Define Net Health Benefit (NHB) and its calculation.

• A. NHB = Incremental Effect − (Incremental Cost / WTP)
• B. NHB = (WTP × Incremental Cost) − Incremental Effect
• C. NHB = Incremental Cost ÷ WTP
• D. NHB = Incremental Effect × WTP

Answer: (A)

Net Health Benefit is a single metric that blends health outcomes and costs using a willingness-to-pay threshold. It converts the incremental cost into a health-value terms unit by dividing by the WTP per unit of health gain, then subtracts that amount from the incremental health effect. The standard form is NHB = ΔE − ΔC/λ, where ΔE is the difference in health effects (like additional QALYs) between the new intervention and the comparator, ΔC is the difference in costs, and λ is the willingness-to-pay per unit of health gain.

This formulation means: if the resulting NHB is positive, the new option is cost-effective at the chosen WTP; if negative, it is not. The given expression matches this idea, with Incremental Effect as ΔE, Incremental Cost as ΔC, and WTP as λ.

For example, if the new option yields 0.2 additional QALYs (ΔE) and costs an extra $20,000 (ΔC), with a WTP of $100,000 per QALY (λ), then NHB = 0.2 − (20,000/100,000) = 0.2 − 0.2 = 0. A positive NHB indicates cost-effectiveness at that threshold; zero or negative means not cost-effective.

Other forms would mix units improperly or fail to reflect the threshold intuition, such as multiplying cost by WTP or not dividing cost by WTP, which would not yield a comparable health-outcome measure.