BACKGROUND: Budget impact analysis was required for new drugs listing application to the National Health Insurance (NHI) in Taiwan over the last decade. However, a working model has not been proposed until now. OBJECTIVES: To provide a simple framework and working tool to estimate the likely financial impact to NHI due to the submitted new drug. METHODS: To estimate the potential 5-year financial impact annually if a new drug was reimbursed, proposed framework starts with the size of patient population and potential claim amount of existing drugs that the new drug is going to target, and taking into account the clinical position and usage of the new relative to the existing drugs. A simple working tool by using Excel spreadsheet was developed accompanying the framework. Only 9 cells need to be input. They are grouped into three parts: (1) predicted annual number of new patients receiving new drug, (2) treatment duration, and (3) drug cost. The first part should reference to local epidemiology of the specific disease, the adoption and diffusion rate of new drug, etc. Drug cost is expressed as the monthly cost of new and/or existing drugs. Treatment duration is the average months of patient remained on new and/or existing drugs which could be derived from clinical trials or clinical observations. Person-time on treatment is calculated by multiplying (1) and (2) and be allocated to respective budget year, then multiple (3) to obtain the annual cost of new and/or existing treatment. The net financial impact is the annual cost difference between new and existing treatment. CONCLUSIONS: The framework is simple and flexible, feasible for most new drug applications to estimate likely financial impact. It has been adopted by recently revised new drug reimbursement application form of NHI. The working tool is freely available as an option for calculation.