2023 Annual Report

Mission Critical

Bringing drug discount stakeholders together so patients win
Kalderos 2023 Annual Report Map

The Setup

America's drug discount system is at a make-or-break moment. Patients in the U.S. are paying too much for prescription drugs compared to peer countries,1 even as spending for government discount programs has reached new heights.2

At the core of this dissonance is a collaboration breakdown. Mistrust among key stakeholders in the drug discount ecosystem have spilled over into courtrooms, legislatures and the front pages of major newspapers. And years of status quo complacency have stacked the deck against meaningful change.

But the very pressures that have pushed the system to the brink have also created an opening for a paradigm shift that can promote collaboration and ensure that programs work as intended. We call it "the Big Win" — a drug discount system that creates seamless collaboration, builds mutual understanding and puts the patient at the center of a system that delivers for them.

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The
Stakes

Alarm bells are going off across the drug pricing ecosystem. Out-of-pocket drug costs remain a heavy burden for many Americans. As discount programs expand, the cost of duplicate discounts and other inaccurate payments rises, creating operational burdens for all stakeholders. When drug discount programs become mired in dysfunction, patients are affected. The stakes have never been higher.

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America's drug discount system is falling short for patients.
The U.S. has thousands of pages of drug discount laws on the books, but patients in the U.S. are still spending significantly more on prescription drugs than patients in other countries. And even though total per capita health spending is a whopping $6,911 more than the average of comparable countries, Americans still have a life expectancy that is 6.3 years shorter than the comparable average.4
$6,911
more spent total per capita on health in the U.S. than the average of comparable countries
6.3 years
shorter life expectancy in U.S. compared to peer countries
The costs of drug discount programs continue to rise.
Discounted purchases in the 340B program increased 15.6% between 2020 and 2021.5 Medicaid spending has expanded in recent years as well, due in part to the COVID-19 public health emergency. Discount programs also include commercial rebates that manufacturers pay to pharmacy benefit managers. All together, manufacturers paid $223 billion in drug discounts in 2022.6
$5.3 B
spending for the 340B program in 20107
$43.9 B
discounted purchases in the 340B program in 20218
Inaccurate claims cost everyone — in dollars, energy, time and focus.
Since Kalderos’ founding in 2016, we’ve identified inaccurate Medicaid rebate requests of 5% on average across assessments of prospective customer data. These inaccurate payments cost manufacturers billions of dollars and create operational burdens for all stakeholders. 
5%
average inaccurate payments to MDRP based on Kalderos platform assessments of prospective customer data
$988,893,846
total inaccurate rebate requests identified by Kalderos between 2016 and 2023
Under the IRA, drug discount programs will become more complex.
The 2022 Inflation Reduction Act (IRA) introduced major pricing reforms, including three mandated drug pricing and discount programs. Many questions remain about how the new discount programs will be implemented, but one thing is certain: They will introduce new layers of operational complexity for every stakeholder.
When drug discount programs fail to work as intended, patients are harmed.
When frustrations over duplicate discounts escalate to manufacturer restrictions and legal fights, the flow of drug discounts is disrupted. With patient health on the line, there’s an urgent need to get discount programs working as seamlessly as intended, but the obstacles are many. 
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The
Obstacles

If we fail to get drug discount programs working as intended once more, adverse conditions will continue to harm every stakeholder — patients most of all. Here are the major pitfalls that threaten to derail the mission.

Obstacle
Inadequate infrastructure, outdated technology and data silos
Misapplied discounts are almost always caught after the fact. Tracing the stages of each claim from the moment of dispense requires valuable time and effort because the data needed to identify possible duplicate discounts is held by multiple stakeholders with incompatible systems.
Obstacle
Fractured trust and mounting conflict among stakeholders
The 340B program’s growth has been driven largely by the proliferation of contract pharmacies — stand-alone pharmacies that covered entities partner with to dispense drugs on their behalf. This has expanded patient access to 340B-discounted drugs, but the added complexity can lead to more errors in payments. Recently, manufacturers have taken action to restrict the use of contract pharmacies, which many covered entities see as a far-reaching threat.
Obstacle
Unclear regulatory authority and ambiguous guidelines
The federal government is aware of the challenges that the 340B program faces.9,10 While it’s clear that drug discount stakeholders need more explicit guidelines on how to administer these complex programs, it’s much less clear who has the authority to both issue and enforce those guidelines.
Obstacle
Entrenched investments support the status quo
With so much money on the line, another obstacle to tackling the program’s challenges is the sizable investment that so many have made in today’s imperfect status quo. Billion-dollar retail pharmacies and pharmacy benefit managers have become heavily invested in the 340B program’s returns.11
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"
We all have to step back every once in a while and realize we’re all facing some of the same challenges."
Senior Medicaid analyst
Major pharmaceutical manufacturer
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The Game Plan for Success

It’s audacious to imagine a solution to these obstacles — and Kalderos has embraced that kind of audacious vision from the very beginning. Here, we lay out our game plan for taking on these obstacles one by one.

Obstacle
Inadequate infrastructure, outdated technology and data silos
Solution
Create platform technology that unites the data in a single source of truth
Today, every stakeholder has its own fragmented view of the data. But a powerful, data-driven platform such as Kalderos’ can bring together disparate data from manufacturers, state Medicaid agencies, commercial payers, covered entities, contract pharmacies and third parties for a comprehensive view of every drug discount claim throughout its life cycle. 
Obstacle
Fractured trust and mounting conflict among stakeholders
Solution
Enable transparency, build trust and drive collaboration
Driving alignment among stakeholders is difficult when each is referencing a different set of data. Kalderos’ ethos has always focused on collaboration, ensuring that every stakeholder has a seat at the table. We deliver value for every customer with products that bring clarity, simplicity and actionable data to covered entities, drug manufacturers and state payers alike.
842,637
claims reviewed by covered entities on Discount Hub since 2016
$110,916,831
in verified duplicate discounts since 2016
Obstacle
Unclear regulatory authority and ambiguous guidelines
Solution
Promote partnership and problem-solving
Federal law mandates that state Medicaid agencies and covered entities work together to prevent duplicate discounts, but exactly how that is implemented is left up to the players on the ground. Kalderos brings stakeholders together to solve this problem, resolving disputes quickly and efficiently.
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Through ongoing conversations with state Medicaid agencies and their vendors, Kalderos is continually learning what will make their lives easier. With that focus in mind, we are regularly evolving the claim-level data reports to suit their needs."
Maury Anderson
Kalderos Senior Director, Product Strategy — Medicaid Solutions
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When we give stakeholders access to the same data, compiled and curated from multiple independent sources, we drastically reduce the disputes that have plagued the system for so long. It is essentially like getting everyone to finally speak the same language."
Jared Crapo
Kalderos Head of Product, Engineering, Design and Data Management
Obstacle
Entrenched investments support the status quo
Solution
Unite stakeholders to put the patient first
Overcoming a broken system isn’t easy. It’s a necessity, though, if we’re going to create a drug discount system that works seamlessly for every stakeholder and puts the patient first. We’re proud of the impact that Kalderos has already had on the industry. But to transform the drug discount system for good, we will need more players to join us in this mission.
51.6%
Kalderos’ team growth in 2022
13
of the top 50 manufacturers work with Kalderos
5.4x
Kalderos revenue more than doubles two years in a row
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The Big Win

So, what is "the Big Win"?

The Big Win is a drug discount system built on transparency and trust. It’s realized through a collaborative platform that gives all stakeholders access to the same data, allowing them to focus on a central mission: to better serve patients.

Everybody wins — patients most of all

The endpoint of this mission is to achieve drug discount collaboration that will benefit covered entities, manufacturers and states alike. But perhaps most important, patients will finally receive the full advantages of a drug discount system that delivers for them.

Download Report

Ready to take on the mission?

Kalderos 2023 Annual Report Cover
Download the full report to read more about:
How a collaboration breakdown among stakeholders created drug discount dysfunction
Why the solution to systemic obstacles must begin with building trust and bringing every stakeholder to the table
How revolutionary, tech-enabled solutions that engage all stakeholders equally can provide transparency to the true scale of misapplied discounts
Download Report
End notes
1
Peter G. Peterson Foundation. “How Have Prescription Drug Prices Changed Over Time?” April 1, 2022.
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3
U.S. Congress. Public Law 102-585. November 4, 1992.
4
Hanna Dingel et al. “The State of the U.S. Health System in 2022 and the Outlook for 2023.” The Peterson-KFF Health System Tracker. December 22, 2022.
6
Adam J. Fein. “The 340B Program Climbed to $44 Billion in 2021 — With Hospitals Grabbing Most of the Money.” Drug Channels Institute. August 15, 2022.
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Adam J. Fein. “Four Trends That Will Pop the $250 Billion Gross-to-Net Bubble — and Transform PBMs, Market Access, and Benefit Design.” Drug Channels Institute. December 16, 2023.
7
Sarah Jane Tribble and Emily Featherston. “As Big Pharma and Hospitals Battle Over Drug Discounts, Patients Miss Out on Millions in Benefits.” KFF Health News. November 16, 2021.
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U.S. Department of Health and Human Services Office of Inspector General: Testimony Before the United States Senate Committee on Health, Education, Labor, and Pensions. May 15, 2018.
11
Adam J. Fein. “Five Pharmacy Chains and PBMs Dominate 2022’s Still-Booming 340B Contract Pharmacy Market.” Drug Channels Institute. July 12, 2022.
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