How a budget-impact analysis complements cost-effectiveness to present a balanced economic outlook

Understanding the financial implications of new healthcare interventions is fundamental to making informed reimbursement and access decisions. While cost-effectiveness analysis (CEA) has long been regarded as a critical tool in evaluating the value of new treatments, budget-impact analysis (BIA) offers a complementary perspective by focusing on short- to medium-term affordability and sustainability. Together, they create a comprehensive framework that empowers payers in balancing long-term value with near-term financial feasibility.

The third article in our health economic modeling series explores how BIA complements CEA and key steps to ensure accuracy and reliability when conducting an analysis.

Read the second blog in our series ‘Using cost-effectiveness models to drive smarter drug development and access decisions’.

A budget-impact analysis evaluates how the adoption of a new medical technology impacts a payer’s budget over a defined timeframe. Unlike a cost-effectiveness analysis, which typically involves a head-to-head comparison of two or more specific treatment options to assess long-term value (e.g., using quality-adjusted life years or QALYs), a BIA compares two broader scenarios: the healthcare system’s financial status quo versus the projected budgetary outcomes after introducing the new technology. A BIA estimates the size of the eligible patient population, forecasts how rapidly the technology will be adopted (uptake rates), and calculates associated costs (i.e., drug acquisition, administration, monitoring, and hospitalization) under realistic market conditions, over a defined short- to medium-term horizon, typically 1 to 5 years. It explicitly considers all relevant current and future treatments, including their market shares and dynamics, rather than focusing solely on one comparator. This allows BIAs to reflect realistic clinical practice, in contrast to CEAs which may oversimplify comparator structure. Key modeling inputs include epidemiological data (such as disease prevalence, incidence, and mortality rates), current and anticipated standards of care, market trends, and healthcare utilization patterns. Costs are analyzed from the payer’s perspective, with detailed consideration given to patient access pathways, intervention mix, and changes to resource allocation resulting from the new technology’s introduction.

While BIA is generally more straightforward than CEA, many HTA guidelines (i.e., ISPOR, NICE) recommend incorporating sensitivity or scenario analyses to explore uncertainty in key inputs and assumptions, even if not to the same extent as in CEAs.

• Affordability: Helps payers determine whether integrating a new technology fits within immediate budget constraints for a defined budgeting period (typically 1-5 years).

• Sustainability: Evaluates short-to-medium-term financial feasibility to ensure that ongoing patient access can be maintained without compromising financial stability.

• Practical Decision-Making: Provides detailed insights into expected patient uptake and treatment utilization patterns, enabling more accurate forecasting and better allocation of healthcare resources.

Budget-impact analysis is no longer optional; it’s a critical component of market access strategy. With healthcare budgets under constant strain, payers require clear, actionable insights to make informed decisions. By focusing on affordability and sustainability, BIA ensures that new technologies can be integrated without compromising access or quality. Market access, pricing, and reimbursement leaders must prioritize integrating BIA into their decision-making processes. Combined with cost-effectiveness analysis, it positions organizations for long-term success by balancing value with financial feasibility.

Health Technology Assessment (HTA) submissions and Global Value Dossiers (GVD) tell a holistic story that must include clinical and financial evidence. A BIA plays an important role in demonstrating the value of new treatments. We’ll wrap up our blog series with a look at the full spectrum of information presented in HTA submissions and GVDs to build a case for new medical technologies.