Which statement best describes ICER for 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 measures patient satisfaction only.
• D. ICER is used to set regulatory approval dates.

Answer: (C)

Decision making in health care often hinges on weighing costs against the health benefits of options. The Incremental Cost-Effectiveness Ratio (ICER) does just that by comparing two interventions: you subtract the cost of the standard option from the cost of the new option, and you subtract the health effect of the standard option from the health effect of the new option. Then you divide the cost difference by the effect difference: ICER = (cost of new − cost of standard) / (effect of new − effect of standard).

The “effects” are health gains, commonly measured in quality-adjusted life years (QALYs), life-years gained, or other clinical outcomes. ICER thus tells you how much money is needed for each additional unit of health benefit gained with the new option. Decision makers then compare the ICER to a willingness-to-pay threshold to judge whether the extra benefit is worth the extra cost.

This concept is not about total costs alone, nor about patient satisfaction, and it isn’t used to set regulatory approval dates.