BUDGET IMPACT ANALYSIS
Budget Impact Analysis
 It is an integral part of a comprehensive economic assessment which is designed to estimate,
over a defined time horizon, the likely financial impacts or consequences of the adoption
and diffusion of new health intervention within a specific healthcare setting or system
context.
 In particular, such analysis predicts how a change in the mix of pharmaceuticals and other
therapies used to treat a specific disease will impact the trajectory of health spending on
that condition.
 Given the systems’ highly local nature and decision makers’ varying perspectives, a BIA
cannot give a single estimate applicable to all decision makers. Instead, the purpose of a BIA
is to provide a valid computing framework—a “model”—that allows users to apply input
values and view financial estimates pertinent to their setting. Thus, the outcomes of the BIA
should reflect scenarios consisting of specific assumptions and data inputs of interest to the
decision maker rather than a normative “base” case intended to be generally applicable.
 Is part of the comprehensive economic assessment of healthcare technologies along with
CEA before the technology is approved for addition to a formulary or reimbursement by
healthcare payers.
 Provides a framework for stakeholders to examine how different assumptions about the
potential impact of the new interventions with regard to:


 changes in technology mix
 changes in treatment cost
Takes the true “unit” cost of an intervention and multiplies it by the number of people
affected by the intervention to provide an understanding of the total budget required to
fund the intervention. Thus, the size of the population is explicitly considered.
The focus of the BIA is the direct cost of specific resources needed to put the intervention
into effect, such as supplies, equipment, and staff.
Uses of Budget Impact Analysis
1. Budget planning
2. Forecasting
3. Estimating impact of health technology changes in health insurance premiums
4. Estimating fiscal impact of pursuing an intervention at the national level
New Interventions
In setting up a BIA, consider the nature of the intervention
 Replacing the existing standard care
 Used in addition to the existing standard of care
 Used only for situation with no existing care
 Cost change
Impact of Budget Impact Analysis on Cost
 New interventions (usually) increase cost
 New interventions may reduce disease cost because of clinical benefits
 The reduced disease cost may offset the costs of the new intervention
 Timing of changes in cost of intervention or disease costs have an impact on budget changes
Six Steps of Budget Impact Analysis
1. Characterize the population with the potential to be impacted by the intervention
 Use epidemiology data from multiple sources
 Start with country population to determine population with potential to be
impacted by the new intervention
- Include all people with the condition who have been diagnosed and are
currently undergoing treatment
- Include people who might enter the treatment pool because of the new
intervention
- Include both new entrants to the treatment pool who will start on the new
intervention and patients who will switch from other interventions
 Sub-divide population by disease severity and disease stage and allow population in
stages to vary time if necessary
2. Select the time horizon
 Decision makers prefer short time horizon
 When designing an analysis, ensure that the framework is flexible with regard to the
time horizon
3. Determine the current and future mix of interventions
 Characterize all the current interventions that are currently in use and are likely to
be changed when the new intervention sets in
- Data may come from observational studies or market research
 Determine the future intervention mix
- Is the new intervention an add-on or a substitute?
- If it is a substitute, which of the current interventions will loose “market”
share?
- Estimate market share for new intervention each year after introduction
- Data come from expert/stakeholder projections
4. Estimate intervention cost
 Costs of intervention come from cost studies
 If the time horizon is long, there is a need for discounting
 Consider impact of adherence to interventions on cost and outcomes
5. Estimate changes in disease-related costs
 Estimates of changes in disease-related costs come from the same disease-related
models as are used for other economic evaluations
 Data may come from trials for acute illnesses
6. Present results
 BIA results are presented for each year as costs per person or costs per treated
person per month
- May be presented for a country or a health plan or a district
- For a country, the members may be tax payers i.e., impact on the taxes of
tax payers
 Health outcomes are usually presented alongside budget impact results
Budget Impact Analysis VS Cost-Effective Analysis
Recognition is growing that a comprehensive economic assessment of a new pharmaceutical
product at the time of launch requires both cost-effectiveness analysis (CEA) and a budget impact
analysis (BIA).
CEA estimates the incremental lifetime costs and effectiveness of a new drug compared with
current treatment for a representative patient and provides an estimate of the efficiency or value of
the new drug compared with alternative treatments. In contrast, a BIA estimates the impact on
annual healthcare use and costs for the first, second and subsequent years after the introduction of
the new product for a national or health plan population. A BIA provides an estimate of the impact
of a drug based on its rate of uptake as well as the magnitude and timing of its impact on healthcare
use and costs. Decision makers need such estimates of the impact of a new drug on annual drug and
total health system expenditures for financial planning. Decision makers are also interested in the
impact of a new drug on annual healthcare service utilization at the system level since they need to
understand how the new drug will impact the system in terms of service provision. For example, a
new treatment for influenza may have a major impact on health system functionality by encouraging
more people to seek primary care when they have symptoms of influenza, possibly overburdening
already busy general practitioners.
Budget impact Analysis in the Context of
Philippine Health Care System
The conduct of an economic assessment should allow for the determination of the relative
costs and benefits of a health technology as well as the budgetary implications of its adoption to the
national health system from the perspective of the government payor, namely DOH and PhilHealth.
Economic evaluation in the country includes Budget Impact Analysis (BIA) to increase the awareness
of DOH or PhilHealth policymakers with regards to the financial impact of introducing a new
technology and to aid in budget or service planning of government and/or social insurance.
Therefore, All BIAs shall use government payor perspective. This is required, along with the CEA or
CUA.
Lower annual percent changes in the budget is always preferred. However, higher percent
changes may be acceptable by the payor, if the payor would be able to find ways to increase its
annual budget in order to accommodate the expected increases due to the implementation of the
new technology.
ISPOR Budget Impact Schematic
Performing Budget Impact Analysis
1. Establish perspective
The budget holder or government payor’s perspective should be
used.
2. Establish time horizon
At least a one-year assessment, and ideally up to 3-5 years forecasts
should be provided based on the base case price and discounted
scenarios.
3. Identify the eligible The volume of patients should be clearly defined. With a
population
government payor perspective, the population should be adjusted
for the level of use of government facilities. This takes into account
the planned delivery mechanism health system level/facility
types/integration with other services where relevant).
A distinction should be made based on the full or gradual
implementation of the new treatment. In the latter, subsequent
calculations should be based on the mix of patients on the current
treatment and of patients on the new treatment.
In some cases, a distinction should also be made between
maximum potential number of patients that may benefit from the
new treatment, as opposed to the number of patients for which
there is a positive cost-effective resolution (i.e., only a subset of
patients has been deemed cost-effective, as opposed to the whole
exposed population included in the studies).
Changes to the eligible population (i.e., delay of disease
progression, reduction of mortality etc.) within the established time
horizon should be taken into account.
Details of the health technologies under evaluation should be
included. Preferred sources of data are epidemiologic studies and
government records (e.g., utilization rates of government facilities,
Philhealth claims). Other data sources are the following:
● Data from clinical trials specific to or extrapolated to specified
population
● Uptake, usage, and adherence data from international sources,
from similar populations, and with similar practice patterns
● Market research data
● Expert opinion and surveys for practice patterns
In any case, a summary of the process in deriving the numbers
should be described.
4. Estimate the costs of If there is no current intervention that the payor pays for, then this
treating the disease with will be zero.
current treatment
If there is an intervention that the payor currently pays for, then
this will be the current cost for the delivery of the current
treatment/s. Cost of treatments used off-label may be included. The
estimates should account for variations in usage and cost-relevant
details concerning usage such as monitoring and management of
side effects or treatment failures. The cost of required diagnostic
test/s to identify eligible individuals should also be estimated.
Note: The cost values and items used in the CEA/CUA and BIA
should be consistent.
5. Estimate the costs of Similar to #3, all relevant costs of the new treatment should be
treating the disease with estimated (e.g., diagnostic test, procurement price, delivery costs,
the new treatment
storage, administration costs, management of side effects or
treatment failures).
Note: The cost values and items used in the CEA/CUA and BIA
should be consistent.
6. Compute the changes in Compute for the difference in total costs of the current treatment
total costs
versus the new treatment. The estimated total cost for each
treatment should have been multiplied by the proportion of the
eligible population using or expected to use that treatment
7. Compute the annual Compute for the percent changes in total costs of the current
percent changes
treatment versus the new treatment.