Small Drug Companies Increase Health Economics Spending 55%

PHILADELPHIA, PA--(Marketwire - Jul 26, 2011) - A study of health economics and outcomes research (HEOR) groups across the life science industry finds that small companies increased their spending by an average 55 percent in the last full budget cycle.

Cutting Edge Information published the data in "Health Economics and Outcomes Research: US, Europe, Canada and Emerging Markets," a 303-page report on strategies for improving HEOR team's structures, communications and processes. The study found that while small drug companies increased their HEOR spending by more than 50 percent last year, large and mid-sized firms upped their spending by 16 percent and 14 percent, respectively.

"Smaller drug companies are increasingly competing in the same global markets as their larger cousins," said Adam Bianchi, chief operating officer at Cutting Edge Information. "Without a strategically focused HEOR group in place, these companies will have difficulty negotiating with payers around the world."

Small drug company executives agree that they cannot afford to underinvest in health economics as the success of brands and companies often depend on a well-planned reimbursement strategy. As regulatory environments become more stringent and payers scrutinize clinical and economic data, the role of pharmacoeconomics will grow, requiring even greater investment in health economics and outcomes research.

"Companies typically expand their HEOR activities when they prepare to launch a new product or move investigational compounds from Phase II to Phase III testing," said Elio Evangelista, director of research at Cutting Edge Information. "One company profiled in the study increased its HEOR group's 2010 budget by 75 percent over 2009."

Some of the added budget help small companies develop cost-benefit analysis plans to secure market access with payers in different countries. An aggressive managed markets strategy around the world demands an increase in global pharmacoeconomics spending. For many small companies, pharmacoeconomic modeling in new markets is outside the experience of most team members. Expanding the team becomes a necessity.

"Health Economics and Outcomes Research: US, Europe, Canada and Emerging Markets," available at http://www.cuttingedgeinfo.com/research/market-access/health-economics/, includes benchmarks for HEOR structures, staffing, compensation, outsourcing and performance metrics. The report examines next practice trends in health economics research, including health outcomes liaisons, risk sharing agreements, and comparative effectiveness.