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Pharma Budget Impact Models (BIMs) in practice: Creating a better model for manufacturers and payers

14 August 2012 April Semilla

This year’s ISPOR , in Washington DC, provided a great variety of issue panels for the attendees, with topics falling under the umbrella of three main topics: 1) clinical outcomes research 2) economic outcomes research and 3) health policy development using outcomes research. Attending panels in each of the topic areas provided a means to gauging what topics held the greatest interest or were deemed high priority by industry and conference attendees. Consistent with payer focus on cost—and industry’s desire to provide their products with every advantage during launch—one of the most popular panels explored payer perceptions on manufacturer-submitted budget impact models for new products. The panel provided well-rounded perspectives including a pharmaceutical company representative responsible for BIM creation, a payer medical director, and a BIM user at a large insurer.

Overall, BIMs are seen to serve a purpose, but their usefulness to end users varies according to the perceived value they bring. In recent years, the focus has shifted more towards Cost Effectiveness Analysis (CEA), as this takes into account impacts outside just the budgetary sphere. However, BIMs still play a role in the budgetary process, and complement CEAs. Therefore, although their influence may not increase, they will remain a mainstay of industry.

The Reality: Not Every Product Needs a BIM

Given the great impact that additions of new therapies, particularly costly products, would have on a health system or pharmacy, it is logical to assume that BIMs and their resultant analysis would be mostly used at the medical director level. In practice, however, panelists shared that stakeholders at that level rarely look at BIMs. Instead, pharmacy analysts work with models the most. Primarily, manufacturer submitted BIMs are used to validate a pharmacy’s own internal analysis and models. In the US, where commercial payers bear the brunt of paying for pharmaceuticals, BIMs are mostly used as a tool to assist in formulary tier placement decisions.

Suitable subjects of a BIM include products that are predicted to garner high utilization, are highly publicized treatments, or have large societal impacts. Such products are more likely to have an effect beyond just the pharmacy, and therefore, internal BIMs may be supplemented by manufacturer provided models. However, there are reservations about manufacturer supplied BIMs. Payers generally perceive the provided BIMs as just another marketing tool. This view is common when budget impact models were submitted for products that treated common diseases, especially if that market was saturated. In the panelists’ opinion, submitting BIMs for such products provided little additional value, since manufacturers place a higher financial benefit on BIMs than payers and pharmacy end users.

The Modeling Wish List

Despite the caveats discussed, the panel did acknowledge that when created and used properly, budget impact models provide valuable insights for future scenarios. From the end user perspective, the basic criteria required for ideal models are that they should be adaptable and in an electronic format (payers prefer models based in Microsoft Excel over other platforms). Several examples for inputs that should be adaptable in an ideal model included prices, averages, rate of uptake, treatment length information and time horizons. Model transparency is key, along with inputs that are applicable and accurate. It was also important to payers that appropriate comparators are used, especially if generic alternatives are available. In terms of security, payers shared a dislike for models that were public access, preferring to house and analyze BIMs internally. Panelists acknowledged that there is currently a better understanding of cost effectiveness analysis than budget impact models, which led to a call for a BIM that retained internally sophisticated underpinnings but sported an interface that was easy to navigate, such as those frequently seen on CEA models.

Building a Better BIM

The critical lesson shared was that BIMs provide the greatest value when they tell a story that the budget holder did not already know. Payers articulated a desire for models that could be validated externally and were easily adaptable to specific environments in their system. A resounding recommendation was that models built for European payers should act as the gold standard. Looking forward, the goal appears to be determining ways to increase the value of budget impact models to both payers and manufacturers. For example, a BIM that is the collaborative product of both payers and manufacturers is being developed. Implications that unfold from this will be interesting to observe: Will payers eventually require standardized BIMs from manufacturers? Will collaborating with one manufacturer restrict future partnerships with others?

By creating a collaborative BIM, a twofold benefit will result: payer reservations about the extra value that manufacturer created BIMs will be assuaged, and manufacturers will have a better idea of what components must be included in their models to further assist their product’s value story. A key consideration here is the disparity in how manufacturers and payers perceive the value of budget impact models. In order to increase value for both parties, BIMs that reconcile what manufacturers and payers find most important are essential.

Posted 14 August 2012

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