What a budget impact model is and when HTA bodies require it
A budget impact analysis (BIA) estimates the change in spending for a defined health budget if a new technology is adopted, compared with a world in which it is not. It does not ask whether the technology is good value. It asks whether the budget can absorb it, and how fast. The two questions are complementary, which is why most HTA bodies ask for both a cost-effectiveness model and a budget impact model.
In England, the budget impact test in NICE's technology appraisal and highly specialised technologies manual (PMG36) is triggered when net budget impact is expected to exceed £40 million a year in any of the first 3 financial years of use in the NHS. NHS England then offers commercial discussions with the company before it can ask NICE to vary the funding requirement. In Ireland, a budget impact analysis is part of every full HTA dossier to the NCPE. In Denmark and Belgium, national guidelines set their own horizons and rules.[1]
Budget impact sits outside the EU joint clinical assessment under Regulation (EU) 2021/2282, which covers relative clinical effectiveness only. It remains a national deliverable for every market.
How a budget impact model is structured
The reference framework is the second ISPOR task force report (Sullivan et al., Value in Health 2014;17(1):5-14). It sets out the core building blocks, which we follow in every model:[2]
- Eligible population: the size of the treated population for the licensed indication, built from prevalence and incidence and treated as an open population, with patients entering and leaving over time.
- Treatment mix and uptake: the current mix of treatments and the expected mix after the new technology enters, year by year.
- Displacement: which existing treatments lose share, and the costs that are no longer incurred as a result.
- Costs: acquisition, administration, monitoring and adverse events, plus changes in condition-related costs where they fall within the time horizon.
- Time horizon and discounting: results reported for each budget period, undiscounted, over a horizon relevant to the budget holder. ISPOR notes that 1 to 5 years is common and does not recommend discounting.
The task force prefers a simple cost calculator where it can credibly capture the changes, and a cohort or patient-level model only where population size, severity mix or treatment patterns change in ways a calculator cannot represent. Complexity has to earn its place.
Requirements by agency
- NICE (England): the company submits a budget impact test submission, and NICE estimates the net annual cost to the NHS. The £40 million threshold applies to each of the first 3 financial years, so the year-by-year profile matters as much as the total.
- NCPE and HIQA (Ireland): HIQA's National Guidelines for the Budget Impact Analysis of Health Technologies in Ireland 2.0 require annual results over a minimum of five years, the perspective of the publicly funded health and social care system, no discounting, and high and low uptake scenarios. Incremental budget impact is reported net of displaced costs. See NCPE submissions.[3]
- Medicinrådet (Denmark): the Danish Medicines Council's budget impact guidance (version 1.0, February 2026) sets a 5-year horizon, regional costs only, no discounting, and compares a scenario with and without a recommendation. Uptake is generally assumed to be 100%, with gradual uptake only where justified.[4]
- KCE (Belgium): the Belgian guidelines for economic evaluations and budget impact analyses (third edition, KCE Report 400, 2025) set the horizon at the time needed to reach steady state, with a minimum of 3 years, and no discounting.[5]
Budget impact analysis versus cost-effectiveness analysis
| Budget impact analysis | Cost-effectiveness analysis | |
|---|---|---|
| Question | Is it affordable for this budget? | Is it good value for money? |
| Result | Net cost per year, in currency | Incremental cost per QALY or other outcome |
| Perspective | The budget holder | Health system reference case, as defined nationally |
| Population | Open: everyone eligible in each year | Usually a modelled cohort |
| Time horizon | Short and defined: 3 to 5 years in most guidelines | Long enough to capture all relevant differences, often lifetime |
| Discounting | Not applied | Applied to costs and outcomes at the national rate |
| Uptake and displacement | Central to the result | Usually not modelled |
The two models should share inputs. Drug costs, dosing, treatment duration and adverse event rates that differ between them are among the first things reviewers notice. We build both from a common parameter set; see health economic modelling.
Budget impact model examples and Excel templates
A typical example, with hypothetical numbers: 1,000 eligible patients a year, uptake of the new medicine rising from 20% to 40% to 60% over three years, displacing an existing treatment that costs 15,000 a year less per patient, in any currency. Net budget impact is then 3 million, 6 million and 9 million in years 1 to 3, before any offsets. Simple arithmetic, but every term in it needs a source, a range and a reason.
Generic Excel templates are a reasonable starting point for learning. They rarely survive contact with a real submission, because each agency defines the perspective, horizon, costs and uptake rules differently. We build models in transparent Excel, with VBA only where it adds function, or in Python where scale or automation is needed, with every input traceable to its source.
What we deliver
- De novo budget impact models in Excel/VBA or Python
- Adaptation of global budget impact models to national guidelines
- Epidemiology and eligible population estimates, with sources and ranges
- Uptake and displacement scenarios, built with market and clinical input
- Consistency checks against the cost-effectiveness model
- NICE budget impact test submissions and NCPE budget impact sections
- Technical reports, validation and quality control
- Price and commercial scenario analysis for pricing discussions
What assessors look for
- Population estimates: eligible numbers that match the licensed indication and the national treatment pathway.
- Justified uptake and displacement: uptake curves with a clear rationale, and displacement of treatments clinicians would actually replace.
- Consistent inputs: costs and durations aligned with the cost-effectiveness model.
- Appropriate offsets: condition-related savings that fall within the time horizon and the budget in question.
- Guideline rules: no discounting, the required perspective, and at least the guideline minimum horizon.
- Transparency: calculations a reviewer can follow and replicate, as ISPOR recommends.
Why Evidaxia
We have built de novo and globally adapted cost-effectiveness, cost-utility, cost-comparison and budget impact models in Excel/VBA and Python for NICE and NCPE submissions. Our founder is a former NICE HTA Technical Lead and Analyst, so we build models the way they will be reviewed. For other European markets, we apply the same modelling standards to each national guideline.
References
- National Institute for Health and Care Excellence. NICE health technology evaluations: the manual (PMG36) [Internet]. London: NICE; 2022 Jan 31 [updated 2026 Oct 13; cited 2026 Oct]. Available from: https://www.nice.org.uk/process/pmg36
- Sullivan SD, Mauskopf JA, Augustovski F, Jaime Caro J, Lee KM, Minchin M, et al. Budget impact analysis: principles of good practice: report of the ISPOR 2012 Budget Impact Analysis Good Practice II Task Force. Value Health. 2014;17(1):5-14. doi:10.1016/j.jval.2013.08.2291 Available from: https://www.valueinhealthjournal.com/article/S1098-3015(13)04235-6/fulltext
- Health Information and Quality Authority. Guidelines for the budget impact analysis of health technologies in Ireland 2.0 [Internet]. Dublin: Health Information and Quality Authority; [date unknown] [cited 2026 Oct]. Available from: https://hiqa.ie/sites/default/files/2025-03/BIA-Guidelines.pdf
- Medicinrådet. Budget impact analysis guidance [Internet]. Copenhagen: Medicinrådet; [date unknown] [cited 2026 Oct]. Available from: https://filer.medicinraadet.dk/media/phjhtgr2/budget-impact-analysis-guidance-document-vers-1-0.pdf
- Belgian Health Care Knowledge Centre (KCE). Belgian guidelines for economic evaluations and budget impact analyses. KCE Report 400 [Internet]. Brussels: KCE; 2025 [cited 2026 Oct]. Available from: https://kce.fgov.be/sites/default/files/2025-05/KCE400_Method_guidelines_economic_evaluations.pdf
Sources reviewed October 2026. Methods and procedures change; check the latest agency guidance before submission.