What is ICER and how is it used in decision making?

• A. ICER = difference in costs / difference in effects between two interventions; used to assess value for money.
• B. ICER is a measure of total costs only.
• C. ICER is the ratio of benefits to societal utility
• D. ICER indicates time to market.

Answer: (C)

Incremental cost-effectiveness ratio expresses the additional cost per additional unit of health gain when comparing two health interventions. You calculate it by taking the difference in costs between the two options and dividing it by the difference in their effects (often measured in QALYs or life-years). This yields a value like dollars per QALY gained.

In decision making, the ICER is weighed against a willingness-to-pay threshold set by a health system or society. If the ICER is below the threshold, the new intervention is considered cost-effective; if it’s above, it’s not. If the new option provides more health with lower cost, it’s clearly preferred (dominant). If it provides less health and costs more, it’s not preferred (dominated).

Context and limits matter: the ICER depends on perspective (payer vs. societal), time horizon, and the quality of the effectiveness data. Thresholds vary by country, and the ICER doesn’t capture equity considerations or total budget impact. It’s not a measure of total costs, nor a ratio of benefits to societal utility, nor a measure of time to market.