A budget impact analysis (BIA) estimates the financial consequences of adopting a new health technology within a specific healthcare budget, over a short period of time.
In Portugal, it is part of the evidence that INFARMED considers when deciding whether a technology is funded by the National Health Service (SNS). It answers a practical question for the payer. If this technology is adopted, how much more (or less) will the SNS spend in the next years?
A budget impact analysis complements the cost-effectiveness analysis but does not replace it. Cost-effectiveness asks whether a technology is good value for money. Budget impact asks whether the system can afford it. We explain the difference in more detail in this article on cost-effectiveness and budget impact.
What does a budget impact model compare?
A budget impact model compares two scenarios for the same population and time horizon.
- Current scenario. How patients are treated today, with the current mix of treatments and their costs.
- New scenario. How patients would be treated after the new technology is adopted, with its expected uptake.
The budget impact is the difference in total costs between the two scenarios, year by year.
What does INFARMED expect from a budget impact analysis?
INFARMED’s methodological guidelines for economic evaluation studies of health technologies, published in 2019, include a dedicated section on budget impact analysis. The main points are these.
- SNS perspective. The analysis must adopt the perspective of the SNS. If relevant, the wider State perspective can also be considered, for example when the disease has costs or savings for Social Security, but the results must be presented separately for the SNS and for the other sectors of the State.
- Same comparators as the economic evaluation. The current scenario must include the costs of the comparators selected in the economic evaluation.
- Realistic substitution scenarios. When the new technology replaces or complements current practice, the analysis should present transparent scenarios on how that substitution happens, including uptake by health professionals and patient adherence.
- Prevalent and incident patients. The eligible population must include the current patients to be treated, based on prevalence, and the new cases expected in the future, based on incidence. These estimates must be consistent with the approved indication and with the pharmacotherapeutic assessment.
- Short time horizon. The analysis is used for short-term budget planning, so the time horizon is limited, as a rule to around two years, and discounting is not applied.
- Relevant costs only. Productivity costs are excluded. Fixed costs for staff or equipment are excluded if they would be incurred without the new technology. The costs of the new technology must be shown separately.
When there is no empirical data to quantify a parameter for the Portuguese context, the guidelines allow the use of structured expert elicitation, provided the experts are identified and their potential conflicts of interest declared.
What inputs does a budget impact model need?
- Eligible population. Epidemiology, registries, administrative data and, as a last resort, expert opinion, always consistent with the approved indication.
- Market shares and uptake. The current treatment mix and how quickly the new technology is expected to be adopted.
- Treatment costs. Acquisition, administration and monitoring, using official Portuguese sources.
- Healthcare resource use. Consultations, hospital stays, tests and management of adverse events, reflecting Portuguese clinical practice.
- Treatment duration and discontinuation. How long patients stay on each treatment.
Adapting a global model to Portugal
Many companies start from a global budget impact model built for another country. Adapting it to Portugal usually requires more than changing prices.
Treatment pathways, resource use, the eligible population and the comparators often differ from the original setting. If those assumptions are not adapted, the results may not be credible for INFARMED and for hospital decision-makers.
A good adaptation reviews the structure and logic of the model, replaces clinical and cost inputs with Portuguese data, validates the assumptions with local clinical experts where evidence is missing, and tests the model thoroughly before submission.
Common pitfalls
- An eligible population that does not match the approved indication or the pharmacotherapeutic assessment.
- Comparators in the budget impact model that differ from those in the cost-effectiveness analysis.
- Uptake assumptions that are too optimistic or not justified.
- Costs taken from other countries instead of official SNS sources.
- Time horizons that are too long for a budget planning tool.
- No scenario or sensitivity analysis on the parameters that drive the result.
Frequently asked questions
What is the time horizon of a budget impact analysis in Portugal?
INFARMED’s guidelines limit it, as a rule, to around two years, because the analysis is meant for short-term budget planning.
Is a budget impact analysis the same as a cost-effectiveness analysis?
No. A cost-effectiveness analysis compares costs and health outcomes to assess value for money. A budget impact analysis only estimates the financial consequences of adopting the technology for the SNS.
Can expert opinion be used in a budget impact model?
Yes, when empirical data is not available for the Portuguese context. It should be collected through a structured elicitation process, with the experts identified and their conflicts of interest declared.
Final thoughts
A budget impact analysis is one of the most practical pieces of evidence in a reimbursement submission. It translates the adoption of a new technology into numbers the payer can plan with. To be credible in Portugal, it needs the SNS perspective, Portuguese data and assumptions that are consistent with the rest of the dossier.
At Clevidence, we develop and adapt budget impact and cost-effectiveness models for the Portuguese setting. See how we validated the assumptions of a budget impact model with Portuguese clinical experts and how we localised a cost calculator to the SNS, or learn more about our health economics and outcomes research services.