The role of economic evaluation in US healthcare

Hannah Palin (Director – Market Access) and Calum Jones (Associate Director – Health Economics) explore the landscape for economic evaluation in the US. They highlight important considerations for companies seeking to infiltrate this key market.

Health economic modelling is fundamental to market access, in both health technology assessment (HTA) and pre and post-launch engagement. It is of value globally, but holds particular importance in markets across Europe, the UK, and Canada, among others. Its application in the US, however, is less established. With a dedicated Health Economics Team, economic modelling is a key area in which Mtech Access support clients.

Whilst there are variations in the approaches between HTA markets, we can see commonalities in the requirement for economic modelling as part of a value proposition; this is in direct contrast to the current status quo in the US.

The conversation around more consistent economic modelling in the US has been ongoing for some time, however, it has been gaining more interest and momentum in recent years. At Mtech Access, we have found that our clients are becoming more conscious of the application of economic evaluation in the US market, and how it can support effective and multi-level engagement with stakeholders.

Here, we discuss some of the hurdles that we frequently encounter when exploring US-based modelling. It is important to be aware, however, that there are many other nuances to account for.

The current landscape for economic evaluation in the US

Economic modelling commonly plays a key role in HTA. In many cases, such as England’s National Institute for Health and Care Excellence (NICE), HTAs provide strict guidelines on how the economic value of a technology should be presented. In contrast, the requirement for economic evaluation is less defined and more fragmented in the US. This can cause confusion for drug manufacturers launching in this market. So, what does the requirement for an economic model look like in the US?

Economic models in AMCP dossiers

The first step to reimbursement in the US typically begins with the development of an Academy of Managed Care Pharmacy (AMCP) dossier. This details the key clinical and economic evidence for the drug. The AMCP dossier is used by healthcare decision-makers across different institutions, rather than forming part of a centralised assessment.

Whilst AMCP outline the structure and elements required in the dossier, the format, including the provision of an economic model, is currently optional, and not a formal requirement (2). In our experience, where AMCP dossiers include an economic model, the model is often less detailed than those used in the UK and Europe.

Economic evaluation by US payers

Most payers in the US have a greater focus on affordability and budget impact, rather than cost effectiveness. A quality-adjusted life year (QALY)-based model, as used by NICE in England, is rarely accepted for decision-making purposes in the US. Medicare and Medicaid will often consider cost-effectiveness or cost-consequence arguments (where avoided events are the main outcome).

Insurers are much more heterogeneous in their approach, however. Whilst most payers encourage some level of economic evaluation, the application of health economics is highly varied between States and institutions.

Cost-effectiveness modelling in ICER’s assessment

Another key body in the US is the Institute for Clinical and Economic Review (ICER). ICER is an independent organisation, created to provide a centralised and standardised approach to HTA (3). Through horizon scanning activities, ICER selects high impact topics for review.

The assessment includes cost-effectiveness modelling to estimate a value-based price (4). A public report is published as a reference point for Pharmaceutical companies, payers, and policymakers to use in pricing and reimbursement decisions. In contrast to guidance produced by NICE and HTA bodies in other markets, however, following ICER’s recommendations is not mandatory.

Why develop a US-centric economic model?

As there is no formal requirement for a US-centric economic model, why should drug manufacturers care?

ICER review

Whilst recommendations from ICER do not hold the same weight as those from NICE, their influence on decision-making is said to be growing. ICER uses key criteria to guide topic selection, often selecting drugs projected to have a significant budget impact, or with potentially large eligible populations (4). Though there are ways to engage with ICER in advance (see our recent article with top tips!), a negative outcome can have implications for uptake.

It is, therefore, important to be prepared. ICER conduct their own cost-effectiveness modelling of a technology, on which companies can provide feedback. Conducting economic modelling internally can help to determine, in advance, what the outcome of ICER’s assessment may be. A proactive approach will help to identify key challenges and any additional data requirements.

Total cost of care models

In addition to ensuring preparedness for ICER review, irrespective of its requirement, early economic modelling can support the development of customer-facing total cost of care models. The Centers for Medicare & Medicaid Services (CMS) are partnering with States to take accountability for the ‘total cost of care’ (5). This includes inpatient, outpatient, and other services across all payers within the State.

Any economic modelling conducted internally can be applied to support development of total cost of care models. These customer-facing tools can aid field teams in facilitating meaningful discussions with relevant insurance, payer, and institution stakeholders. Modelling can help to communicate cost implications, such as those associated with differences in administration methods, inpatient versus outpatient settings, and cases with a higher burden of adverse events. In turn, this can help to ensure that a drug manufacturer is best placed commercially versus competitors.

Internal decision-making and strategy

Finally, early feasibility assessments can support decision-making with regard to whether economic models for the US can be developed alongside other markets, or whether they must be developed separately.

Overall, early engagement to develop economic models can help drug manufacturers prepare for a conversation down the line, whatever that may be. This is particularly pertinent for drugs anticipated to significantly alter the standard care pathway or incur wider resource utilisation, as well as those that do not follow the usual ‘bundles’ of care costs. Nevertheless, it will ultimately be applicable to many scenarios.

Key challenges when developing a US health economic model

There are a number of challenges when developing an economic model for the US market, particularly since adaptation from an existing UK or European model is generally not straightforward. We discuss just a handful of challenges below.

Varied costs

First and foremost, given the size and heterogeneity of the US market, a ‘one size fits all’ approach does not work. As an example, direct healthcare costs for a given treatment pathway will vary by State, insurer, and even by individual institution.

Whilst flexibility must always be incorporated into a model to account for regional variation, this is amplified by the scale of the US. An individual decision-maker needs to be able to understand how a new treatment will impact their individual budget. This is no small feat.

Varied treatment protocols

This variability also applies to treatment protocols. In England, most patients will follow a treatment pathway broadly within NICE guidelines. By contrast, individual institutions in the US may follow different treatment protocols. Therefore, modelling the impact of a new treatment could vary significantly between institutions.

In order to understand the most relevant modelling approach for a given payer, it is critical to partner with clinicians. This approach helps to ensure that the clinical argument effectively translates into an appropriate economic argument.

Validating data

Another challenge is the abundance of data available in the US. The US has some of the best established disease registries and a wide range of publicly available data sources. As such, the challenge lies not in finding inputs for a model, as is often the case in other markets, but in validating them. A key task includes exploring the available data options and justifying the use of a particular data source. Nevertheless, it is worth noting that, for innovative approaches, existing data may still be lacking, with analogues not always available.

How can Mtech Access help?

Mtech Access can support Pharma and Medtech clients across the decision life cycle, from early development to launch and beyond.

The UK sets the bar for economic evaluation, and thus represents a powerhouse of knowledge in the health economics space. Our Health Economics Team have a wealth of experience, which enables them to provide a foundation for clients to overcome the challenges of developing models for the US. We have the technical expertise and are well versed in ensuring flexibility in models, conducting due diligence, and developing models with a high level of complexity.

Our other centres of excellence provide complementary and informative services, coupled with an wealth of market access experience. These include primary research to optimise pricing and reimbursement, and systematic reviews to identify key data.

Email to speak to our experts about how to incorporate the US into your wider global market access strategy.


  1. NICE. NICE health technology evaluations: the manual. NICE process and methods [PMG36]. Published 31st January 2022. Available from: Accessed on: 9th April 2024.
  2. AMCP. AMCP Format for Formulary Submissions — Guidance on Submission of Pre-Approval and Post-Approval Clinical and Economic Information and Evidence, Version 5.0. Available from: Accessed on: 11th April 2024.
  3. ICER. Who We Are. Available from: Accessed on: 9th April 2024.
  4. ICER. Guide to Understanding Health Technology Assessment. 2018. Available from: Accessed on: 9th April 2024.
  5. CMS. Total Cost of Care and Hospital Global Budgets. Available from: Accessed on: 9th April 2024.