Budget impact analysis: review of the state of the art

Abstract

A budget impact analysis for a new pharmaceutical product provides estimates of the likely impact of the new drug on a healthcare decision maker’s short- and longer-term annual budgets. Budget impact analysis are an essential part of a comprehensive economic assessment of a new pharmaceutical product and are increasingly required, along with cost-effectiveness analyses, before national or local formulary approval or reimbursement. Standards for the development, content and presentation of the results of a budget impact analysis have recently been proposed but detailed guidance on alternative methods for estimating budget impacts are not yet available. Methods for performing these analyses require either static or dynamic analysis techniques depending on the type of health condition and health impact of the new drug. Several factors, that are not generally needed for cost-effectiveness analysis, should be part of a comprehensive budget impact analysis including the size of the treated population, second-order costs, market diffusion rates for the new drug, and off-label use. A review of the recent literature indicates that there is only a limited number of published budget impact analyses and these vary greatly in the methods used. Instead of publication in peer-reviewed journals, budget impact analyses are more frequently presented directly to decision makers as interactive computer programs designed to compute the budget impact for specific health plans using plan-specific inputs. It is recommend that a comprehensive approach to budget impact estimation be adopted, with the results being presented from both a societal perspective as well as from more limited perspectives depending on the needs of the decision maker.