Modeling in Healthcare Economic Evaluations

A new drug, more efficacious and more expensive than the standard of care, is introduced to the market. How does the higher cost for the improved health outcomes compare to our willingness to pay? How do we select the most cost-effective treatment from a number of different treatments with a wide range of efficiencies and costs? How does the addition of a new treatment to a formulary affect a payer's budget? These are all questions amenable to economic modeling and analysis. In this presentation, I will describe a number of different modeling approaches used in health economic analyses and discuss how the results of those analyses are used to answer questions such as those posed above.