Overview

Metrics

Content

Purchase

Excerpted from Chapter 6 of  Pharmacoeconomics and Health Outcomes: Driving Formulary Access and Reimbursement.

Budgets and Spending
The group’s budget comes from R&D with endorsement from the commercial organization. This financial separation from direct commercial interests helps to draw a clear line between Company 4’s research and marketing activities.

In 2006, the group’s budget was $3 million, as seen in Figure 4.5, all of which came from the R&D department (see Figure 4.6 [charts and graphics appear in complete report]). The only drawback to this setup is the potential for funding to be revoked or withheld because decision makers want to use resources for R&D study purposes rather than commercial objectives. Figure 4.8 shows that of this budget, 70% of that amount funds activities that are ultimately outsourced. Of the total number of pharmacoeconomic studies performed annually, half are conducted by external vendors.

Health economics leaders use an algorithm to set project budgets for individual brands. The team considers three main factors:

• Sales: Potential peak sales of product
• Pharmacoeconomics impact: Impact of health outcomes research in support of product (e.g., pharmacoeconomic work will have a low impact on a late-to-market, me-too product but a high impact on an expensive, unique drug)
• Product lifecycle stage: Products at launch and in growth phases benefit more from pharmacoeconomic support than products in declining stages

These three factors help the team determine how much to spend on specific products. The team’s leader feels that such a filter keeps health economics work focused on high-priority products that can benefit from the group’s support. That approach, in turn, ensures that the health economics team’s limited resources will have the greatest impact on Company 4’s fortunes.

Within this framework, much is dependent on the group’s FTEs. The number of health economics personnel determines how much money can actually be spread among different projects. Leaders of relatively small groups want to dedicate their limited FTEs to the most worthy projects. High-profile products tend to get a lot of attention, but they may not benefit the most from outcomes work. The three factors listed above help decision makers identify the projects where health outcomes can have the greatest impact.

 

…To read more, please see Chapter 6 of Pharmacoeconomics and Health Outcomes: Driving Formulary Access and Reimbursement.