budgetimpact

Budget impact analysis is a field within health economics that estimates the financial consequences of adopting a new health intervention within a defined budget context over a specified time horizon. It is distinct from broader economic evaluations that emphasize cost-effectiveness, because budget impact focuses on affordability and resource allocation within a payer's or health system's budget constraints.

The purpose of budget impact analysis is to inform decisions about coverage, reimbursement, and procurement by projecting changes in costs and in the overall budget due to adoption. It considers direct costs such as acquisition, administration, and monitoring, as well as potential offsets from reduced utilization of other services. BIAs are typically conducted from the payer or budget holder perspective and use short- to medium-term horizons, commonly one to five years, and may be broken down by population subgroups.

Methodology and inputs include estimating the eligible population, expected uptake or market share, utilization patterns, unit costs, and potential cost offsets. Data sources include administrative claims, electronic health records, epidemiological data, and published literature. Results are usually presented as cumulative budget impact and annual changes, with scenario analyses and sensitivity analyses to reflect uncertainty in key parameters such as price, uptake, and utilization.

Limitations of budget impact analyses include dependence on assumptions about uptake, price, and utilization, and the fact that they measure financial feasibility rather than clinical value or long-term outcomes. They do not typically capture indirect costs or broader societal effects, and should be interpreted alongside clinical and economic evaluations to support balanced decisions.