Healthcare is a notoriously complex industry with a multitude of stakeholders, many of whom find themselves in adversarial positions, simply due to the way the market operates. Ultimately, there is a shared goal of providing the best care to the patient. But as stakeholder relationships grow more complex, there can also be conflicts that drive wedges between parties and hamper successful collaboration.
We see this dynamic playing out in many areas of healthcare, but particularly in drug pricing, where conflicts over reimbursement, contracting and drug costs have been especially apparent over the past few years.
HIT platforms have shown they can help. In a number of arenas, HIT platforms are serving as independent arbiters of thorny healthcare issues, by enabling formerly antagonistic parties to operate using a single set of trustworthy data. One example is electronic prescription platforms, which provide an independent mediator to ensure prescription safety, security and legitimacy. Another example is interoperability platforms, which have played key roles in bringing transparency to payers and providers in the application of value-based payment contracts.
Platforms are ideal for problem-solving — and bringing together stakeholders who have traditionally been in conflict with one another — because they share the same data between all parties, so each side is making decisions with the same information. This creates a shared source of truth and brings disparate parties to the same page, removing some of the skepticism and even rebuilding trust.
As the benefits of stakeholder-supporting platforms become evident across many areas of healthcare, one area that’s ripe for innovation is drug pricing. Here, the consequences of adversarial relationships have been especially evident, leading to waste, inefficiency, higher costs and protracted legal battles.
Much of this conflict has centered on the 340B Drug Pricing Program, in which manufacturers make prescription drugs available to eligible providers at deeply discounted prices. Providers use 340B program revenues to shore up slim operating margins, provide expanded services to their communities and make medicines more affordable for patients.
But tensions have risen in 340B, primarily due to a lack of transparency and trust between manufacturers, providers, pharmacies and payers over complex issues surrounding compliance and information exchange. These challenges have resulted in many safety net providers, particularly those who serve the most vulnerable populations, experiencing significant impacts on their revenue and operations. Legal remedies are in motion, but the process is slow and the outcome is uncertain. If these differences aren’t resolved, the impact could be profound.
While all 340B program stakeholders have good intentions, fragmented systems, outdated technology and failing infrastructure have hampered transparency, causing confusion and distrust. Manufacturers, providers, pharmacies and payers all have their own tracking, reporting and invoicing systems, so it’s easy for important indicators to get lost even when critical data is being exchanged between parties. This leads to mistakes that cause inaccurate payments.
Inaccurate payments are a growing problem. A conservative estimate is that at least 3-5% of 340B discounts are duplicated with Medicaid, something that is prohibited by the 340B statute. By 2019, these duplicate discounts amounted to anywhere from $933 million to $1.6 billion a year or higher.
The issue is especially significant at contract pharmacies, of which close to 30,000 now partner with providers to dispense drugs purchased at discounted 340B prices to eligible patients. These arrangements enable providers to take full advantage of the benefits of 340B, and even more importantly, expand patient access to needed medicines. However, the lack of transparency surrounding these dispenses is a concern for manufacturers, a handful of whom have chosen to take actions to limit contract pharmacy participation, creating grave concerns for providers, along with significant financial impacts.
An aging infrastructure creates obstacles to compliance and makes participation in the program more challenging, degrading trust and increasing antagonism in relationships between stakeholders who should be working together for the good of patients.
But as a platform provides more compatibility, communications can become more direct, resolving uncertainties. In the case of 340B, greater visibility would give manufacturers insight into the business impact of non-compliant discounts; and, from the provider end, they could better manage their own compliance programs with limited resources, freeing up more resources to better care for patients.
Platform technology has already made an impact in many areas of healthcare. With a platform’s ability to bring stakeholders together, comes new opportunities for transparency and collaboration that are deeply needed in the drug cost ecosystem.
About David de Vogel
Dave is a founder and the Chief Technology Officer at Kalderos, a company delivering technology that solves the challenges facing the US healthcare system. He’s a software development professional who’s been designing, architecting and building innovative software systems for more than twenty years. Dave is passionate about technology and driven by the challenge and adventure of finding and implementing the most appropriate solutions for bringing Kalderos’ business value to market.