What is an ICER?

An ICER (Incremental Cost-Effectiveness Ratio) is a summary measure representing the economic value of an intervention, compared with an alternative (comparator). It forms 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. The unit to calculate the health effect is often a QALY, but can also be another form of measurement. 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 in order to decide whether choosing the new intervention is an efficient use of resources.

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