Defining HEOR: Health Economics and Outcomes Research


The services used by healthcare and pharmaceutical companies to determine the value, cost, and cost-effectiveness of products or processes are referred to as Health Economics and Outcomes Research (HEOR). Observational data, price comparison, and other market indicators assist healthcare and pharmaceutical companies in making better informed strategic decisions for their goods. Ultimately, HEOR assists in comparing and selecting the best treatment options for physicians and patients.

What is HEOR?

HEOR is a field of research that uses economic data to evaluate the value of healthcare interventions, including pharmaceuticals. It can be used to determine the cost-effectiveness of treatments by comparing their costs and benefits. The various disciplines that a HOER integrates with are:

  • Market Access
  • Reimbursement
  • Pricing
  • Contracting & Account Management
  • Policy & Advocacy
  • Public Health
  • RWD/RWE Analytics (Real World Data/Evidence)
  • Epidemiology
  • PRO (Patient-Reported Outcomes)

HEOR also allows researchers and doctors to determine whether a new drug provides value over existing treatments in terms of both cost and efficacy (i.e., health outcomes). This information helps them decide how much money should go toward researching new drugs versus improving existing ones or investing in other areas such as education or housing subsidies for low-income populations. The type of costs include:

  • Direct medical costs such as medications, hospital days, and tests
  • Indirect costs such as unpaid assistance, days lost from work and decreased productivity
  • Intangible costs such as pain

In a general overview, the goal of a HOER analysis is to determine whether benefits outweigh costs.

HEOR Plays an Important Role in Drug Development, Pricing, and Marketing

Unlike traditional economic evaluations that focus on the cost-effectiveness of interventions and programs, HEOR is a subdiscipline of health economics that offers insights into their impact on outcomes. It is a discipline that is used to complement traditional clinical development information (ie, efficacy, safety, quality) to guide decision makers regarding patient access to specific drugs and services. As such, it can be used to support decisions about drug development, pricing, and marketing.

To determine whether a drug is worth developing in the first place, researchers conduct clinical trials with large groups of people over long periods. The purpose of these trials is to evaluate whether new drugs are safe and effective compared to existing treatments or no treatment at all (placebo). This information allows researchers to calculate how well a new treatment works in comparison with other options available on the market today—a metric known as Cost Effectiveness Ratio (CER).

If researchers find that one product has better results than others in terms of its ability to treat certain diseases or conditions effectively while also being less risky or less expensive than other similar products on the market today (i.e., there’s no reason why they shouldn’t exist), then they’ll recommend developing this product further until its benefits outweigh its costs over time. This is dependent on the different conditions based upon historical data analysis methods used by economists before anything else.

As such, HEOR has become an essential part of the whole process of drug development, including its pricing and marketing strategies, because it can help determine:

  1. Appropriate dosing regimens
  2. Identify patient populations most likely to benefit from treatment
  3. Guide on health outcomes accounting methodologies
  4. Assist with developing price estimates
  5. Evaluate cost-effectiveness analyses
  6. Determine reimbursement levels
  7. Support commercialization strategies, including product positioning and launch activities

How Can Companies Benefit from Hiring HEOR Professionals?

There are many reasons why companies should look to hire HEOR consultants and professionals. For example, they can help you make better decisions. They can also help you to increase your profit margin and avoid costly mistakes that could hurt you in the long run. They can even help prevent lawsuits by providing an objective analysis of the impact of any given decision on a company’s finances and reputation as well as its legal standing in the marketplace.

Which Organizations Use HEOR Analysis?

The use of HEOR analysis has grown dramatically in recent years, with a variety of organizations now using it to inform strategic decisions. The following is a list of some of the most common users:

  • Companies that make drugs and other healthcare products, such as medical devices and equipment.
  • Companies that sell drugs and other healthcare products.
  • Healthcare providers (hospitals, clinics). These may be private or governmental institutions; examples include public health departments, Veterans Affairs hospitals, and academic medical centers such as John Hopkins Hospital in Baltimore MD, or Massachusetts General Hospital in Boston MA.
  • Health insurance companies (e.g., UnitedHealthcare) who purchase drugs for their members’ use or reimburse patients for costs incurred while obtaining them on their behalf via CMS-approved “third party administrators” (TPAs).
  • Government agencies at all levels—local municipalities through federal agencies like Medicare/Medicaid programs—whose mission involves providing access to care regardless of ability to pay but whose budgets must be balanced against other competing priorities like education or infrastructure improvements.

How Do You Go About Becoming a Health Economics and Outcomes Researcher?

A HEOR career path is a multifaceted one, requiring a Ph.D. in economics or a closely related field, such as public policy or law. A background in statistics and experience in pharmaceuticals is also helpful to have on hand when starting as a HEOR researcher.

In addition, you’ll need a strong understanding of clinical trial design and biostatistics, expertise in epidemiology, experience with data mining and statistical software programs such as:

  • Experience using data mining software such as RapidMiner®, Oracle Data Mining®, IBM SPSS Modeler®
  • Comfort with financial analysis model including Discounted Cash Flow (DCF) model, Merger model (M&A), Initial Public Offering (IPO) model, Leveraged Buyout (LBO) model, and more
  • Knowledge of healthcare policy analysis methods including the step-by-step framework to study the characteristics of established policies
  • Experience using statistical software programs including MATLAB®, STATA®, SPSS®, SAS®, and more


HEOR professionals help companies decide which drugs to develop and how much they should cost. By analyzing the expected impact that treatments have on the quality of life, they can determine whether a drug will be worth its price tag. They are also valuable in helping companies market their products effectively by identifying the right target groups and tailoring marketing campaigns accordingly.

In addition, HEOR researchers conduct studies that provide a clearer picture of the benefits and risks associated with different therapies so that doctors can make better decisions when prescribing medications for their patients.

Contact Us

By submitting, you are agreeing to our terms and privacy policy
This field is for validation purposes and should be left unchanged.