Before the inputs needed for a budget-impact analysis for a new drug can be determined and their values derived and before the computer model can be designed to perform the analysis, an analytic framework must be established. The analytic framework provides the overall approach to the analysis, and its components are described in this chapter. This framework might vary from jurisdiction to jurisdiction and from budget holder to budget holder within the same jurisdiction. Design of the analytic framework requires an understanding of jurisdiction requirements for a budget-impact analysis. Also required is an understanding of the health system and the relationship between the characteristics of the health system and how the new drug will affect the budget for a specific health plan or region. The introduction of a new drug can affect the budget in multiple ways. The most important components to understand for a jurisdiction when constructing a budget-impact analysis are the eligible population, the potential use of the drug in the treatment pathway, and the budget holder cost perspective and time horizon. Once these are understood, model specifications can be prepared to guide the analysis.
