Why it's Time to Abandon the ICER

20 March 2019
Edmonton, Alberta

The incremental cost-effectiveness ratio (ICER) is the most popular summary measure in economic evaluations of health technologies. Yet reporting ICERs is unnecessary: alternative summary measures exist, based upon ‘net health benefit’ (NHB) or ‘net monetary benefit’ (NMB).

The popularity of the ICER may be due to its perceived simplicity, as well as the ability to calculate ICERs without a known cost-effectiveness threshold (which is required to calculate NHB or NMB). This latter property may be considered particularly attractive by decision makers who are reluctant to specify an explicit cost-effectiveness threshold, but who still wish to be seen to be conducting economic evaluations of health technologies.

The purpose of this paper is to argue that the popularity of the ICER is unwarranted, and that future economic evaluations should abandon the ICER in favour of NHB or NMB. This argument is based upon a number of components.

First, we note that the perceived simplicity of the ICER is misplaced, since ICERs are generally more difficult to both calculate and interpret than NHB or NMB. Second, we show that many common ways of interpreting ICERs are flawed and result in misleading conclusions. Third, we establish that ICERs have no greater interpretability than NHB or NMB in the absence of a cost-effectiveness threshold. Fourth, we demonstrate how NHB and NMB allow decision makers to perform various tasks, such as ranking strategies, which are not generally possible using ICERs. Fifth, we propose a novel means for reporting NHB and NMB on the cost-effectiveness plane that is simpler and more flexible than the ‘efficiency frontier’ approach used to report ICERs.

Collectively, this nullifies any perceived advantages to using ICERs, even if the cost-effectiveness threshold is unknown. As a result, we conclude that it is time to abandon the ICER in favour of NHB or NMB.

Why it's Time to Abandon the ICER

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Presenter

Mike Paulden Profile PictureMike Paulden, PhD, is an Assistant Professor at the School of Public Health, University of Alberta. His research interests are in health technology assessment, with a particular focus upon the integration of social values into the methods used for the economic evaluations of health care technologies.

 

 


The Network of Alberta Health Economists and the NOAHE Health Economics and Technology Assessment Rounds are supported financially and in-kind by Alberta Health, through the Health Funding and Economics Capacity (HFEC) Grant. Please note that the views expressed in this series and other deliverables associated with NOAHE are not necessarily representative of any particular organization involved.