AN OVERVIEW OF ECONOMIC ANALYSIS FOR NEW TECHNOLOGIES
A thorough economic analysis should be used to guide the clinical
research protocol to ensure that the end points measured are commercially
relevant and useful. The analysis should describe important ele-ments of the
market to the firm, helping decision makers to understand the way decisions are
made and providing guidance in affecting those decisions. Later, the results of
economic analyses should inform and guide marketing and pricing decisions as
the product is prepared for launch, as well as help customers to use the
product efficiently and effectively.
money through the various health care systems. This process should begin
as soon as the likely indications for a new product have been identified and
continue throughout the product’s development. The first step is to create
basic economic models of the current treatment for the disorder(s) for which
the product is likely to be indicated. This step will be used to provide better
information to fine-tune financial assumptions and to provide critical input
into the clinical development process to assure that the clinical protocols are
designed to extract the greatest com-mercial potential from the product. If the
product is likely to be used for more than one indication and/or if there is
the potential that several different levels of the same indication (e.g., mild,
moderate, and severe) would be treated by the same product, separate models
should be prepared for each indication and level.
The purpose of the basic model is to provide a greater understanding of
the costs associated with the disorder and to identify areas and types of cost
that provide the greatest potential for the product to generate cost savings.
For example, the cost of a disorder that currently requires a significant
amount of laboratory testing offers the potential for savings, and thus better
pricing, if the new product can reduce or eliminate the need for tests.
Similarly, some indications are well treated, but the incidence of side effects
is sufficiently high to warrant special attention. When developing a new agent,
it is as important to understand the source of the value to be provided as it
is to understand the clinical effects of the agent.