Drug Discount Solutions: Gavin Magaha from Kalderos, in a Stimulating Conversation with PharmaShots

Shots:

With the implementation of the Inflation Reduction Act (IRA) in 2022, several pricing reforms were introduced, including the new mandated drug pricing and discount elements
Today, we have with us Gavin Magaha, Senior Director, Value Delivery for Kalderos, shedding light on the challenges that come with the IRA act and the impact it puts on MDRP and 340B program
Gavin talks about the company’s enterprise-grade platform that works for all the stakeholders and provides seamless drug discount solutions

Saurabh: Let’s begin by talking about the 340B Drug Pricing Program and the Medicaid Drug Rebate Program.

Gavin: Congress created the Medicaid Drug Rebate Program (MDRP) in 1990. In short, under the program, if a manufacturer wants a state Medicaid agency to pay for its drug, the manufacturer must agree to provide that state with a Medicaid rebate.

Two years later, Congress enacted the 340B program, helping financially strapped Covered Entities (CEs), such as hospitals and health systems in rural areas, by providing access to drugs at discounted prices. The program could benefit patients directly if CEs chose to pass those savings along to them, or indirectly as the money saved through 340B would enable CEs to redirect spending toward staffing and patient services.

Both programs have grown rapidly in recent years, creating management and efficiency challenges that have contributed to a sharp increase in duplicate discounts. These duplicates have led to revenue leakage for manufacturers that inevitably is passed along to consumers in the form of higher drug prices.

Saurabh: What are the challenges to the 340B Program and how do those challenges pose a matter of concern?

Gavin: For starters, MDRP and 340B are highly complex programs that intersect with each other as well as other federal and state policies, either directly or indirectly. If one agency issues policies to optimize or enhance its functionality, it’s not uncommon for those policies to have an impact on other programs. This also happens when state-specific policies are implemented that make it challenging to comply with federal intentions. An example would be where a state moves to pay for its Medicaid prescription benefit entirely through a managed care model. If Covered Entities gave 340B drugs to Medicaid patients in that state, how would they answer the federal, Health Resources and Services Administration (HRSA)-required Medicaid question, “At this site, will the CE bill Medicaid fee-for-service for drugs purchased at 340B prices?” If they comply with the state policy, then they would answer “no,” which would not permit them to register their National Provider Identifier (NPI) numbers in the database.

The only way for the NPI number of the CE to populate in the Medicaid Exclusion File would be for the CE to answer “yes” to this question, which may not be an accurate representation of what it is doing. In addition to regulatory challenges mentioned above, there are operational challenges facing the 340B program. The variability among CE types (e.g., hospitals vs. grantees) both in what services they provide and how they provide them, along with inconsistent or even omissions of necessary definitions, makes the application of a common statute highly challenging. Stakeholders compete for finite resources and often have different priorities, which stresses collaboration efforts. This fuels an environment of distrust where stakeholders are less open to transparency, which makes accountability virtually impossible. While MDRP and 340B run on parallel tracks, the Medicaid program uses a relatively simple rebate system, while 340B often uses a convoluted purchase at one price, bill at that price, then reverse that transaction, modify it, resubmit it, and either credit the original purchase and rebill it, or give a transactional credit to be applied in the future model.

Adding to the confusion, the Inflation Reduction Act (IRA) may create further potential for challenges. Passed into law in August 2022, this sweeping legislation introduced multiple major pricing reforms, including new mandated drug pricing and discount elements.

Saurabh: Despite several reforms in the 340B program and initiatives from the IRA, the duplication in drug discount programs remains a major concern for manufacturers, CEs, and payors. What’s your take on this?

Gavin: Duplicates are a valid concern for every stakeholder in the drug discount ecosystem because they undermine the fundamental goal of discounts and rebates, which is to ultimately lower healthcare costs.

In an analysis of 340B program outcomes published in JAMA Health Forum, Harvard Medical School researchers reported that audits of CEs found low rates of compliance with 340B program requirements. This noncompliance could be attributed to uncertainty among CEs and state Medicaid agencies surrounding program rules, the failure of stakeholders to extract and share data, and little or no collaboration. The analysis also cited a lack of transparency and reporting on the use of 340B revenue.

The IRA and other factors, such as the decision in the Genesis case, may make it even harder for manufacturers to identify duplicate discounts as the volume of 340B claims likely surges. Stakeholders still working with inadequate tools will be poorly positioned to manage a growing number of claims while effectively minimizing duplicate discounts. That’s a recipe for more revenue leakage.

Saurabh: How does Kalderos come into the picture? Tell us how Kalderos enhances the normal function of these two programs.

Gavin: Kalderos has developed an enterprise-grade platform purpose-built to work for all stakeholders. The Kalderos platform increases transparency and enables collaboration, both of which are critical to combating duplicate discounts.

Problems with accessing and standardizing data make it difficult for manufacturers and other drug discount stakeholders to implement effective solutions. Our platform can ingest and unify data from multiple sources and stakeholders by breaking down data silos across the discount system. Thus, we are able to provide a single source of truth.

And by integrating enhanced data and analytics with the ability to detect 340B noncompliance, the Kalderos platform provides manufacturers with actionable insights into performance on their contracts.

Saurabh: Kalderos has earned a reputation for providing seamless drug discount solutions. What makes Kalderos different from other drug discount management platforms?

Gavin: Unlike other drug discount management tools, the Kalderos platform can scale to meet growing volumes of claims from 340B, Medicaid, and commercial programs. We use a sophisticated rules engine and automated data acquisition to handle enterprise-level volumes.

But data in and of itself has little value if it can’t be mined for context and meaning. The Kalderos platform allows drug manufacturers to normalize, transform, and validate data for actionable insights, regardless of file types and formats. Finally, our technology streamlines the process and strengthens the ability of drug manufacturers to effectively dispute rebate requests submitted by payers.

By using Kalderos technology to identify and reduce duplicate drug discounts, manufacturers can improve their gross-to-net and ensure savings from the program aren’t being lost to revenue leakage.

The proof is in the results. Since launching in 2016, Kalderos has enabled customers using our Discount Hub to verify more than $110 million in duplicate discounts.

Saurabh: As mentioned, the objectives of these programs are further compromised when customers are not aware of available discounts. How does Kalderos plan to spread awareness? Tell us about your plans.

Gavin: While Kalderos does not work directly with patients who could benefit from available discounts, our company was founded on the principle of empowering everyone to focus on the health of people. As such, we have built strong relationships with top drug manufacturers, thousands of CEs, and the State Medicaid agencies in all 50 U.S. states with the goals of fostering a drug discount management ecosystem of transparency, collaboration, and trust. Doing so will enrich an environment for patients to gain access to the drugs and therapies necessary to improve their lives.

Image Source: Canva

About the Author:

Gavin Magaha

Gavin Magaha, PharmD, is Senior Director, Value Delivery for Kalderos, where he plays a pivotal role in driving innovation for Kalderos and advising the strategic direction to solve problems facing the U.S. healthcare system. He commonly presents at national meetings on the topics of 340B, Duplicate Discounts, and Medicaid. Before Kalderos, he served as Director, 340B Policy and Compliance for Apexus (HRSA’s 340B Prime Vendor). In addition to serving as faculty for 340B University events, he worked closely with leadership from manufacturers, covered entities, government agencies, national advocacy associations, wholesalers, law firms, and consultant groups, helping them understand and navigate the complexities of the 340B world. Before coming to Apexus, Dr. Magaha worked for Wake Forest Baptist Health, developing and maintaining corporate systems associated with various regulatory agency mandates, including 340B, controlled substances, and vendor contracting.