Budget impact analyses get some respect.

Budget impact analyses (BIA) have taken a back seat tocost-effectiveness analysis (CEA) in economic evalua-tionovertheyears.IfCEAwasthewell-bornandhighlyregarded member of the family, BIA was the slightlydisreputable one, hanging around with a somewhatsuspiciouscrowdofhealth-caremanagers,bureaucrats,budget ofﬁcials, and other silo dwellers. There is nolisting at all for “budget impact analyses” in the indexof the US Panel on Cost-Effectiveness [1]. Other refer-ence standards, including the well-known work byDrummond et al., give BIAs scant attention [2].Reasons for its “dissing” are not hard to under-stand. Cost-effectiveness analyses are rooted in eco-nomic theory. They can help guide resource allocationdecisions in a rational and consistent fashion. CEAscan aid policymakers as they attempt to optimizepopulation health subject to resource constraints.Other forms of economic evaluation, such as cost-beneﬁt analyses, in which beneﬁts and costs are mon-etized, also yield a decision rule and have a strongbasis in welfare economics. Even cost-minimizationand cost-consequences analyses speak to the cost andbeneﬁt sides of the equation.In contrast, BIA say nothing explicitly about healthbeneﬁts. There is no optimization, no decision rule, nocalculation of value, and no grounding in economictheory. They simply quantify the ﬁnancial conse-quences of using health-care services (though they mayconsider beneﬁts indirectly to the extent they capturecost offsets).Yet, BIA have stubbornly refused to fade away.Indeed, payers worldwide keep demanding them. Thereasons for the popularity are also not hard to fathom.Unlike CEAs, BIA speak to affordability, the chiefconcern of health managers everywhere. Like anyshopper on a spree, the payer has a real budget con-straint and worries that he could go broke buying all ofthe items purporting to deliver good value for money.Abstractions like cost per QALY calculations, thoughthey provide a useful guide to value, have neveraddressed the manager’s overarching ﬁscal problem.To date, however, BIAs have had few journalarticles devoted to their use. Moreover, they have notreceived the formal guideline treatment that CEA hasenjoyed. Thus an ISPOR Task Force Report on thetopic is a welcome addition [3].As the Report argues, a comprehensive assessmentof a new health-care intervention at time of launch canbeneﬁt from both CEA and BIA. At least in somerespects, the two approaches can be viewed as comple-mentary. CEAs evaluate costs and outcomes associatedwith health-care strategies and can be used to guidecoverage or reimbursement decisions. BIAs are used, asthe Report notes, for budget planning, for forecasting,and for computing the impact of a health technologyon health insurance premiums. BIAs can be helpful inestimating the ﬁnancial consequences of adoption anddiffusion and in predicting how a change in mix ofdrugs versus other therapies will impact the trajectoryof health spending on a condition.The publication of this Task Force Report will helplegitimize the practice. The Task Force has performedits job well and delivered a balanced and thoughtfulstatement. The call for standards and rigor should helpstrengthen the ﬁeld.Importantly, there is a central focus on the practicalneeds of the decision-maker, which sets it apart frommost reports on CEAs. The recommended perspectiveis that of the budget holder. The Report notes that thedrawing of budget boundaries is a highly local exer-cise, and that the speciﬁc set of assumptions of interestshould reﬂect the decision-maker rather than a “refer-ence case.” The Task Force highlights the fact thatanalyses should include data that reﬂect the size, char-acteristics, and symptoms of the population at hand, aswell as the current and new treatment mix. The Reportemphasizes that where possible BIAs should incor-porate decision-makers’ own populations for otherparameter estimates.Therearesomeimportantqualiﬁershereaswell,forexample, that the purpose of BIAs is not to produceexact estimates but to provide a valid computingframework on possible budget consequences. TheReport also usefully recommends “that the analyst usethe simplest design that will generate credible andtransparent estimates,” a kind of Occam’s razor forthe ﬁeld. There is also useful guidance for the reportingof analyses.