Health Economics Unit was established in 1994 as a project under the Fourth Population and Health Project (FPHP) of the Ministry of Health and Family Welfare with support from the then Overseas Development Administration (ODA) of United Kingdom. The project initiated building capacity in health economics across the health sector and a critical number of personnel were trained overseas. The project successfully produced the 1st National Health Accounts in 1997. In addition a number of research studies in the area of costing; expenditure; financial tracking and resource allocation. The Institute of Health Economics was setup in The University of Dhaka to complement the strengthening of health economics capacity in the country.

During the first health sector programme (HPSP 1998-2003) HEU was re-organized as Policy Research Unit (PRU) with three constituent arms e.g. Health Economics Unit, Human Resources Development Unit and Gender, NGO and Stakeholder Participation Unit. It contributed to identify and include health related issues in Poverty Reduction Strategy Paper (PRSP) and in disseminating the report of the Commission on Macro-Economics and Health. During this period, International Conference on Health Economics was organized and a number of policy advices were developed. In 2002, the PRU again was renamed as the Health Economics Unit with HEU and GNSP unit. HRD unit was shifted to the ministry’s administration wing.

The HEU was transferred to the revenue setup in 2010 and organization was expanded in 2011.