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What is the incremental cost-effectiveness ratio (ICER)? Posted 03/12/2010

The incremental cost-effectiveness ratio (ICER) often comes up when talking about drug comparisons, but what is it and how does it relate to medicines?

A health economic evaluation involves a comparative analysis where a therapeutic intervention is compared to another health technology.

The results of this analysis are expressed by means of an incremental cost-effectiveness ratio (ICER), which is defined as the ratio of the change in costs of a therapeutic intervention (compared to the alternative, such as doing nothing or using the best available alternative treatment) to the change in effects of the intervention.

Incremental cost-effectiveness ratio (ICER) = (C1 – C0) / (E1 – E0)

Where C1 is the cost of the medicine; C0 is the cost of the comparator technology; E1 and E0 are the consequences of the medicine and the comparator, respectively.

The change in effects is usually measured in terms of the number of life-years gained or quality-adjusted life years gained by the intervention.

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Source: Steven Simoens. Personal Communication. 30 September 2010.

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