OBJECTIVES: Budget impact analyses (BIAs) in Canada assess the financial impact, for a given drug plan, of adopting a new drug. Although most drug plan managers now require BIAs as part of the formal decision process on the pricing and reimbursement of drugs, there is no standardized method of performing and presenting BIAs. Guidelines were developed to facilitate the development and reporting of BIAs in Canada. METHODS: A survey of representatives across Canada and a review of 35 previously submitted BIAs were conducted to assess existing needs for BIA guidelines. Based on these findings, previously published guidelines (e.g. ISPOR Task Force) and input from the project's Steering Committee, guidelines were developed to provide instructions on how to perform BIAs. An accompanying interactive budget impact model template was also designed to facilitate BIA model development. RESULTS: Five key problem areas were identified in the needs assessment for improvement in BIA models: Lack of transparency, inaccurate or misapplied assumptions, generalized analysis (non-specific or inaccurate jurisdiction and/or plan), inappropriate choice of comparators, and overall quality. The guidelines and template address these issues and cover model design, analytic perspective, time horizon, target population, costing, scenarios to be compared, uncertainty analysis, discounting and validation methods that should be used when preparing a BIA, as well as provide detailed guidance on data inputs and data sources. CONCLUSION: The BIA guidelines and template address the requirements of each of the participating drug plans in Canada. Their introduction promises to facilitate the BIA submission development process and the decision-making process for listing and reimbursement of new drugs on provincial formularies.