Incremental cost-effectiveness ratio

Incremental cost-effectiveness ratio (ICER) is a statistic used in health economics to summarize the cost-effectiveness of a health care intervention. It is defined by the difference in cost between two possible interventions, divided by the difference in their effect. It represents the average incremental cost associated with 1 additional unit of the measure of effect.

Calculation

The ICER is calculated by the formula:

ICER = (C1 - C0) / (E1 - E0)

where C1 and C0 are the costs of the two interventions, and E1 and E0 are their effects. The ICER can be interpreted as the additional cost per additional unit of effect.

Interpretation

The ICER is used to compare the cost-effectiveness of two interventions. If the ICER is less than a predetermined threshold, the intervention is considered cost-effective. The threshold can vary depending on the country and the specific health care context.

Limitations

The ICER has several limitations. It assumes that the costs and effects of the interventions are linear and can be accurately estimated. It also does not take into account other factors that may be important in decision making, such as equity, feasibility, and acceptability.

See also

• Cost-effectiveness analysis
• Quality-adjusted life year
• Health economics