To keep pace with the health care marketplace, the pharmaceutical industry "must acknowledge there is an affordability problem," Peter Juhn told attendees of the Post-Approval Summit at Harvard, held earlier this week. Juhn is Executive Director for Health Policy and Evidence at Johnson & Johnson. He warned that as health care costs keep growing, more and more employers and governments are asking "Can we afford this?"  

Recent projections suggest the US will soon reach unsustainable levels of health care spending—costs will reach approximately $2.64 trillion over the next few years, up from $1.54 trillion in 2002. If they don't help contain those costs, pharmaceutical companies will face increasingly tough times as payers move toward rationing and other drastic approaches. Regulatory approval has been increasingly decoupled from coverage decisions. So drug companies need to pay as much attention to payers as to regulators, and payers want to know about "value." 

Determining value depends on many things, including the disease involved. So, pharmaceutical companies need to figure out, "What do payers really need to know?" Juhn said.  For example, payers worry far more about the total cost of bringing a therapy to market, rather than the cost of treating an individual.  They want to know "How can we begin to control utilization?" says Juhn, particularly when off-label use may become an issue. 

Besides clinical outcomes, drug makers will need to think about other types of "benefits" derived from drug treatment, Juhn said, including "functional outcomes and workplace productivity."  Payers and other organizations are starting to study these issues and provide data for making decisions about which treatments provide the greatest value. "But the methods of determining value are still in flux," he said, adding that pharmaceutical companies can help make those determinations.   

One way that companies are starting to do this is by establishing registries that provide new data about products that are already approved and on the market.  Data from these registries are more reflective of the real world because they use actual patients rather than study participants. These data can also be used to answer pending questions, including those around value. 

The greatest opportunity for drug makers lies in the quality arena.  Currently, 30% of health care dollars are spent on suboptimal care.  As a result, a lot of money could be saved just by improving care.  "The wasted dollars are very important," Juhn said.  "That money could be available to pay the premium for new technology." 

How to pay for new technologies—including new drugs—is a growing problem.  In the US, technological advances account for approximately 50% of the health care inflation.   

While much of the attention is on the cost of health care, Juhn reminded attendees not to forget that we've already reaped great benefits from those health care dollars.  One recent study estimated health gains of as much as $2.40 to $3.00 for every one dollar invested so far.   

That realization will be little comfort once the US reaches the point where more than $8,000 is being spent per person, per year, on health care.  "We must all participate in paving the way to a new approach," Juhn said. 

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