What Is Cost-Effectiveness Research?

What Is Cost-Effectiveness Analysis?

Broadly speaking, cost-effectiveness research, also known as cost-effectiveness analysis, is a method of health care economic analysis that assesses and compares the difference in costs and outcomes associated with different courses of action. In the pharmaceutical industry, these analyses are typically performed to compare treatment intervention and analyze a new intervention compared with the current market, which may be represented by 1 or more established interventions or a standard of care. 

Why Is Cost-Effectiveness Research Important to the Pharmaceutical Industry?

Cost-effectiveness research is an important tool in the pharmaceutical industry used to inform coverage determinations by decision-makers. Establishing how cost-effective an intervention helps with resource allocation by identifying which treatment options are the most impactful to patient outcomes for their cost. This allows for the relative value of the healthcare provided to be maximized within the available budget. 

How Is Cost-Effectiveness Measured? 

Cost-effectiveness can be measured in several different ways depending on the therapeutic area, type of intervention, and target audience. Most often, cost-effectiveness is presented as an incremental cost-effectiveness ratio using life-year (LY), quality-adjusted life year (QALY), or equal value life-year (evLY) as the effectiveness measurement. In the US, LY and evLY are the primary effectiveness measurements, while many other countries primarily look at QALY. In addition to life-year based measurements, effectiveness may also be assessed according to metrics of interest for the disease or intervention, such as number of lives saved, number of cases prevented, or reduction in symptoms. 

When to Perform Cost-Effectiveness Analysis

Cost-effectiveness research is most often performed during phase 3 clinical trials; however, it may also be done earlier or later in the development process. Cost-effectiveness analysis studies performed during phase 3 trials are typically done in preparation for product launch and negotiations with relevant decision-makers. A health care economic analysis performed earlier may be used to inform pricing decisions, while an analysis performed after launch may be targeted toward supporting discussions with specific decision-makers where receiving positive coverage decisions has been challenging. 

Unlock the Full Potential of Cost-Effectiveness Research

Cost-effectiveness research is crucial in demonstrating the value of your products to payers, providers, and patients. By leveraging the data-driven insights in cost-effectiveness analysis, you can support reimbursement decisions, optimize resource allocation, and strengthen your market position. Learn how our team can help you conduct robust cost-effectiveness studies, build impactful health care economic models, and communicate the value of your innovations to key stakeholders.