Economic Models

Health Economic Models

What is a Health Economic Model?

  • A Health Economic Model is a mathematical framework whose purpose is to estimate the effects of an intervention on valued health consequences and costs.
  • Models enable an evaluation to be extended beyond what has been observed in a study and can bring together data from a variety of different sources.
  • Data sources for model parameter estimates may include clinical trials, observational studies, insurance claim databases, case registries, public health statistics, and quality-of-life surveys.

What types of Health Economic Models does HEA develop?

  • Cost-Effectiveness Models:  Cost–Effectiveness Models assess the overall clinical and economic value of a new therapy in relation to therapies in the same class or in relation to other healthcare interventions.  Cost-effectiveness evaluations typically include impacts on patients or populations (i.e., morbidity and mortality) and on healthcare costs. Common approaches for constructing cost-effectiveness models may include decision tree and Markov (cohort) models.
  • Budget Impact Models:  Budget Impact Models estimate the impact of an intervention on drug costs, healthcare cost offsets, and adverse event costs, as well as the expected utilization in the healthcare system.  These models are useful for estimating system wide (i.e., pharmacy and medical) budget impacts, and are commonly used by managed care payers.  Budget impact models may utilize clinical data and have their results projected as cost per member per month.


  • Transparent: Development of models with calculations, data sources, and assumptions clearly presented and described throughout the model.  Inclusion of sensitivity analysis to explore the effects of alternative input values and assumptions on the results.
  • User-Friendly: Design of customer-friendly graphical user interfaces (GUIs) for economic models using a variety of platforms including Excel and Visual Basic for Applications so that the models can be shared externally or used for internal decision-making.
  • Methodologically Sound: Development and validation of models based on the ISPOR principles of good research practice for modeling in health care evaluation.  Several models have been published in peer-reviewed clinical journals and health economics journals.


  • Development of over 50 health economic models for clients in the pharmaceutical, medical device, and diagnostics industries.
  • Clinical areas of model development have included oncology supportive care, diagnostic imaging, nephrology, neurology, obesity, ophthalmology, and orthopaedics.
  • Global adaptation of models from the Canadian, UK, and Australian payer perspectives.
  • Publication of several models in the medical literature and presentation of modeling results at scientific conferences.
  • Development of models to support AMCP value dossier submissions, Core Value Dossiers, and HTA assessments.