Micah Litow shares insights from the 2023 Kalderos Annual Report on drug discount programs
Micah Litow, in a stimulating conversation with PharmaShots, shares insights from the 2023 Kalderos Annual Report on drug discount programs
Micah highlights the challenges the drug manufacturers, covered entities, and state payers face on account of US drug discount programs
Micah sheds light on how Kalderos' MDRP Discount Monitoring solution helps drug manufacturers prevent duplicate discounts and other inaccurate claims
Saurabh: What were the key findings and insights from the 2023 Kalderos Annual Report regarding drug discount programs and their impact on drug manufacturers, payers, and patients?
Micah: The drug discount system in the U.S. is at a make-or-break moment. Americans pay far too much out-of-pocket for prescription drugs compared to peer countries, despite the record spending related to government drug discount programs. The U.S. spends $1,126 per capita on prescribed medicines, while comparable countries spend less than one-half that amount, on average. Even worse, this extra spending doesn’t translate into better outcomes: Americans have a life expectancy 6.3 years shorter than the comparable average.
Problems in the discount system can be traced directly to a lack of collaboration and a lack of trust among drug manufacturers, Covered Entities (CEs) (aka safety-net providers), and state Medicaid agencies, which has led to legal battles and public relations campaigns that create additional barriers to cooperation. This conflict and dysfunction have made it more difficult for stakeholders to focus on the main goal of drug discounts – helping Americans by increasing access to the medicines they need and making them more affordable.
Saurabh: How do systemic challenges in drug discount programs affect the overall healthcare industry, and what measures can be taken to address these challenges effectively?
Micah: The systemic challenges in U.S. drug discount programs originate with how these programs were created. These programs were not thoughtfully designed to make implementation easy or compliance intuitive; instead, drug discount programs have typically been retrofitted around existing processes and infrastructure, using legacy technology.
Then, as a country, we’ve scaled up these programs and expected them to continue to work effectively, when the processes and infrastructure used to effectuate them were never built for that kind of scale.
The consequence is that every stakeholder in the drug discount ecosystem is allocating vast amounts of time, energy, money, and resources to operationalize a system that simply isn’t working very well. This creates a burden on everyone, drug manufacturer, CE, and state payers alike. Allocating all those resources to navigating these systemic issues is taking resources away from investing in initiatives that could better help patients.
The symptoms of that play out in a few different ways. Revenue leakage costs manufacturers billions of dollars each year. This affects new drug pipelines and creates uncertainty in financial forecasting. On top of that, increased administrative responsibilities can overwhelm operations teams tasked with sifting through vast amounts of data to find and correct misapplied discounts.
Identifying and resolving duplicate discounts also imposes a heavy burden on state Medicaid agencies and CEs. This administrative toll forces them to redirect time and resources away from tasks that may have a more direct impact on patients in their communities.
Saurabh: Tell us how Kalderos' MDRP Discount Monitoring solution helps drug manufacturers to prevent duplicate discounts and other inaccurate claims.
Micah: Over the past seven years and assessing Medicaid drug rebates across dozens of drug manufacturers, Kalderos has identified an average of 5% potentially inaccurate Medicaid drug rebates invoiced to drug manufacturers, primarily duplicates with 340B.
However, there is an opportunity now to effect positive change in how the programs are managed that can dramatically improve collaboration and ensure they work as intended.
That’s why Kalderos developed its Drug Discount Management platform – to prevent duplicate discounts and other inaccurate claims using technology. Our platform enables a level of transparency that engenders trust and cooperation among all stakeholders in the drug discount system.
Stakeholders have been trying to solve problems using their own technologies and tools. The Kalderos solution effortlessly connects all stakeholders to resolve noncompliance, bringing together dozens of disparate data sources for drug manufacturers, CEs, and payers.
Saurabh: Covered Entities play a crucial role in drug discount programs. How can they ensure compliance and proper utilization of drug discounts to maximize their benefits while maintaining transparency?
Micah: Covered Entities today face staffing shortages, rising costs, slashed budgets, and increasing workloads. One of the most challenging things that CEs deal with daily is ensuring compliance with laws around drug discount programs like 340B.
CEs need to communicate with a number of other parties in the 340B workflow, which can create data gaps. Inadequate infrastructure and incompatible systems are the source of many of these data gaps. CEs often work with third-party vendors, all of whom have their own tech systems, file formats, and ways of communicating data. This makes it easy for vital information to slip through the cracks, leaving CEs to sort out the claims data and any rejected claims.
To ensure compliance and avoid duplicate discounts, they must adopt technologies that increase transparency and data sharing. A common platform accessible by all stakeholders will make the entire drug discount management process more efficient and less costly.
Saurabh: The pharmaceutical industry plays a critical role in shaping drug discount programs. How can drug manufacturers collaborate with other stakeholders to ensure that these programs are sustainable and beneficial?
Micah: Drug manufacturers can best collaborate with other stakeholders through a unified technology platform that provides a holistic view for all stakeholders. They are best positioned to invest in more technological infrastructure that improves the experience, not just for them, but also for other stakeholders. When everyone has the same information, it is easier to work from a position of trust.
By using technology to identify and reduce duplicate discounts, drug manufacturers can improve their gross-to-net and ensure savings from the program aren’t being eaten up by revenue leakage. Making the drug discount system more efficient and accurate will help keep these programs financially viable and allow these savings to be passed along to the consumer.
Saurabh: Transparency is essential in drug discount programs to maintain trust and accountability. What measures can be implemented to enhance transparency in drug discount programs?
Micah: The best way to ensure and enhance transparency in the drug discount programs is to provide all stakeholders with the same data. This is best achieved through a shared, cloud-based digital platform that includes data from all relevant data sources and powerful tools for data analysis and exchange. Transparency absolutely begets trust and accountability, and it also ultimately benefits consumers who need drugs at affordable prices.
Saurabh: Comment on the strong growth of Kalderos in 2022. What are some of the factors that have brought impressive progress to the company?
Micah: We’re proud of our growth because it means our platform is doing good in the real world. Our annual revenue and total customers doubled for the second straight year, while our team has grown by more than 50%. I would say the biggest factor behind our success has been our ability to meet the needs of drug manufacturers, CEs, and state Medicaid agencies. By eliminating duplicate discounts, we’re saving millions of dollars in waste so patients can win – because they deserve to.
Image Source: Canva
About the Author
Micah Litow is the President and the Chief Operating Officer of Kalderos, a data infrastructure and analytics company, and creator of the world’s first Drug Discount Management platform.
Saurabh is a Senior Content Writer at PharmaShots. He is a voracious reader and follows the recent trends and innovations of life science companies diligently. His work at PharmaShots involves writing articles, editing content, and proofreading drafts. He has a knack for writing content that covers the Biotech, MedTech, Pharmaceutical, and Healthcare sectors.