients could save between $102 and $5,400 just depending on where they purchase prescription drugs.3
  • The price differential between the median and maximum cost for a Lantus Solostar Insulin Injector Pen is $1314.40.4
  • There is a 3753% price difference for the minimum and maximum price of Advair Diskus, a corticosteroid used to control symptoms of asthma and lung disease.5
Rising prices can negatively impact patient care by creating budget pressure. Price unpredictability can also catch providers off-guard, impeding financial planning and administrative operations.
Providers face a rocky path of uncertain prices
  • Between 2015 and 2017, total drug spending per hospital increased 18.5%.6
  • In the same time period, hospitals experienced price increases of more than 80% across different classes of drugs.7
State Medicaid
Data is constantly moving between not-quite-compatible systems. For those who work in state Medicaid agencies, sometimes small differences in systems or spreadsheets can create hours of extra work or have thousands of dollars in impact.
In many cases, states do not have the procedures in place to catch noncompliant discounts:
  • "GAO found that the procedures states used to exclude 340B drugs are not always documented or effective at identifying these drugs. As a result, CMS does not have the information needed to effectively ensure that states exclude 340B drugs from Medicaid rebate requests."8
Communication can break down in so many places. Fixing it seems like such a mountain to climb, nobody wants to touch it because it is going to be so much work to change the system."
—Maury Anderson, Former state rebate operations director, Magellan RX
The financial consequences of these data gaps especially impact manufacturers, who face revenue leakage due to noncompliant discounts. This revenue leakage can impact operations, reduce R&D budgets that allow innovation on life-saving new therapies, and threaten the survival of emerging and growth-stage companies.
Manufacturers are left in the dark when it comes to noncompliance
  • Kalderos analysis suggests that at least 3-5% of 340B discounts and Medicaid rebates are duplicates, resulting in at least $1.3 to $2.1 billion in duplicate discounts in 2020.
  • Kalderos assessments have flagged an average of 972% more noncompliance than manufacturer legacy methods.
187 to 1
In one compliance assessment process, Kalderos identified nearly 187 high-risk claims for each 1 identified by the manufacturer.
Policy challenges

Each stakeholder is operating in a silo. Everyone wants to solve key challenges, but no one has a full view of the problem’s dimensions. Policy efforts are weighed down by doubt and uncertainty.
We find that most bills in the recent flurry of state price transparency activity are of limited impact and none provide complete transparency throughout the distribution system, despite the enormous legislative resources spent to enact them."
—Martha Ryan and Neeraj Sood. “State Drug Pricing Transparency Laws: Numerous Efforts, Most Fall Short.” Schaeffer Center White Paper Series. September 2019.
Each stakeholder in the system is impacted by the Great Unknown—but many don’t know the scale or severity.

Read the full report to discover the systemic challenges that will only get worse if left unchecked.
Part 3
New Frontier
Solution sight lines

Closing the data gaps that create waste and dysfunction requires scaling systemic obstacles. Data-sharing infrastructure that has been widely accepted in other industries has not been as quickly adopted in prescription drug channels. Fortunately, the technological solutions that can bring about more ubiquitous data are already being built by Kalderos.

Technology unleashed

Kalderos built the world’s first platform for Drug Discount Management, powered by a modern data warehouse that can process more than 100 million drug discount claims per hour, the world’s highest-throughput pipeline for pharmaceutical claims. The platform brings together data and validations from multiple stakeholders to ensure a "gold standard" of data accuracy.
The Kalderos platform
covered entities are enrolled on the Kalderos platform, with responses from providers in all 50 states
$640 million
in overall noncompliance has been identified since the launch of Kalderos Discount Monitoring in 2016
$85 million
in 340B/MDRP duplicate discounts have been verified by covered entities since 2016
Kalderos Discount Monitoring works by ingesting a steady flow of data, then uses A.I. pattern recognition to identify anomalies that indicate a high risk of noncompliance
Our powerful data platform has opened the door of possibilities for so much—and offers a preview of a world where the Great Unknown is no longer a threat.
Conquering the Great Unknown

To actually conquer the Great Unknown requires a truly collective push from all stakeholders to embrace a more transparent future. Kalderos is poised to be a connective facilitator in this world. We are building technologies that allow for seamless stakeholder communication and ubiquitous data, reducing destructive data gaps so that the needs of patients can truly come first.

Join Kalderos on an urgent journey into the “Great Unknown” of drug pricing information gaps. Discover the info chasms that encourage waste and dysfunction, and the solutions illuminating inefficiencies to help make prescription drugs more affordable.
End notes
  1. Adam J. Fein. The 2022 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers. Drug Channels Institute. March 2022.
  2. Andrew W. Mulcahy, Christopher Whaley, Mahlet Tebeka, Daniel Schwam, Nathaniel Edenfield, and Alejandro U. Becerra-Ornelas. "International Prescription Drug Price Comparisons." RAND Corporation. 2021.
  3. Reuben Mathew, Lance Kilpatrick, Adam Garber. "The Real Price of Medications." U.S. PIRG Education Fund. March 2019.
  4. U.S. PIRG Education Fund; see above.
  5. U.S. PIRG Education Fund; see above.
  6. NORC at the University of Chicago. "Recent Trends in Hospital Drug Spending and Manufacturer Shortages." American Hospital Association. January 15, 2019.
  7. NORC at the University of Chicago; see above.
  8. Nicholas C. Fisher. "The 340B Program: A Federal Program in Desperate Need of Revision After Two-And-A-Half Decades of Uncertainty." Journal of Health Care Law and Policy. 2019.