What is the formula for ICER?

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Study for the WHEBP Evidence as it Relates to Cost Test. Use flashcards and multiple-choice questions, with explanations and hints. Prepare for your exam efficiently!

Multiple Choice

What is the formula for ICER?

Explanation:
The idea here is to quantify value by looking at how much more you pay for how much more benefit you get when choosing one option over another. The ICER equals the incremental cost divided by the incremental effect: (Cost of the new option minus cost of the comparator) divided by (Effect of the new option minus effect of the comparator). In other words, it tells you the additional cost per additional unit of effect gained by adopting the new option. For example, if the new treatment costs $30,000 and yields 2.1 QALYs, while the standard costs $20,000 and yields 2.0 QALYs, the ICER would be (30,000 − 20,000) / (2.1 − 2.0) = 10,000 / 0.1 = $100,000 per QALY. Why the other forms don’t fit: using the ratio of effects to costs reverses the numerator and denominator and doesn't measure the cost per unit of effect gained. Using only costs ignores the change in effectiveness entirely. Using sums of costs and sums of effects mixes total amounts rather than the incremental change between options. The correct approach—and the formula you need here—is the difference in costs divided by the difference in effects.

The idea here is to quantify value by looking at how much more you pay for how much more benefit you get when choosing one option over another. The ICER equals the incremental cost divided by the incremental effect: (Cost of the new option minus cost of the comparator) divided by (Effect of the new option minus effect of the comparator).

In other words, it tells you the additional cost per additional unit of effect gained by adopting the new option. For example, if the new treatment costs $30,000 and yields 2.1 QALYs, while the standard costs $20,000 and yields 2.0 QALYs, the ICER would be (30,000 − 20,000) / (2.1 − 2.0) = 10,000 / 0.1 = $100,000 per QALY.

Why the other forms don’t fit: using the ratio of effects to costs reverses the numerator and denominator and doesn't measure the cost per unit of effect gained. Using only costs ignores the change in effectiveness entirely. Using sums of costs and sums of effects mixes total amounts rather than the incremental change between options. The correct approach—and the formula you need here—is the difference in costs divided by the difference in effects.

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