Economic Models

Over the last 18 months, Cedar Associates LLC has been engaged by companies recognized as leaders in the health care industry to develop models used to inform economic analyses of new technologies and therapies. Some of these engagements have resulted in favorable reimbursement decisions from Medicare and private payers soon after product launch. In all cases, Cedar has enjoyed repeat business from clients who appreciate our contribution to their success. Success derived not only from our modeling expertise but also from Cedar’s unique ability to translate value messages from the clinical to the commercial.

The following is a list of 2009-2010 modeling projects in oncology/diagnostics. Contact information from these organizations is available if further validation of Cedar’s expertise is needed:

Client	Technology	Modeling Service(s)
Quest Diagnostics, Inc.	OVA1TM: Ovarian cancer diagnostic	Value based pricing model
Genomic Health, Inc.	Oncotype Dx®: Diagnostics for: Breast cancer Colon cancer Gastrointestinal (GI) cancer	Budget impact model (Colon) Market demand model (Colon) Value based pricing model 2 each for breast, colon, GI cancer
Allegro Diagnostics, Inc.	BronchoGenTM: Lung cancer diagnostic	Cost effectiveness analysis model
Genentech, Inc.	Rituxan®: Treatment for Chronic Lymphocytic Leukemia (CLL)	Cost effectiveness analysis models for two indications Budget impact model combining two indications
Johnson & Johnson, Inc.	VelcadeTM: Treatment for Multiple Myeloma	Cost effectiveness analysis model to support UK NICE submission

Cedar Associates has published extensively in the areas of oncology and diagnostics. Review the full list of publications authored by Cedar staff.

Cost-effectiveness Analysis (CEA) - http://en.wikipedia.org/wiki/Cost-effectiveness_analysis

Cost-effectiveness/cost-utility (Markov, Excel-based discrete event simulation)

Cost-effectiveness analysis (CEA) is a form of economic analysis that compares the relative costs and outcomes (effects) of two or more courses of action.
In the context of pharmacoeconomics, the cost-effectiveness of a therapeutic or preventive intervention is the ratio of the cost of the intervention to a relevant measure of its effect. Cost refers to the resource expended for the intervention, usually measured in monetary terms such as dollars or pounds. The measure of effects depends on the intervention being considered. Examples include the number of people cured of a disease, the mm Hg reduction in diastolic blood pressure and the number of symptom-free days experienced by a patient. The selection of the appropriate effect measure should be based on clinical judgment in the context of the intervention being considered.
A special case of CEA is cost-utility analysis, where the effects are measured in terms of years of full health lived, using a measure such as quality-adjusted life years (QALYs) or disability-adjusted life years.
Cost-effectiveness is typically expressed as an incremental cost-effectiveness ratio (ICER), the ratio of change in costs to the change in effects.

Cost-benefit Analysis - http://en.wikipedia.org/wiki/Cost-benefit_analysis
Budget Impact Analysis (BIA), (Insurers, hospitals, physician offices)

A model which is primarily intended to inform health care decision makers, especially those who are responsible for national, regional, or local health care budgets. Unlike a cost-effectiveness analysis, where the recommended perspective is that of society, a budget impact analysis focuses on third party perspective, e.g. payer member per month (PMPM). We follow Good Research Practices as described by ISPOR.

Practice economic model

A model that would explore the financial implications of new product to a physician’s practice. Such a model includes:

Direct contributions (DC) – the financial implications of using the test for the next patient in the clinic; it estimates revenue minus marginal costs of ordering the test from the clinic’s perspective.
Operating income (OI) – the financial implications of the clinical expanding clinic capacity for widespread use of the test, estimated as revenue minus fixed costs. This computation includes potential effect on revenue and costs that may ensue as a result of a new test supplanting other revenue-generating activities in the clinic (e.g., cardiography).

Addressable market forecast

Fundamental component of any market analysis. Cedar will create a dynamic model to project the changes of size of target population over time

Product diffusion forecast

Model to project rate of adoption and adoption pattern after market introduction. These models will account for market interaction between users.

Market demand model

Market demand will projects potential market Share and revenue over time accounting for:

Strength of product against competitor
Impact of quality of evidence publication and third party endorsement
Impact of reimbursement

Conjoint analyses

Cedar will design conjoint surveys to identify physician decision behavior and the optimal product profile for the market
Test new product profile, calculate potential market share and revenue

Epidemiologic

Survival

Models based on survival analysis

Disease progression

Models showing various stages in a disease

Disease propagation

Models describing an occurrence of disease less than or greater than would otherwise be expected in a particular time and place

Markov models (discrete and continuous time)

Discrete time: Models having a finite or countable state-space
Continuous time: Models including stochastic processes

Pricing assessment: value-based pricing - http://en.wikipedia.org/wiki/Value-based_pricing

Cedar provides competitive assessment of your product’s societal and patient value through extensive quantitative and qualitative analyses for the most optimal price

Model types

Fully developed

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Back-of-the-envelope

The use of approximate data and approximate models, expected to give an answer within a factor of ten in either direction.