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 are the typical stages involved in the HEOR process for pharmaceutical companies?

When diving into the HEOR process, pharmaceutical companies follow a series of essential steps designed to build a comprehensive understanding of a therapy’s value:

Spotting the evidence gaps: Companies start by identifying areas where current data is lacking, helping them pinpoint what information is needed to make their value case stronger.
Projecting economic impact: They develop economic models to estimate how a therapy will affect costs, reimbursement, and overall market access.
Analyzing clinical data: Clinical trial results are closely examined—not only for efficacy and safety but also for real-world relevance.
Expanding the knowledge base: Companies supplement their findings by evaluating published research and other available evidence.
Creating budget models: Detailed budget impact analyses are used to inform pricing strategies and support reimbursement negotiations.
Tracking real-world outcomes: After launch, real-world data is collected to assess how the therapy performs outside the controlled environment of clinical trials.

This structured approach ensures that both the clinical and economic benefits of a therapy are documented and communicated effectively.

Why is HEOR knowledge important for medical affairs professionals?

Understanding HEOR isn’t just for economists—it’s a key skill for medical affairs teams as well. Being well-versed in HEOR helps professionals translate complex clinical and financial data into real-world benefits for patients, healthcare providers, and payers. This expertise empowers teams to engage in informed discussions with clinicians, hospital administrators, and policymakers about the value and impact of therapies—beyond just their clinical outcomes.

In a world where reimbursement decisions and drug adoption hinge on both effectiveness and cost-effectiveness, medical affairs professionals need to speak the language of HEOR to advocate for new therapies. This knowledge ensures that conversations go beyond efficacy alone, incorporating broader health outcomes and tangible economic value that matter to every stakeholder involved.

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.

HEOR establishes and measures the link between treatments and actual outcomes, providing evidence-based guidance for improving healthcare practices. By taking a broad view—including clinical trial data, real clinical outcomes, financial considerations, and patient-reported measures of quality of life and satisfaction—HEOR helps close the gap between controlled clinical trial results and what actually happens in real-world settings. Patient perspectives are captured not only through surveys and questionnaires but also through electronic health records, giving a more comprehensive picture of a therapy’s value.

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.

The impact of precision medicine and value-based care on HEOR

As the healthcare landscape shifts toward precision medicine and value-based care, the role of HEOR is becoming increasingly integral rather than just supportive. Precision medicine—which tailors treatments to individual patient characteristics—and value-based care—which rewards providers for patient health outcomes—both require robust, data-driven insights to truly demonstrate value.

HEOR is uniquely positioned to support these trends by providing the economic and outcomes data that stakeholders need to assess which therapies actually deliver better results for specific populations, and at what cost. This evolution means that HEOR findings are not only shaping clinical decisions, but also influencing product development, market access strategies, reimbursement decisions, and even legislative policy.

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.