With the shift from fee-for-service models to value-based care models, it is important to identify and define the healthcare resource utilization and clinical outcomes that are relevant to the various healthcare stakeholders and can be used to determine the ‘value’ of a therapeutic intervention.
HEOR stands for health economics and outcomes research.
Health economics comprises the use of economic analysis to quantify and compare the value of healthcare interventions.
Outcomes research involves evaluating and analyzing the effect of healthcare interventions on patients in terms of their medical and health outcomes.
Health economics and outcomes research (HEOR) is used to complement traditional clinical development information in guiding healthcare coverage and access decisions for specific therapies.
A budget impact analysis is usually performed in addition to a cost-effectiveness analysis. A cost-effectiveness analysis evaluates whether an intervention provides value relative to an existing intervention (with value defined as cost relative to health outcome). A budget impact analysis evaluates whether the high-value intervention is affordable. For example, a cost-effectiveness analysis may indicate that Drug A is a good value relative to Drug B because it has an incremental cost-effectiveness ratio (ICER) of $40,000 per Quality-Adjusted Life Year (QALY). This means that per person, one needs to spend $40,000 additional dollars to provide each patient with Drug A. If there are 50,000 patients within a health system that need this drug, the healthcare system will have an additional 2 billion dollars of budget impact to treat these patients, which may not be affordable.
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