Incremental Cost-Effectiveness Ratio
Cost per additional unit of health outcome (often QALY) versus comparator.
Definition
ICER = (Cost_new − Cost_comparator) / (Effect_new − Effect_comparator). A foundational HTA metric. The U.S. organization ICER (Institute for Clinical and Economic Review) produces influential value assessments. A result is compared with a willingness-to-pay threshold, such as cost per QALY gained. If the new technology costs less and works better, it dominates and no ratio is needed. Uncertainty is shown through sensitivity analyses and cost-effectiveness acceptability curves. In device models, learning curves and changing prices can affect the result.What this means in practice
Often confused with the U.S. organization of the same name. Manufacturers must distinguish between the math and the organization in commercial conversations.Examples
- A manufacturer calculating the ICER for a new surgical robot compared to traditional open surgery to demonstrate its cost-effectiveness to a national health service.
- A MedTech company using ICER results to justify the pricing of a novel diagnostic device during negotiations with private insurers.
- During a health economic submission, a company provides an ICER analysis to a European HTA body to support inclusion of their device on a national reimbursement list.
- •Confusing the mathematical concept of ICER with the Institute for Clinical and Economic Review, an organization that performs HTA using ICER.
- •Failing to consider the specific thresholds for cost-effectiveness that vary by country and payer.
- •Not adequately accounting for all relevant costs and effects in the ICER calculation, leading to an inaccurate representation of value.
- •Presenting ICER without appropriate context or sensitivity analyses, which can misrepresent the robustness of the findings.
Frequently asked questions
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Sources
2 sourcesSources support the definition or relevant regulatory context, not necessarily every claim on this page. Each is graded against our source-tier hierarchy so you can see what rests on binding law versus commentary.
Official citation replacements checked: . Medicare documents support Medicare coding, coverage or payment context, not every payer policy or CPT editorial procedure. Citation replacement does not change the full term review date.
- 1ICER (US)Tier 3 VerifiedICERicer.org
- 2NICE health technology evaluation manual: economic evaluationTier 3 VerifiedNICEnice.org.uk
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