Kalderos 2022 Annual Report

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

Stakeholder

Patients

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

Stakeholder

Providers

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

Stakeholder

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

Stakeholder

Manufacturers

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.

End notes

Adam J. Fein. The 2022 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers. Drug Channels Institute. March 2022.
Andrew W. Mulcahy, Christopher Whaley, Mahlet Tebeka, Daniel Schwam, Nathaniel Edenfield, and Alejandro U. Becerra-Ornelas. "International Prescription Drug Price Comparisons." RAND Corporation. 2021.
Reuben Mathew, Lance Kilpatrick, Adam Garber. "The Real Price of Medications." U.S. PIRG Education Fund. March 2019.
U.S. PIRG Education Fund; see above.
U.S. PIRG Education Fund; see above.
NORC at the University of Chicago. "Recent Trends in Hospital Drug Spending and Manufacturer Shortages." American Hospital Association. January 15, 2019.
NORC at the University of Chicago; see above.
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.