Economic models involve the application of mathematical techniques and the synthesis of available information in order to simulate and predict what happens in the 'real world'. Models are often a crucial component of evaluating the potential for a health technology to deliver value for the health care budget.

Fourth Hurdle Consulting offers a variety of economic modelling services that can be used to inform the decision-making process at all stages of product development, and to support marketing activities. These services include:
• Decision analytic modelling (including decision trees)
• Markov modelling
• Simulation modelling
• Explanatory and statistical modelling

Amongst other things, economic models are used to extrapolate data from clinical trials to predict “real world” outcomes. They are an important source of information for decision makers at the National Institute for Health and Clinical Excellence (NICE) in England and Wales and the Scottish Medicines Consortium (SMC), and are an important component of market access processes in many other countries.

Why Health Care Decision-Makers Use Economic Modelling

Efficacy and safety data, generated in clinical trials to obtain registration of a new product or indication, are often insufficient to provide robust economic data. For example, clinical trials tend to be of short duration, with tightly controlled patient groups, and frequently use surrogate end points. Economic evaluations often need to consider longer timelines, less homogeneous patient groups, and patient-centered outcomes such as QALYs (Quality Adjusted Life Years) or life years gained.

Consequently, there is often a gap between the data needed to show efficacy, and that needed to show
cost-effectiveness. One way to bridge this gap and to make clinical data relevant to economic decisions is to use modelling to extrapolate from clinical trials to 'real world' outcomes.

The Role of Economic Models in Gaining Market Access
Economic models are now accepted as part of the market access process. Australia’s Pharmaceutical Benefits Advisory committee (PBAC), for example, states, “frequently the randomised trials will provide insufficient information on which to base a judgment about the full clinical and economic performance of the proposed drug. In these circumstances (which are a matter of judgment), a modelled economic evaluation will be useful to the PBAC.” (1)

In England and Wales, NICE guidelines accept the use of modelling to “adjust efficacy data to reflect differences between efficacy and clinical benefits, demonstrate that results are generalizable, and extrapolate the long-term outcomes of treatment from short-term clinical trials.” (2)

Because 'real world' decisions around reimbursement or formulary listing often have to be taken with limited information and within a short time frame, economic models can help decision-makers by providing extrapolated data from existing information.

Economic models provide a way to demonstrate:
• Long-term benefits of interventions that have been studied only in short-term trials
• Benefits of interventions in sub-populations
• Benefits from the patient’s perspective
• Cost offsets to justify pricing and reimbursement claims

Key Roles for Economic Modelling

Early Stage Decisions
The assessment of cost-effectiveness can be conducted at a very early stage of the development process, based on a target profile or a series of scenarios. Information about potential cost-effectiveness can be used to inform “go/no-go” decisions even when information about a product is scarce. Companies can then proceed into clinical development with confidence that a successful programme will not only demonstrate safety and efficacy, but will also meet cost-effectiveness and reimbursement hurdles.

Strategic Decisions During Development
Models can help health technology companies set prices and make strategic decisions on issues such as product positioning. Models can allow a company to explore cost-effectiveness under a variety of scenarios, and to understand the consequences of strategic decisions on product reimbursement.

Promotional Messages
Often clinical trials do not collect all of the information needed to undertake an economic evaluation. Decision analytic models, however, allow companies to demonstrate the full range of benefits of a product. Such models can be used in reimbursement and market access applications, and can be published in high impact peer-reviewed journals to support promotional messages.

Budget Impact
Often health care payers are concerned about more than the efficacy of a new intervention. They want information about the likely impact of introducing a new product on total expenditure, or on service delivery. Budget impact modelling can help companies plan for these new product introductions.

How Fourth Hurdle Consulting Can Help

Early Stage Modelling
At Fourth Hurdle Consulting, we have developed a wide variety of economic models to estimate the minimum profile required for new product candidates, early in the drug development process. This type of information has helped many companies make strategic decisions and has influenced the choice of indications and profile for a variety of potential new chemical entities.

Decision Analytic, Markov and Simulation Modelling
Our team members have extensive experience building, analysing and using decision analytic models, Markov models and cost consequence models in support of negotiations with a variety of government, health care payer and provider agencies.

Budget Impact Modelling
Our team has also conducted budget impact modelling projects to help local and national health care decision-makers assess the financial impact of formulary and reimbursement decisions.

Existing Model Review and Validation
We have experience of assisting clients to review existing models in order to test their validity in the light of existing good practice, as defined by the Sheffield Conference on Guidelines on Economic Modelling in Health Technology Assessment for example. Members of our team helped to develop, and are signatories to the Sheffield Conference consensus statement. (3)

References
1. See www.health.gov.au/internet/wcms/publishing.nsf/Content/health-pbs-general-pubs-guidelines-index.htm – Pharmaceutical Benefits Advisory Committee, Governmetn of Australia
2. NICE Technical Guidance for Manufacturers and Sponsors on Making a Submission to a Technology Appraisal, March 2001.
3. Akehurst R, Anderson P, Brazier J, Brennan A, Briggs A, Buxton M, Cairns J, Calvert N, et al Consensus Conference on Economic Modelling. PharmacoEconomics 17[5], 443-513. 2000.