OBJECTIVES: During the pharmaceutical lifecycle, health economic modelling is usually reserved for the purposes of health technology assessment (HTA) and rarely plays a part in determining target product profiles (TPPs) or go/no go decisions. Yet the two are intrinsically interlinked; the clinical outcomes achievable can differ between patient subgroups, which underpins cost effectiveness, the pricing corridor and the size of the target patient population. The price, patient numbers, clinical trial size and economic evidence generation activities are key drivers of net present value (NPV). Here we demonstrate how early health economic modelling can be a useful tool to guide strategic development or in-licensing decisions.

METHODS: Two separate but interacting Excel models were developed to evaluate the cost effectiveness and NPV of a hypothetical acute care product for cerebrovascular injury. Product development was assumed to be pre-phase III. The cost effectiveness model was used to calculate ICERs from a selection of prices, patient subgroups and efficacy outcomes (as determined by modified Rankin score). Model outputs were in turn used to inform price, evidence generation cost, promotional and marketing cost and patient number inputs to the valuation model, which calculated the NPV of the product, an NPV>0 indicating a viable product.

RESULTS: Using the two models, a structured table of potential product profiles was produced with details of the price, patient population and size, efficacy assumption, potential patient share, development cost, ICER and NPV. The economic model both highlighted key value drivers and provided a ‘menu’ of viable profiles to choose from to inform phase III trial design or alternatively, a decision to discontinue development.

CONCLUSIONS: Early health economic modelling is a useful tool to guide strategic decision making in pharmaceutical development or in-licensing. Pharmaceutical companies would benefit from involving health economics at an early stage of the development process.