ICERs

ICERs, or incremental cost-effectiveness ratios, are a metric used in health economics to assess the value of a medical intervention by comparing its additional cost to its additional health benefit relative to a comparator. The most common outcome is cost per quality-adjusted life year (QALY) gained.

Calculation: ICER = (Cost of new intervention − Cost of comparator) / (Effectiveness of new intervention − Effectiveness of comparator). Costs include medical expenses over a defined time horizon, and effectiveness is typically measured in QALYs or life-years gained. A higher ICER indicates less favorable value, though interpretation depends on willingness-to-pay thresholds set by policymakers or payers.

Use and policy context: ICERs are central to health technology assessment (HTA). Payers, including insurers and government programs, may use ICERs to guide coverage decisions, reimbursement levels, and pricing negotiations. In the United States, ICER also refers to the Institute for Clinical and Economic Review, a nonprofit organization that conducts independent analyses of the value of medical interventions; its assessments inform clinicians, patients, and policymakers but are not binding.

Limitations: ICERs depend on data quality and methodological choices, such as time horizon, discount rate, and the selected health outcome measure. They do not capture all values, including equity considerations, patient preferences, or societal impact. Thresholds for what constitutes cost-effective vary by country and organization, and critics argue that rigid thresholds can undervalue rare or innovative therapies.