What is HEOR?

What is HEOR?

Health economics and outcomes research (HEOR) is used by pharmaceutical companies to demonstrate the clinical and economic value of a particular therapy in the real world. Health economics data focuses on assessing the financial value of healthcare interventions, while outcomes research determines the value of healthcare interventions on patients.

What types of data are used in HEOR?

HEOR uses a wide variety of data sources, from medical records, lab tests and insurance claims to population health data and datasets on topics like a disease’s overall prevalence and cost burden, drug spend within an indication, and more.

HEOR can also incorporate patient-reported outcomes (PRO) data, which captures qualitative data about a patient’s health status. This data is collected directly from patients via surveys or questionnaires, and typically includes questions about functional improvement, complications, pain and fatigue, and the overall patient experience.

Common HEOR analyses include variables such as demographic data, comorbidities, medication compliance and adherence, and utilization and treatment patterns. A pharmaceutical company’s HEOR team might perform a cost-effectiveness analysis of a particular drug, or a retrospective chart review to better understand the clinical characteristics, healthcare utilization, and treatment response associated with a relevant indication.

How does HEOR help generate real-world evidence (RWE)?

Using HEOR, manufacturers can quantify the impact of a therapy on both individual patient outcomes and the health of a patient population as a whole. HEOR data provides real-world evidence of the therapy’s efficacy and safety profile and reveals the impact of the therapy on patients’ quality of life. HEOR data also assesses the impact of the therapy on direct medical costs, such as hospitalizations, tests and procedures, and indirect costs, such as productivity and the likelihood of developing comorbidities.

In early phases of drug development, a pharmaceutical company can use HEOR to help determine if the benefits of a potential drug outweigh the costs. Does a new drug provide greater value over an existing treatment, in terms of both clinical efficacy and its cost profile? Throughout the development process, HEOR data helps manufacturers decide on factors such as the appropriate patient population and the optimal dosing regimen and administration setting.

What is comparative effectiveness research?

Comparative effectiveness research (CER) is frequently used in concert with HEOR. CER uses real-world data to compare the relative benefits and drawbacks of various interventions on patients. Instead of using prescreened patient populations, as is typical with clinical trial data, CER attempts to provide generalized information that relevant to both the overall population and specific subpopulations, such as minorities or those with disabilities. Common CER studies include observational studies, meta-analyses, randomized clinical trials, and systematic reviews.

Under the Medicare Drug Price Negotiation program, established in 2022 as part of the Inflation Reduction Act, manufacturers whose therapies are selected for negotiation are allowed to use real-world evidence to demonstrate the efficacy, benefits, and value of their product. Pharma companies are also prompted to produce CER that shows the value of the treatment for specific sub-populations, including those that may have been underrepresented in the treatment’s initial clinical trials.

How are HEOR and CER used?

HEOR has long been a staple of the drug development process. Outcomes research is of particular importance, as it can provide data on specific patient populations and reveal which treatment combinations have proven most effective over time. Most pharmaceutical companies conduct HEOR studies in parallel with clinical trials, to collect measurements beyond the limits of whether or not the trial has achieved its prescribed endpoints. Many continue to collect post-market economic and outcomes data throughout a product’s lifecycle.

HEOR is also increasingly used in manufacturers’ commercialization strategies. With the influx of specialized therapies, pharmaceutical companies have recognized that they need continued access to HEOR during the commercial phase to better understand niche patient populations and achieve a successful launch.

During commercialization, HEOR data is also crucial for setting the pricing of a treatment. Manufacturers often present HEOR data to payers to justify coverage, prove a therapy’s efficacy, and negotiate formulary placement or medical policy inclusion. In some instances, HEOR and CER data can help manufacturers build a value story proving that payers can save money in the long run by proactively treating patients with a newly approved therapy.

Payers frequently use HEOR and CER data to determine how a treatment impacts health outcomes relative to its competitors. Will a particular treatment provide the same or better outcomes at a better cost? What percentage of a therapy’s costs should be reimbursable, based on the data? Regulatory agencies also use HEOR data to establish reimbursement guidelines for a particular therapy, population, and indication.


Learn how Panalgo’s IHD Analytics platform can help you automate CER for patient subpopulations, and how our HEOR consulting resources can help you generate the real-world evidence you need.