Calculating and Interpreting ICERs and Net Benefit
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PRACTICAL APPLICATION
Calculating and Interpreting ICERs and Net Benefit Mike Paulden1
© Springer Nature Switzerland AG 2020
Abstract For several decades, the incremental cost-effectiveness ratio has been routinely used by health technology assessment agencies around the world to summarise the results of economic evaluations of health interventions. Yet reporting and considering incremental cost-effectiveness ratios is unnecessary. Alternative summary measures exist, based on the concept of ‘net benefit’. The incremental cost-effectiveness ratio and measures of net benefit share several commonalities but some important distinctions. As a result, different methods are required to calculate and interpret incremental cost-effectiveness ratios compared to measures of net benefit. The aim of this practical application is to introduce readers to these methods, using a hypothetical example to illustrate key issues. First, the methods used to calculate each measure are described. Next, for each measure, consideration is made of whether and how each measure may be interpreted to perform the following tasks, each of which may be of interest to health technology assessment agencies: (1) identifying the single most cost-effective strategy; (2) ranking strategies from ‘most’ to ‘least’ cost-effective (on an ordinal scale); (3) determining the magnitude to which a strategy is more or less cost-effective than another strategy (on a cardinal scale); and (4) determining whether a strategy is more or less cost-effective following a sensitivity or scenario analysis. This practical application also introduces a novel approach for visually interpreting measures of net benefit using the cost-effectiveness plane, which addresses a number of limitations of the conventional cost-effectiveness ‘efficiency frontier’. By the end of this practical application, readers should have an understanding of how to calculate and interpret each measure, as well as the relative strengths and limitations of each.
Key Points for Decision Makers
1 Introduction
This practical application introduces readers to the methods used to calculate and interpret two common summary measures used in economic evaluations of health technologies: the incremental cost-effectiveness ratio (ICER) and ‘net benefit’
1.1 Background
A novel approach is presented for visually interpreting measures of net benefit using the cost-effectiveness plane Readers should finish with an understanding of how to calculate and interpret each measure, as well as the relative strengths and limitations of each
* Mike Paulden [email protected] 1
School of Public Health, University of Alberta, 3‑300 ECHA, 11405 87 Ave NW, Edmonton, AB T6G 1C9, Canada
For several decades, the incremental cost-effectiveness ratio (ICER) has been routinely used by health technology assessment (HTA) agencies around the world to summarise the results of economic evaluations of health interventions [1–6]. Yet reporting and considering ICERs is unnecessary. Alternative summary measures exist, based on th
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