Budget Impact

Analysis
Hilton Lam, MHA, PhD
CE 222

Lam 2019
 Objectives

By the end of the lecture, the student shall be able to:

1) Understand what an budget impact analysis (BIA) is.

2) Appreciate the five step process for creating a BIA
3) Differentiate between a Cost Effectiveness Analysis (CEA)
and a BIA.
4)Understand and interpret a budget impact analysis (BIA)
5)Create his/her own BIA

Lam 2019
 Why perform a BIA?
Budget impact analysis (BIA) is an essential part of a
comprehensive economic assessment of a health care
technology.

BIA is required, along with Cost-effectiveness Analysis (CEA), for

Health Technology Assessment submissions in many countries.

BIA is useful for budget planning and forecasting

Lam 2019
CEA vs BIA

Analysis Population Perspective Time span Example Value to

studied used outcome decision
measurements maker
CEA Vary between Societal Duration of ICER, QALY Which
one cohort to expected gained, DALY intervention
an entire costs and averted, gives the best
population outcomes Deaths value?
Averted,

BIA Everyone Payor Annually, for 5 Annual Budget

eligible for years change in planning
treatment Costs, annual
change in How to reach
outcomes target
outcomes

Lam 2019
Five steps

1. Ensure that the ICER is considered cost-effective

2. Characterize the population that will be eligible within the
payor’s scope
3. Estimate the population changes over a 5 year period,
4. Estimate the nominal (without discounting) annual direct
intervention costs
5. Estimate the nominal (without discounting) annual
disease-related costs

Lam 2019
Presenting a BIA (introducing new therapy)
Outcomes Year1 Year2 Year3 Year4 Year5
(Status Quo)
Basis
A Persons alive and on old drug 63,837 44,771 27,022 16,022 -
therapy
B Persons alive and on new drug - 25,000 45,000 60,000 81,024
therapy
C Hospitalizations 18,000 5,100 3,200 2,500 800
Budget Impact
D Drugs Costs of old drug therapy 3,447,198 2,417,634 1,459,188 865,188 -
(PhP 54 each)

E Drugs Costs of new drug therapy - 2,375,000 4,275,000 5,700,000 7,697,280

(PhP 95 each)

F Hospitalization costs (PhP 15,000 270,000,000 76,500,000 48,000,000 37,500,000 12,000,000

each)
G Total costs (D+E+F) 273,447,198 81,292,634 53,734,188 44,065,188 19,697,280
Budget Change (Annual)
H on old and new Drugs costs 1,345,436 941,554 831,000 1,132,092
I on Hospitalization costs - 193,500,000 - 28,500,000 - 10,500,000 - 25,500,000
J TOTAL (H+I) - 192,154,564 - 27,558,446 - 9,669,000 - 24,367,908
K Percent Change -70% -34% -18% -55%
Lam 2019
Given:
a) The eligible population is 437,000, increasing at 2% every year.
b) Cure rate of treatment X is 75%
c) Cure rate of treatment W is 45%
d) The treatment mix of X v W is 100%v0% for year 1, 65% v 35% for year 2, 45% v 55% for year 3,
25% v 75% for year 4, and 0% v 100% for year 5

 What is the annual eligible population

per treatment arm?

Lam 2019
 Year 1 Year 2 Year 3 Year 4 Year 5
(100% v 0%) (65% v 35%) (45% v 55%) (25% v 75%) (0% v 100%)
A Population on Tx W 437,000 159,352 50,075 10,925 0
(total population not
cured in the previous

What is
year put on Tx W in the
current year)
the annual B Population on Tx Y 0 85,805 61,202 32,774 14,486

eligible (total population not

cured in the previous
population year put on Tx Y in the

per
current year)
C Population on Tx W who are 196,650 71,708 22,534 4,916 -

treatment
cured by the end of of the
year (A*45%)

arm? D Population on Tx Y who are

cured by the end of the year
0 64,354 45,902 24,580 10,865

(B*75%)
E Population on Tx W not 240,350 87,644 27,541 6,009 -
cured by the end of the year
(A-C)
F Population on Tx Y not cured 0 21,451 15,301 8,193 3,622
by the end of the year (B-D)
G Population not cured by Tx 240,350 109,095 42,842 14,202 3,622
W&Y, but the end of the year
Lam 2015 (E+F)
Create your own BIA
Given:
a) CEA shows that New treatment X is more cost effective than current treatment W.
b) Cost of Treatment W is 1,050 per patient per year, cost of Treatment X is 2,500 per patient per
year
c) Treatment W is associated with 18% side effect requiring 500 pesos worth of rescue
interventions, while Treatment X is associated with 5% side effect requiring 500 pesos worth of
rescue.
d) The eligible population is 737,000, increasing at 2% every year.
e) Cure rate of treatment W is 35%
f) Cure rate of treatment X is 65%
g) The treatment mix of W v X is 100%v0% for year 1, 65% v 35% for year 2, 45% v 55% for year 3,
25% v 75% for year 4, and 0% v 100% for year 5

1) Create a BIA if the scenario is a switch in treatment as per (g)

2) Create a BIA if the scenario is that there was no existing treatment (ie: no treatment W) and
all eligible will be put on the new treatment immediately (assume 50% side effect if no ttt)
 Year 1 Year 2 Year 3 Year 4 Year 5
(100% v 0%) (65% v 35%) (45% v 55%) (25% v 75%) (0% v 100%)
A Population on Tx W 737,000 317,610 122,233 33,594 0
(total population not
cured in the previous
Gradual year put on Tx W in the
current year)
Switch
Scenario B Population on Tx Y 0 171,021 149,396 100,782 58,252
(total population not
cured in the previous
year put on Tx Y in the
current year)
C Population on Tx W who are 257,950 111,164 42,782 11,758 -
cured by the end of of the
year (A*35%)

D Population on Tx Y who are 0 111,164 97,108 65,508 37,864

cured by the end of the year
(B*65%)

E Population on Tx W not 479,050 206,447 79,452 21,836 -

cured by the end of the year
(A-C)
F Population on Tx Y not cured 0 59,857 52,289 35,274 20,388
by the end of the year (B-D)
G Population not cured by Tx 479,050 266,304 131,741 57,110 20,388
W&Y, but the end of the year
(E+F) Lam 2019
 Outcomes Year1 Year 2 Year 3 Year 4 Year 5
(Status Quo) (65% v 35%) (45% v 55%) (25% v 75%) (0% v 100%)
(100% v 0%)

Basis
A Persons alive and on old drug 737,000 317,610 122,233 33,594 -
Gradual therapy (Tx W)
Switch B Persons alive and on new drug - 171,021 149,396 100,782 58,252
Scenario therapy (Tx X)
C Persons with Side Effects (18% of 132,660 65,721 29,472 11,086 2,913
persons on Tx W; 5% of persons on
Tx X; and 50% of persons not on any
Tx)
Budget Impact
D Drugs Costs of old drug therapy (Tx 773,850,000 333,490,500 128,344,650 35,273,700 -
W, PhP 1,050 each)
E Drugs Costs of new drug therapy (Tx - 427,552,500 373,490,000 251,955,000 145,630,000
X, PhP 2,500 each)
F Side Effect intervention costs (PhP 66,330,000 32,860,425 14,735,870 5,543,010 1,456,300
500 each)
G Total costs (D+E+F) 840,180,000 793,903,425 516,570,520 292,771,710 147,086,300
Budget Change (Annual)
H on old and new Drugs costs - 12,807,000 - 259,208,350 - 214,605,950 - 141,598,700
I on side effect intervention costs - 33,469,575 - 18,124,555 - 9,192,860 - 4,086,710
J TOTAL (H+I) - 46,276,575 - 277,332,905 - 223,798,810 - 145,685,410
Lam 2015 K Percent Change -6% -35% -43% -50%
 Year 1 Year 2 Year 3 Year 4 Year 5
(No existing (100% put (100% put on (100% put (100% put
Treatment) on new new on new on new
treatment) treatment) treatment) treatment)
A Population on with 737,000 - - - -
disease (total
population not cured in
Radical Switch the previous year put on
Scenario (with Tx W in the current
no existing year)
treatment) B Population on Tx Y 0 751,740 268,371 95,809 34,204
(total population not
cured in the previous
year put on Tx Y in the
current year)
C Population who are not on - - - - -
treatment, who become
cured by the end of the year
(A*0%)

D Population on Tx Y who are - 488,631 174,441 62,276 22,232

cured by the end of the year
(B*65%)
E Population who are not on 737,000 - - - -
treatment and are not cured
by the end of the year (A-C)

F Population on Tx Y not cured 0 263,109 93,930 33,533 11,971

by the end of the year (B-D)

G Population not cured by Tx 737,000 263,109 93,930 33,533 11,971

W&Y, but the end of the year
(E+F) Lam 2019
 Outcomes Year1 Year 2 Year 3 Year 4 Year 5
(Status Quo) (0% v 100%) (0% v 100%) (0% v 100%) (0% v 100%)
(No existing
treatment)

Radical Switch Basis

Scenario (with A Persons alive with disease but with 737,000 - - - -
no existing no existing treatment
treatment) B Persons alive and on new drug - 751,740 268,371 95,809 34,204
therapy (Tx X)
C Persons with Side Effects (50% of 368,500 37,587 13,419 4,790 1,710
persons who are not on treatment;
5% of persons on Tx X)
Budget Impact
D Drugs Costs of no treatment - - - - -
E Drugs Costs of new drug therapy (Tx - 1,879,350,000 670,927,500 239,522,500 85,510,000
X, PhP 2,500 each)
F Side Effect intervention costs (PhP 184,250,000 18,793,500 6,709,275 2,395,225 855,100
500 each)
G Total costs (D+E+F) 184,250,000 1,898,143,500 677,636,775 241,917,725 86,365,100
Budget Change (Annual)
H on old and new Drugs costs 1,879,350,000 - 1,208,422,500 - 431,405,000 - 154,012,500
I on side effect intervention costs - 165,456,500 - 12,084,225 - 4,314,050 - 1,540,125
J TOTAL (H+I) 1,713,893,500 - 1,220,506,725 - 435,719,050 - 155,552,625
K Percent Change 930% -64% -64% -64%
Lam 2015
Create your own BIA (HOMEWORK) (Due December 12, 2015)
Given:
a) CEA shows that New treatment X is more cost effective than current treatment W.
b) Cost of Treatment W is 5,050 per patient per year, cost of Treatment X is 6,500 per patient per
year
c) Treatment W is associated with 10% side effect requiring 500 pesos worth of rescue
interventions, while Treatment X is associated with 5% side effect requiring 500 pesos worth of
rescue.
d) The eligible population is 1,000,000, increasing at 2% every year.
e) Cure rate of treatment W is 35%
f) Cure rate of treatment X is 65%
g) The treatment mix of W v X is 100%v0% for year 1, 65% v 35% for year 2, 45% v 55% for year 3,
25% v 75% for year 4, and 0% v 100% for year 5

1) Create a BIA if the scenario is a gradual switch in treatment as per (g)

2) Create a BIA if the scenario is that there was no existing treatment (ie: no treatment W) and
all eligible will be put on the new treatment immediately (assume 50% side effect if no ttt)
Thank you for your attention and
participation

Lam 2019