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## Incremental Cost Effectiveness Ratio

*Aka: Incremental Cost Effectiveness Ratio, ICER*

- See Also
- Definition: Incremental Cost Effectiveness Ratio (ICER)
- Based on cost for an outcome utility or value (e.g. QALY)
- Cost effectiveness can be determined by comparing ICER to a willingness to pay

- Technique
- Given
- Two strategies: 1 and 2 (e.g. treatment and no treatment)

- Calculation
- Incremental Cost Effectiveness Ratio (ICER) = Incremental_Cost / Incremental_Effectiveness

- Components
- Incremental Cost = c1-c2
- Incremental Effectiveness = e1-2

- Given
- Example
- Given
- Strategy 1: New intervention costs $100 and is assigned an effectiveness value of 0.9
- Strategy 2: Status Quo costs $1000 and is assigned an effectiveness value of 0.8

- Calculation
- Incremental cost =$100 - $1000 = -$900
- Incremental effectiveness = 0.9 - 0.8 = 0.1
- Incremental Cost Effectiveness Ratio (ICER) = -$900/0.1 = -$9000
- Each unit of effectiveness saves $9000 with the new intervention strategy

- Given
- Resources
- Incremental Cost Effectiveness Ratio

- References
- Desai (2014) Clinical Decision Making, AMIA’s CIBRC Online Course