Today in the U.S. and many developed economies, cost-effectiveness analysis (CEA) is on the list of mandatory economic studies that manufacturing companies conduct before product development and production. Drug manufacturers use data from cost-effectiveness modelling (for more details click here) to create a value proposition for payers and healthcare providers. Officials can also use CEA data to optimize pharmaceutical budgets. This article will look at cost-effectiveness analysis and how it can be helpful to government decision-makers.
What is cost-effectiveness analysis, and why do manufacturers need it?
CEA is an economic tool that allows you to examine the relationship between treatment costs and medical intervention’s health effects. It also allows you to compare the effectiveness of the treatment protocol being studied to other intervention options with other protocols. This makes it possible to calculate the cost per unit of outcome (e.g., preventing death or extending life by a year) for different treatment modalities.
Cost-effectiveness analysis allows manufacturers to know the following:
- which clinical indicators are key to determining the health benefits of using a new drug;
- the price/quality ratio of the new product compared to alternatives used to treat the same disease;
- the health benefits that the patient will receive from using the drug under study.
Also, based on CEA data, manufacturers formulate the product’s value and determine the optimal cost. This same data also serves as an argument when negotiating with officials in the market access process.
How is CEA conducted, and what data is used for analysis
When conducting CEA, researchers follow the general guidelines for any economic study. Important points that are emphasized in the CEA process include:
- Choosing a perspective. It is important to determine for whom the study of the economic benefits is being conducted – payers, health care providers, or the health care system.
- Performance Measurement. When conducting a study, you can choose which metrics you will study compared to other drugs:
- clinical measures;
- quality of life indicators for specific diseases;
- more general measures of health.
- Results Report. It compares the cost and effect of using your product compared to peers.
What data does the study include:
- the net cost of treatment with the product;
- health outcomes with and without the intervention;
- health outcomes and side effects after treatment.
It’s worth noting that CEA considers all treatment costs, including delivery of medical technology, payment to healthcare providers for primary and secondary care, hardware and software costs, etc.
Researchers today use digital programs and cost-effectiveness models for calculations. Typically, they are by a team of specialists that includes economists, medical professionals, and programmers.
How can CEA data be useful for decision-makers?
Typically, cost-effectiveness research data is to inform resource allocation decisions on limited healthcare budgets.
CEA data allow you to:
- compare the health impact of different health intervention protocols;
- calculate how much a treatment will cost and compare it to alternative protocols;
- determine which treatment protocol is most effective at the lowest cost.
In other words, CEA data allow for optimal allocation of budgets and maximum benefit from treatment.