The Hidden Gaps in Cost of Care Analysis: Why Most Calculations Miss the Mark

When pharmaceutical companies and payers discuss "cost of therapy," the conversation often centers on drug acquisition costs and standard reimbursement rates. But this narrow view obscures a fundamental truth: we're measuring a fraction of the actual economic burden.

The Fragmentation Problem

Traditional cost analyses rely heavily on insurance claims databases that, by design, capture only what flows through a single payer or health system. The result? A fractured picture that systematically excludes critical cost components:

What typically gets missed:

• Out-of-pocket expenses patients absorb directly
• Services paid across multiple insurance plans (think: patient switches employers mid-treatment)
• Care delivered outside network systems
• Pharmacy costs not processed through medical benefits
• The constellation of ancillary services—lab work, imaging, supportive care—scattered across providers

This fragmentation doesn't just create analytical blind spots. It fundamentally distorts our understanding of treatment value, making it nearly impossible to conduct meaningful health economics outcomes research or accurately model real-world treatment pathways.

What Complete Cost Visibility Actually Requires

Accurate cost of care analysis demands a comprehensive view across the entire patient journey:

1. Longitudinal insurance claims spanning multiple health systems – capturing care regardless of where it's delivered
2. Payer-paid claims integrated with patient responsibility – the full economic picture, not just what insurers cover
3. Pharmacy and medication costs – both at point of care and through retail/specialty channels
4. Multi-payer continuity – following patients even as insurance coverage changes
5. Extended time horizons – treatment costs don't stop at 90 days; real economic impact unfolds over months and years

Without these elements integrated, cost analyses are built on incomplete foundations.

Why This Matters Now

Medical affairs and HEOR teams are increasingly asked to demonstrate real-world value—not in controlled clinical trial environments, but across the messy reality of actual clinical practice. Regulators want real-world evidence. Payers demand economic justification. Patients need transparency about the total cost of treatment.

Yet the data infrastructure to answer these questions accurately has been missing. Claims databases show us snapshots. Patient-consented longitudinal data can show us the entire film.

The Path Forward

The evolution toward patient-consented, comprehensive real-world data—spanning 15+ years across 250+ data sources—represents a fundamental shift in what's possible. When you can follow individual patient journeys across:

• Multiple insurance carriers
• Various health systems
• Inpatient and outpatient settings
• Pharmacy networks
• Patient out-of-pocket obligations

...you move from educated guesses to empirical precision.

This isn't about incremental improvement. It's about finally having the data infrastructure to answer the questions that matter: What does this therapy actually cost in the real world? Which treatment pathways deliver better economic outcomes? How do costs distribute across the healthcare ecosystem?

The Bottom Line

Cost of care analysis has been constrained by data fragmentation for too long. As our industry pushes toward value-based care and outcomes-based contracting, we need measurement systems that match the complexity of modern healthcare delivery.

The good news: the data exists. The infrastructure is emerging. The question is whether organizations will embrace the comprehensive approach needed to truly understand—and optimize—the cost of care.

What's your experience with cost of care analysis? Are you seeing the full picture, or just fragments?

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