INTERNATIONAL SOCIETY FOR 

PHARMACOECONOMICS AND OUTCOMES 

RESEARCH (ISPOR) METHODS GUIDANCE

 

A REPORT OF THE ISPOR TASK FORCE II 

ON BUDGET IMPACT MODELING

January 15, 2014

Josephine Mauskopf, PhD

Vice President, Health Economics

RTI Health Solutions
Topics

• Introduction to the Task Force

• Task Force Report

• Outline of Report

• Key Recommendations

• Reviews and Publication
Background

• Evidence requirements from payers include mandates for 

budget impact analyses (BIA)

• With an aging population and a sluggish economy, 

concern about the budget impact of new drugs is 

increasing

• Since the first ISPOR BIA Task Force report many 

publications have appeared reporting the results of BIA 

using a variety of approaches

• The second ISPOR BIA Task Force has produced an 

updated methods guidance on the conduct and reporting 

of budget impact analyses.
2007 Budget Impact Analysis Paper
Task Force II Mission

• Develop an updated, coherent set of methodological 

guidelines* for those developing or reviewing budget 

impact analyses (BIA)

• Develop an updated template for presenting the results of 

budget impact analyses (BIA) that is useful for decision 

makers

* Not an instruction manual
Task Force Members

• Jo Mauskopf, RTI-HS, USA and Sean D. Sullivan, U. 

Washington, USA (Co-Chairs)

• Maria Swift – ISPOR Staff

• Federico Augustovski, IECS, Argentina

• Jaime Caro, McGill U., Canada

• Karen Lee, CADTH, Canada

• Mark Minchin, NICE, UK

• Ewa Orlewska, Center for Pharmacoeconomics, Poland

• Pete Penna, Formulary Resources, US

• Jose-Manuel Rodriguez Barrios, Stryker, Spain

• Wen-Yi Shau, Center for Drug Evaluation, Taiwan
Report Outline

• Abstract 

• Task Force Process

• Introduction

• Purpose

• Intended Use

• Context

• Recommendations for Analytic Framework

• Recommendations for Inputs and Data Sources

• Recommendations for Reporting Format

• Recommendations for Budget Impact Computer 

Program

• Concluding Statement
Purpose of BIA

• Budget Impact Analysis (BIA): an essential part of 

a comprehensive economic assessment of a 

health care technology increasingly required, 

along with cost-effectiveness analysis (CEA), 

prior to formulary approval or reimbursement. 

• Purpose: To estimate the expected changes in a 

health care system’s expenditures after adoption 

of a new intervention. 
Intended Audience

• Health care decision makers who are responsible 

for local, regional or national budgets

• Research analysts who perform these studies for 

health care decision makers

• Others:

• Patient advocacy groups

• Health care professionals

• Drug and other technology manufacturers

• Those developing guidelines for their settings
Context

• HTA agencies start to request budget impact analyses 

(National Institute for Health and Care Excellence (NICE), 

Academy of Managed Care Pharmacy (AMCP), 

Pharmacy Benefits Advisory Committee (PBAC) (1990’s 

to present)

• BIA perspective (1998)

• Prevalence (population)

• Decision maker (no reference case)

• ISPOR Task Force I (2007)

• Increasing number of publications (2007-2013)

• Country-specific guidelines (e.g. Australia, Canada, 

Poland, Thailand )

• ISPOR Task Force II (2012-2013)
BIA – Analytic Framework 

• A BIA is a means of synthesizing available 

knowledge at the time of a coverage or formulary 

listing decision to estimate the likely financial 

consequences of that decision to the health care 

system or health care plan

• A BIA provides a valid computing framework that 

allows users to apply their own input values and 

view financial estimates pertinent to their setting
Total Population

Sick Population

Target Population

Incidence 

Prevalence

% diagnosed % 

treated

Resources utilization

(Hospital, Ambulatory,

Rx)

Current way of 

treatment

Unit Costs

Cost of illness

Total Population

Sick Population

Target Population

Resources utilization

(Hospital, 

Ambulatory, Rx)

Cost of illness

Budget Impact

DIFFERENCE 

CURRENT ENVIRONMENT KEY FACTOR IMPACT ON NEW ENVIROMENT

 Hospitalization

 MD visits, Diagnostic 

tests

 Other therapies

 Diagnosis

 Treatment

 Incidence 

 (For Preventive 

interventions)

 New therapy or 

procedure

New

New

New

New

New
•Features of the health care system

•Perspective

•Use and cost of new and existing interventions

Eligible population

Current interventions

Uptake of new intervention and market effects

Off-label use

Cost of current or new intervention mix

•Impact on other costs

Condition-related costs

Indirect costs

•Time horizon

•Time dependencies and discounting

•Choice of computing framework

•Uncertainty and scenario analysis

•Validation

Elements of the Analytic Framework
BIA - Recommendations for Analytic 

Framework I

• Features of the health care system to include 

those that impact the budget

• E.g. access restrictions, co-payments, practice patterns

• Perspective of the analysis is that of the budget 

holder

• May include health care, social service, other costs

• Flexible design to allow presentation of perspectives of interest 

• Population

• All patients eligible for the new intervention during time horizon of 

interest 

• Note: the new intervention may change the size of the eligible 

population and its distribution by disease severity
BIA - Recommendations for Analytic 

Framework II

• Current interventions

• Mix of all currently used for the eligible population including, if 

appropriate off-label interventions

• Uptake of new intervention and effects on current 

intervention mix

• Consider whether replacement of a current intervention, added 

to a current intervention, or used where previously no 

intervention

• Allow user flexibility to enter different assumptions about 

changes in the intervention mix after introduction of the new 

intervention

• Off-label use of the new intervention

• Not included unless specifically requested by the budget holder

• Cost of current or new intervention mix

• Determined by multiplying the budget holder prices by the 

proportion of the eligible population using each intervention
BIA - Recommendations for Analytic 

Framework III

• Condition-related costs

• Condition related costs should be included if credible data are 

available and they impact the budget during the relevant time 

horizon

• Results should be presented both with and without the impacts 

on condition-related costs

• Indirect costs

• Indirect costs should not be routinely included in a BIA

• Time horizon

• That of relevance to the budget holder between 1 and 5 years

• Time dependencies and discounting

• Include the impacts of inflation and changes in prices (e.g. patent 

expirations) during the analysis time horizon

• Discounting the budget estimates to a net present value is not 

relevant for most budget holders
BIA – Recommendations for Analytic 

Framework IV

• Choice of computing framework

• A simple cost calculator using spreadsheet software is the 

recommended approach (e.g. NICE costing templates)

• Where changes in eligible population size, disease severity mix 

or intervention patterns cannot be credibly captured using the 

cost-calculator approach, a condition-specific cohort or individual simulation model may be used but adapted to account for those 

entering and leaving the eligible population over time

• Uncertainty or scenario analyses

• Present one-way sensitivity analyses

• Present scenario analyses of relevance to the budget holder 

based on plausible alternative assumptions and/or input values

• Validation

• Face validity and program verification should always be 

completed

• For additional credibility, initial year budget impact estimates can 

be compared to current observed costs in the health system
BIA – Recommendations for Inputs and 

Data Sources I

• Size and characteristics of the eligible population

• Current size of eligible population

• Preferred approach from the budget holder’s population directly

• Alternative sources include national or regional data on incidence or 

prevalence adjusted by the characteristics of the population of interest and by 

proportion diagnosed and treated 

• Current characteristics of the eligible population

• Preferred approach from the budget holder’s population directly

• Alternative source for proportion at each level of disease severity from 

published studies of disease incidence, prevalence or progression

• Change in size and characteristics of the eligible population

• Efficacy data from clinical trials or cross sectional data from registries 

• Eligible population for a chronic condition or vaccination program

• Consider two population cohorts eligible for the new intervention: newly 

eligible and catch-up subgroup (became eligible before new intervention was 

available) 

• Size of catch-up subgroup should be obtained from the budget holder or from 

studies of disease incidence, prevalence or progression
BIA – Recommendations for Inputs and 

Data Sources II

• Current and new intervention mix

• Current intervention mix

• Preferred approach from the budget holder’s population directly

• Alternative sources include registries, claims databases, local surveys, market 

research 

• Should allow for current mix to change over the BIA time horizon based on 

past changes, market research or expert opinion

• New intervention mix

• Three approaches to estimate uptake of the new intervention:

• Data from another jurisdiction where the intervention has been introduced

• Producers estimates

• Previous experience of uptake of a similar intervention in budget holders 

population 

• To determine the impact on use of the current interventions, market research, 

producer estimates or expert opinion should be used
BIA – Recommendations for Inputs and 

Data Sources III

• Cost of current and new intervention mix

• Cost of current intervention mix

• Use budget holders acquisition costs after adjustment for any discounts, 

rebates etc where available

• If not available use published wholesale acquisition costs, list prices or 

formulary costs

• Costs associated with administration and monitoring, where relevant, should 

also be included

• resource use estimates from the budget holder or product labels

• unit costs applied to resource use estimates 

• Costs of managing side effects or complications should also be included 

• rates of adverse events taken from product labels or clinical publications

• Costs for treatment of adverse events from published sources or derived 

applying unit costs to resource use estimates derived in consultation with 

treating physicians

• Cost of new intervention mix

• Dosing, administration, monitoring, side effects costs for the new intervention 

should be derived using the product label and clinical trial data supplemented 

by clinical expert opinion 
BIA – Recommendations for Inputs and 

Data Sources IV

• Use and cost of other condition-related services

• Changes in health outcomes

• Data from health outcomes studies (e.g. clinical trials) should be used but 

adapted to a population perspective

• Changes in use of health care services

• Local data are preferred

• Alternative sources are consultation with treating physicians to derive 

treatment algorithms for different health states supplemented by 

observational data

• Unit costs of health care services

• Opportunity costs for the budget holder are the preferred source

• An alternative source are cost accounting estimates 
BIA – Recommendations for Inputs and 

Data Sources V

• Ranges and alternative values for uncertainty and 

scenario analyses 

• Ranges for Uncertainty analyses

• Preferred source is the budget holder 

• Alternative sources include ranges from published studies; arbitrary ranges (e.g. 

± 20% or 50%) are not recommended

• Scenario analyses

• Budget-holder specific information should be used to create relevant scenarios 

based on health plan or system population age and gender distribution and 

condition incidence and prevalence, as well as health plan or system treatment 

patterns and drug and other health care service costs

• If adherence or persistence is included in a scenario analysis:

• assumptions about its impact on intervention costs should be based on 

database or prospective studies applicable to the budget holder

• assumptions about its impact on condition-related costs should be based on 

published studies, pharmacokinetic or pharmacodynamic data or expert 

opinion 

 
BIA – Recommendations for Reporting 

Format

• Use a consistent and standard format 

• Report should follow the main headings of the framework, inputs and data sources 

sections

• Model Framework, Assumptions, and Inputs

• Should be presented in sufficient detail to allow for replication by a researcher

• Output

– Budgetary implications represented by monetary flow (total or per capita) over the 

analysis time horizon.

– Components of budget impact to be displayed.

• Graphical and tabular display

– Present figure of the model structure

– Present table of model assumptions

– Present table with all input values 

– Present table with disaggregated outputs

– Present schematic representation of uncertainty/scenarios

• Reporting combined cost-effectiveness and budget 

impact analyses.

• Provide full description of both models following published reporting guidelines
BIA – Recommendations for Computer 

Model

• Development and use of computer programs for 

reporting the results of BIA

• Create simple spreadsheet program

• Default input parameter values included with text description of 

each parameter and reference to data source and any calculations 

used to derive the input parameter value from the data source 

• User able to change all input parameter values

• User able to restore defaults

• Results presented in tabular and graphical format

• Results presented at different levels of aggregation

• User able to change the scope of the analysis including the time 

horizon and the cost components included
Reviewers and ISPOR Staff

• Primary Review Group:

• Lieven Annemans, PhD

• C. Daniel Mullins, PhD

• Bong-Min Yang, PhD

• Reviewed by ISPOR Membership:

• 84 Reviewers

• ISPOR Staff: Maria Swift
2014 Budget Impact Analysis Paper