Calculating ICER in Pharmacoeconomics: An Example Illustration
Posted: 05 Apr 2023, 14:11
ICER stands for Incremental Cost-Effectiveness Ratio and is a commonly used metric in pharmacoeconomics. It measures the additional cost per additional unit of effect when comparing two treatments.
The calculation of ICER involves two main components: the incremental cost and the incremental effectiveness. The incremental cost is the difference in cost between two treatments being compared, while the incremental effectiveness is the difference in outcomes or benefits between the two treatments.
The formula for calculating ICER is:
Assume we are comparing two treatments for hypertension, Treatment A and Treatment B. Treatment A costs $1,000 and has an effectiveness of reducing blood pressure by 10 mmHg, while Treatment B costs $500 and has an effectiveness of reducing blood pressure by 5 mmHg.
The incremental cost is $1,000 - $500 = $500, while the incremental effectiveness is 10 mmHg - 5 mmHg = 5 mmHg.
Therefore, the ICER for Treatment A compared to Treatment B is:
ICER = ($1,000 - $500) / (10 mmHg - 5 mmHg) = $100 per 1 mmHg reduction in blood pressure
This means that for every additional mmHg reduction in blood pressure, Treatment A costs $100 more than Treatment B.
In pharmacoeconomics, the ICER is often compared to a threshold value, such as the cost-effectiveness threshold, to determine whether a treatment is considered cost-effective. If the ICER is below the threshold value, the treatment is considered cost-effective, while an ICER above the threshold suggests that the treatment may not be cost-effective compared to alternative treatments.
The calculation of ICER involves two main components: the incremental cost and the incremental effectiveness. The incremental cost is the difference in cost between two treatments being compared, while the incremental effectiveness is the difference in outcomes or benefits between the two treatments.
The formula for calculating ICER is:
ICER = (Cost of Treatment A – Cost of Treatment B) / (Effectiveness of Treatment A – Effectiveness of Treatment B)Here is an example to illustrate the calculation of ICER:
Assume we are comparing two treatments for hypertension, Treatment A and Treatment B. Treatment A costs $1,000 and has an effectiveness of reducing blood pressure by 10 mmHg, while Treatment B costs $500 and has an effectiveness of reducing blood pressure by 5 mmHg.
The incremental cost is $1,000 - $500 = $500, while the incremental effectiveness is 10 mmHg - 5 mmHg = 5 mmHg.
Therefore, the ICER for Treatment A compared to Treatment B is:
ICER = ($1,000 - $500) / (10 mmHg - 5 mmHg) = $100 per 1 mmHg reduction in blood pressure
This means that for every additional mmHg reduction in blood pressure, Treatment A costs $100 more than Treatment B.
In pharmacoeconomics, the ICER is often compared to a threshold value, such as the cost-effectiveness threshold, to determine whether a treatment is considered cost-effective. If the ICER is below the threshold value, the treatment is considered cost-effective, while an ICER above the threshold suggests that the treatment may not be cost-effective compared to alternative treatments.