What is health economic modeling?
Health economic modeling is an evaluative method which is used by pharma companies once they reach the end of drug development. This methodology helps companies to identify the benefits, target population and approximate value of their product or therapies. Health economic modeling helps stakeholders to quantify new healthcare intervention’s clinical and economic benefits and risks.
Through these models, researchers use data to forecast the approximate cost, any trade-offs, affordability and impact of new interventions. Decision making authorities include pharmaceutical companies, healthcare providers, payers, policy makers and reimbursement experts who use this model as a guide to make informed decisions and resource allocation.
From patients’ perspective, it gives them a rough idea about the affordability, safety and efficacy and whether it will improve their quality of life.
What are different stages of health economic modeling?
Health economic modeling is divided into various stages. The first involves conceptualization of various comparators and differentiators. The second stage consists of data collection and analysis of patient demographics, target population, acquisition cost, treatment efficacy and benefits/risks. At the third stage, software is utilized to simulate and perform sensitivity analysis of data acquired from the second stage.
The fourth stage deals with review and validation by an expert panel. Models are analyzed, scrutinized and calibrated in accordance with real-world data. The fifth stage involves publication of all the research at a conference. This is followed by development of a manuscript from these research papers and journals. The final stage is adaptation of the new data which will be used as updated models in ongoing development.
How do economic models help policymakers and healthcare organizations make decisions?
Economic models in healthcare provide a structured framework for evaluating approximate value of new interventions, proper resource allocation, impact of new drug and its cost. Economic models generate data from multiple sources, hence they enable healthcare providers to synthesize this data and make informed decisions. They play a vital role in guiding decisions on how to improve the health system and improve patient experience.
In what way health economic models help identify cost-effective treatments?
Health economic modeling can also be used in the early stage of development. This allows companies to study various evidence development initiatives, clinicians, clinical departments, and perform gap analysis to forecast if the new treatment has potential of providing health benefits as well as is cost-effective. Analysis of this data helps researchers to forecast who will get this treatment/therapy, whether it will be reimbursed or not, and the price range.
How do decision-makers leverage health economic models to figure out effects of treatments?
Through economic evaluations, decision-makers can forecast the anticipated benefits of particular treatment. These evaluations are cost-effective analysis, cost-utility and cost-benefit analysis. These are applied to evaluate effectiveness of the new drug, its estimated cost and its safety, quality and efficacy. Clinical data analysis and interpretation and cost-effective analysis helps to extrapolate treatment outcomes, payers, reimbursements, valuation of resource use and budget impact analysis. Health economic models provide tools to make evidence based decisions regarding pricing, reimbursement, identify inequalities, maximize health benefits and minimize risks.
