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A Methodological Review of US Budget-Impact Models for New Drugs

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  • Josephine Mauskopf

    (RTI Health Solutions)

  • Stephanie Earnshaw

    (RTI Health Solutions)

Abstract

A budget-impact analysis is required by many jurisdictions when adding a new drug to the formulary. However, previous reviews have indicated that adherence to methodological guidelines is variable. In this methodological review, we assess the extent to which US budget-impact analyses for new drugs use recommended practices. We describe recommended practice for seven key elements in the design of a budget-impact analysis. Targeted literature searches for US studies reporting estimates of the budget impact of a new drug were performed and we prepared a summary of how each study addressed the seven key elements. The primary finding from this review is that recommended practice is not followed in many budget-impact analyses. For example, we found that growth in the treated population size and/or changes in disease-related costs expected during the model time horizon for more effective treatments was not included in several analyses for chronic conditions. In addition, all drug-related costs were not captured in the majority of the models. Finally, for most studies, one-way sensitivity and scenario analyses were very limited, and the ranges used in one-way sensitivity analyses were frequently arbitrary percentages rather than being data driven. The conclusions from our review are that changes in population size, disease severity mix, and/or disease-related costs should be properly accounted for to avoid over- or underestimating the budget impact. Since each budget holder might have different perspectives and different values for many of the input parameters, it is also critical for published budget-impact analyses to include extensive sensitivity and scenario analyses based on realistic input values.

Suggested Citation

  • Josephine Mauskopf & Stephanie Earnshaw, 2016. "A Methodological Review of US Budget-Impact Models for New Drugs," PharmacoEconomics, Springer, vol. 34(11), pages 1111-1131, November.
    • Handle: RePEc:spr:pharme:v:34:y:2016:i:11:d:10.1007_s40273-016-0426-8
    DOI: 10.1007/s40273-016-0426-8
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    References listed on IDEAS

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    1. Alan White & Howard Birnbaum & Dov Rothman & Nathaniel Katz, 2009. "Development of a budget-impact model to quantify potential cost savings from prescription opioids designed to deter abuse or ease of extraction," Applied Health Economics and Health Policy, Springer, vol. 7(1), pages 61-70, March.
    2. Katelijne Vooren & Silvy Duranti & Alessandro Curto & Livio Garattini, 2014. "A Critical Systematic Review of Budget Impact Analyses on Drugs in the EU Countries," Applied Health Economics and Health Policy, Springer, vol. 12(1), pages 33-40, February.
    3. Anthony J. Culyer, 2005. "The Dictionary of Health Economics," Books, Edward Elgar Publishing, number 2934.
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    Cited by:

    1. Salah Ghabri & Josephine Mauskopf, 2018. "The use of budget impact analysis in the economic evaluation of new medicines in Australia, England, France and the United States: relationship to cost-effectiveness analysis and methodological challe," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 19(2), pages 173-175, March.
    2. Eman Mohammad Massad & Amir Bakir, 2021. "A Framework for Developing a Model Structure of Budget Impact Analysis for New Health Care Interventions in Jordan," International Journal of Economics and Financial Issues, Econjournals, vol. 11(1), pages 126-134.

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