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Incremental Cost Effectiveness Ratio
Aka: Incremental Cost Effectiveness Ratio, ICER
- See Also
- Decision Analysis (Decision Tree, Chance Graph)
- Expected Value Theory (or Expected Utility Theory, Time Trade Off, Standard Gamble, Visual Analogue)
- Quality Adjusted Life Year ( QALY)
- 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
- 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
- Resources
- Incremental Cost Effectiveness Ratio
- https://en.wikipedia.org/wiki/Incremental_cost-effectiveness_ratio
- References
- Desai (2014) Clinical Decision Making, AMIA’s CIBRC Online Course