An incremental cost-effectiveness ratio is a summary measure representing the economic value of an intervention, compared with an alternative (comparator). It is usually the main output or result of an economic evaluation. An ICER is calculated by dividing the difference in total costs (incremental cost) by the difference in the chosen measure of health outcome or effect (incremental effect) to provide a ratio of ‘extra cost per extra unit of health effect’ – for the more expensive therapy vs the alternative. In the UK the QALY is most frequently used as the measure of health effect, enabling ICERs to be compared across disease areas, but in other healthcare systems other measures of health effect may be used. In decision-making ICERs are most useful when the new intervention is more costly but generates improved health effect. ICERs reported by economic evaluations are compared with a pre-determined threshold (see cost-effectiveness threshold) in order to decide whether choosing the new intervention is an efficient use of resources.

How to cite: Incremental Cost-Effectiveness Ratio (ICER) [online]. (2016). York; York Health Economics Consortium; 2016.

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