The Journey To Simplify Healthcare: Our Investment In Kalderos

Aneesha Mehta
Jun 15, 2020 · 4 min read

At some point in our lives, most of us will pick up a drug from a pharmacy. In fact, roughly half of Americans have taken at least one prescription drug in the past 30 days and nearly a quarter of Americans have taken three. The process is seemingly straightforward — Dr. Santos writes Chloe a prescription and calls it into the pharmacy; Chloe picks the drug up or has it delivered; and Chloe pays some, all, or none of the cost depending on the drug and her insurance coverage. It’s a process we all know well, and if we can pay, we expect to be able to access the drugs we need.

Behind the scenes, however, the picture is more complex. Information and data flow through a web of stakeholders. The hospital sends patient information to a contract pharmacy that purchases drugs at multiple different price points from a wholesaler. The wholesaler then processes chargebacks based on prices and volume sold, all while a third-party administrator, or TPA, determines whether the drug is eligible to be purchased at a discount. Simultaneously, the pharmacy benefits manager, or PBM, reviews the health plan coverage and processes payment for the drug, and then applies a rebate for the drug directly with the manufacturer. Did you get all that? Neither did I. In short, the process is a mess.

Unsurprisingly, information gets lost along the way as stakeholders struggle to communicate with one another. The loss of information is no single stakeholder’s fault — it’s simply a byproduct of a messy system and broken infrastructure. Unfortunately, the loss of information leads to consequences, like incorrect payment of vital drug discounts, such as those from the Medicaid Drug Rebate and 340B programs. Kalderos estimates that roughly $9 billion of non-compliant discounts are paid each year. These errors harm patients, create administrative challenges and regulatory risk for providers, and make it difficult for manufacturers to create and deliver therapies. Fixing discount payment errors requires a whole new infrastructure to create transparency and to manage financial transactions. That’s where Kalderos comes in.

Kalderos is building a new infrastructure to manage drug discount transactions, enabling all stakeholders to better process discounts and eliminate errors.

Today, we’re announcing our $28 million Series B investment in Kalderos, the country’s first drug discount management platform. Kalderos has spent the last four years analyzing rebate and prescription data. Using sophisticated models and machine learning, the company can detect and prevent duplicate and erroneous discount requests, simplifying the “behind the scenes” work that occurs when people like Chloe pick up their prescriptions. With this simplification, discount programs can do what they are supposed to do — help our healthcare system provide life-saving medicines to patients that need them.

Kalderos has a winning team.

We met Jeremy and Micah just earlier this year, but immediately knew we’d found a special pair. As the COVID-19 pandemic hit and we, like so many, immediately shifted to remote work, we became even more confident in the duo we’d met and their ability to lead and inspire their team through the crisis, while also creating even stronger relationships with their customers and investors.

Jeremy is the epitome of a domain expert. That term is all too often used in the VC world and particularly in healthcare, but in this case, it’s true. From his prior years of experience identifying mistakes in discount payments at IQVIA and KPMG to his tireless efforts to work with regulators in the space, Jeremy knows the industry cold. Micah is the perfect complement; he’s not only driven and results-oriented, but a true culture carrier, mentor, and leader for the entire Kalderos team. Both care deeply about their people and it has been inspiring to watch them grow and react to change in a difficult environment. We couldn’t be more thrilled to partner with this team.

The market is asking for change.

The complex and intransparent drug discount transaction process has reached its boiling point. All stakeholders have felt pain from the difficulties managing and coordinating discount programs. Providers face the costly, time consuming, and overwhelming burden of working to ensure compliance despite little visibility into what is happening outside of their four walls. Manufacturers lose money and struggle to forecast their drug portfolios and allocate resources to new therapies. Regulators and payers lack methods and resources to ensure proper discounts are paid. These challenges are only getting worse as discount volume expands and patient data proliferates on top of outdated infrastructure.

Kalderos helps manufacturers, providers, and payers work collaboratively to increase transparency across discount programs, and this is just the beginning. As the company continues to grow, they plan to expand to manage additional complex financial transactions such as value-based pricing, which will further support patients to access the drugs they need. We are delighted to partner with Jeremy, Micah, and the entire Kalderos team on this exciting journey to simplify healthcare.

Ideas from Bain Capital Ventures

Ideas and perspectives from the Bain Capital Ventures team.