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March 3, 2023

Health economics and outcomes research (HEOR) in the pharmaceutical industry

This critical function supports successful drug launches in an increasingly competitive landscape.
health economics and outcomes research
What is health economics and outcomes research? Health economics and outcomes research (HEOR) in the pharmaceutical industry is a medical affairs function that determines the value, cost, and overall cost-effectiveness of drugs, devices, or other therapies.

This critical role links treatment to actual outcomes, establishing guidance that could improve patient care.

Pharmaceutical companies emphasize HEOR because it helps HCPs, insurance companies, and patients compare and choose treatment options. HEOR also has an impact on successful drug launches.

Companies have only a short time to make headway in a crowded market. HEOR in pharma must obtain competitive reimbursement by proving their product raises the standard of care and is more cost-effective than any alternatives.

HEOR analytics provide important context that makes one drug or treatment more appealing than other options on the market, whether it’s an established drug or a new competitor entering the market simultaneously.

We help pharma companies increase access to their treatments.

The need for HEOR services is likely to continue growing. This is due to the use of healthcare and life science technologies that support data analysis and more accurate decision-making.

The benefits of HEOR in drug development

There are several key advantages to working with HEOR pharma teams.

Cost-effective drug development

Pharma teams can use HEOR research to develop more cost-effective drugs. In one example from a Within3 client, a medical affairs team held a HEOR virtual advisory board to get funding for a certain cancer treatment. The team needed feedback on developing a cost-effectiveness model for the drug to ultimately increase prescriber and patient access.

In this case, the pharma team engaged health technology assessment experts worldwide to learn about global cost-effectiveness approaches for the drug. They also wanted to know what updates they would need to consider to proposed approaches and methodologies. Finally, the team wondered what challenges they might encounter when submitting the cost-effectiveness model to authorities in various countries.

This type of research helps companies avoid market access issues, which can hamper a drug launch and negatively impact sales revenues.

Understanding the economic impact of new drugs

New drugs have far-reaching impacts on patients and the pharma industry. Ultimately, the most important outcomes are related to the quality of life for patients, but HEOR data generated for one treatment can also affect the prices of other drugs or encourage competition in the market.

“HEOR [teams] aid clinical development by giving useful information about specific treatments, such as population accessibility and competitor pricing,” reports the Journal of Health Economics and Outcomes Research. “HEOR services are used to determine the price of a newly produced drug and to revise the prices of existing drugs, thereby boosting the industry’s growth.”

The future of health economics and outcomes research in the pharmaceutical industry

Until relatively recently, HEOR had more impact on formulary decisions with European payers, who placed more value on health economics metrics like quality of life adjusted years (QALYs), than with American payers. But the market for HEOR services is growing in North America, set to reach $894 million in 2028. There are many reasons for this growth, primarily a surge in clinical trials and the number of healthcare systems and institutions facing tighter budget constraints. Understanding payer acceptance and market access will be even more critical in this environment.

Pharma teams also think more broadly about deploying HEOR expertise in their organizations. A few major global drug companies added HEOR leaders to their commercial functions. This move allows sales and marketing teams to benefit from expertise in analyzing patient-level data or determining how to communicate study data to payers, HCPs, and patients. When these experts are embedded in the sales team, there is less concern about compromising the firewall between medical affairs and commercial.

Increasing importance of HEOR in healthcare systems

HEOR data is important to healthcare systems for a very important reason: “payer organizations are shrewd, cost-conscious, and data hungry.” If a treatment can’t achieve favorable formulary placement, patients won’t ask for it, physicians won’t prescribe it, and perhaps most importantly, payers won’t reimburse it.

Healthcare systems can’t afford to take a chance on whether or not a costly treatment will be adequately reimbursed or if the treatment will have a measurable salutary effect on a patient’s health and quality of life. Therefore, HEOR analysis provides the best information for comparing and choosing treatments.

New technologies and data sources for HEOR studies

OPEN Health states that “there are three key technological drivers of rapid change in healthcare delivery and HEOR: big data, cloud-based computing, and artificial intelligence (AI).”

Big data in the pharma industry refers to the volume, variety, and velocity of information that industries can analyze to gain actionable insight into their operations. Big data and analytics allow pharma companies to process and interpret this information. This ability contributes to the increased use of big data in the drug industry.

What does the availability of big data mean for teams that produce and use HEOR findings? It’s important to understand that more data doesn’t necessarily translate to more helpful information; larger amounts of data can create confusion or overwhelm teams who hope to use it.

Fortunately, AI can play a part in parsing and analyzing large amounts of data. Data must be cleaned and transformed into a helpful format for HEOR teams to use. AI tools like sentiment analysis and natural language processing can help humans draw insights from large amounts of structured data.

Potential for revolutionizing HEOR studies

Cutting-edge technologies like AI will undoubtedly transform how HEOR teams handle large amounts of data. But technology also has a role to play for patients, who can contribute the benefit of their lived experience to the broader picture of outcomes research.

A more patient-centric approach to HEOR might include 1:1 interviews, focus groups, message testing and feedback about proposed websites or other materials. Patients can also provide feedback about study protocols and input on the day-to-day impact of living with a disease and the result of effective treatments. As patients become more familiar with different technology to manage their health, they may contribute this input passively through wearable monitors or actively through apps or virtual discussion platforms.

Insights management technology and HEOR

The HEOR function in medical affairs thrives on insights obtained across different channels from various stakeholders. The more data they can collect, the more they will need technologies and processes that help them work more efficiently. HEOR medical affairs teams should prioritize ways to increase their effectiveness in this area, typically with the help of specialized technology.

What is insights management?

Insights management is the collection of processes around obtaining, analyzing, and sharing insights in the pharmaceutical industry. As information sources and channels proliferate, pharma teams are challenged to strike a balance between getting all the information they need and not becoming overwhelmed with the task of analyzing the information.

How does insights management relate to HEOR?

Insights management encompasses several processes, including understanding a broader disease community through various types of data, social monitoring in pharma for expert and patient conversations, scientific discussions, structured virtual conversations, and analysis of those conversations. HEOR teams might use some or all of these technologies to better understand various pharmacoeconomics or outcomes research elements.

Specific challenges of HEOR that insights management technology can solve

HEOR teams use an insights management platform as a centralized place to capture, analyze, refine, and share insights. They can monitor social platforms for conversations about currently available treatments to understand unmet needs or engage payers or prescribers in a virtual discussion about what would prompt them to choose one treatment over another.


Health economics and outcomes research is a critical function inside pharmaceutical companies. This is particularly true in medical affairs but includes a growing footprint outside that function. HEOR expertise is in high demand to help pharma companies develop more cost-effective treatments. More importantly, HEOR helps treatments reach the hands of more patients for positive health outcomes.

Read a client success story to learn how medical affairs HEOR teams use insights management technology.

Journal of Health Economics and Outcomes Research. Global Health Economics and Outcomes Research (HEOR) Market Report 2021: Increasing Drug Development is Driving the Demand for the HEOR Industry.
Medical Affairs Specialist. Medical Affairs Essentials: The Value of HEOR Teams.
Fierce Pharma. HEOR Continues to be Most Important Among European Payers.
Graphical Resarch. North America HEOR Market.
OPEN Health. Making HEOR more accessible to patients.
PharmacoEconomics. Big Data and Its Role in HEOR: A Collection of Perspectives on Data Sources, Measurement, and Analysis.

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