why it’s time to abandon the icer · dr mike paulden, university of alberta @mikepaulden...

Dr Mike Paulden, University of Alberta @mikepaulden paulden@ualberta.ca mikepaulden.com +1 (844) PAULDEN Slide 1

Why It’s Time to Abandon the ICER

Dr Mike Paulden, Assistant Professor,

School of Public Health, University of Alberta

@mikepaulden paulden@ualberta.ca

mikepaulden.com +1 (844) PAULDEN

Introduction

● The incremental cost-effectiveness ratio (ICER) is widely used to report

the results of economic analyses of health technologies

● Yet reporting ICERs is unnecessary - alternative measures exist, based on

the concepts of net health benefit (NHB) or net monetary benefit (NMB)

● Yet ICERs remain popular with decision makers, and there is a common

perception that there are advantages to using ICERs, particularly if the cost-

effectiveness threshold (λ) is unknown

● This paper argues that this common perception is false - there are

no advantages to using ICERs and many important limitations

Calculating ICERs where

there are only two strategies

ICER = ∆Cost / ∆QALYs

Result:

ICERs are easy to calculate

with only two strategies

Interpreting the ICER where

there are only two strategies

Question:

Is strategy B cost-effective?

Question:

Would a different strategy with

an ICER of $25,000 per QALY

be cost-effective?

Question:

Would a different strategy

with a negative ICER be

cost-effective?

Question:

Does a lower ICER imply that

a strategy is necessarily more

cost-effective?

Limitations of ICERs in comparisons of two strategies

1. A threshold is required to determine whether a strategy is cost-effective,

unless it is dominated/dominating (in which case an ICER is not required)

2. An ICER cannot be interpreted without also knowing the quadrant of the

CE plane in which the strategy lies

3. Change in an ICER during a sensitivity analysis does not necessarily imply

that the strategy is more or less cost-effective

Result:

ICERs are difficult to interpret

with only two strategies and

any interpretation is limited

Calculating ICERs where

there are multiple strategies

Strategy Cost QALYs

A $600,000 24

B $1,300,000 34

C $400,000 16

D $500,000 26

E $700,000 20

F $100,000 6

G $1,000,000 30

H $350,000 8

Step 1:

Rank strategies by cost

Strategy Cost QALYs

F $100,000 6

H $350,000 8

C $400,000 16

D $500,000 26

A $600,000 24

E $700,000 20

G $1,000,000 30

B $1,300,000 34

Step 2:

Rule out ‘dominated’ strategies

Strategy Cost QALYs

F $100,000 6

H $350,000 8

C $400,000 16

D $500,000 26

A $600,000 24

E $700,000 20

G $1,000,000 30

B $1,300,000 34

Strategy Cost QALYs

F $100,000 6

H $350,000 8

C $400,000 16

D $500,000 26

A $600,000 24

E $700,000 20

G $1,000,000 30

B $1,300,000 34

Step 3:

Calculate initial estimates of

incremental values

Strategy Cost QALYs ΔCost ΔQALYs ICER

F $100,000 6

H $350,000 8

C $400,000 16

D $500,000 26

A $600,000 24 D D D

E $700,000 20 D D D

G $1,000,000 30

B $1,300,000 34

F $100,000 6 N/A N/A N/A

H $350,000 8

C $400,000 16

D $500,000 26

A $600,000 24 D D D

E $700,000 20 D D D

G $1,000,000 30

B $1,300,000 34

F $100,000 6 N/A N/A N/A

H $350,000 8 $250,000 2 $125,000

C $400,000 16 $50,000 8 $6,250

D $500,000 26 $100,000 10 $10,000

A $600,000 24 D D D

E $700,000 20 D D D

G $1,000,000 30 $500,000 4 $125,000

B $1,300,000 34 $300,000 4 $75,000

Step 4:

Rule out initial ‘extendedly

dominated’ strategies

F $100,000 6 N/A N/A N/A

H $350,000 8 $250,000 2 $125,000

C $400,000 16 $50,000 8 $6,250

D $500,000 26 $100,000 10 $10,000

A $600,000 24 D D D

E $700,000 20 D D D

G $1,000,000 30 $500,000 4 $125,000

B $1,300,000 34 $300,000 4 $75,000

F $100,000 6 N/A N/A N/A

H $350,000 8 ED ED ED

C $400,000 16 $50,000 8 $6,250

D $500,000 26 $100,000 10 $10,000

A $600,000 24 D D D

E $700,000 20 D D D

G $1,000,000 30 ED ED ED

B $1,300,000 34 $300,000 4 $75,000

Step 5:

Recalculate incremental

values

F $100,000 6 N/A N/A N/A

H $350,000 8 ED ED ED

C $400,000 16 $50,000 8 $6,250

D $500,000 26 $100,000 10 $10,000

A $600,000 24 D D D

E $700,000 20 D D D

G $1,000,000 30 ED ED ED

B $1,300,000 34 $300,000 4 $75,000

F $100,000 6 N/A N/A N/A

H $350,000 8 ED ED ED

C $400,000 16 $300,000 10 $30,000

D $500,000 26 $100,000 10 $10,000

A $600,000 24 D D D

E $700,000 20 D D D

G $1,000,000 30 ED ED ED

B $1,300,000 34 $300,000 4 $75,000

F $100,000 6 N/A N/A N/A

H $350,000 8 ED ED ED

C $400,000 16 $300,000 10 $30,000

D $500,000 26 $100,000 10 $10,000

A $600,000 24 D D D

E $700,000 20 D D D

G $1,000,000 30 ED ED ED

B $1,300,000 34 $300,000 4 $75,000

F $100,000 6 N/A N/A N/A

H $350,000 8 ED ED ED

C $400,000 16 $300,000 10 $30,000

D $500,000 26 $100,000 10 $10,000

A $600,000 24 D D D

E $700,000 20 D D D

G $1,000,000 30 ED ED ED

B $1,300,000 34 $800,000 8 $100,000

Step 6:

Rule out any additional

‘extendedly dominated’

strategies

F $100,000 6 N/A N/A N/A

H $350,000 8 ED ED ED

C $400,000 16 $300,000 10 $30,000

D $500,000 26 $100,000 10 $10,000

A $600,000 24 D D D

E $700,000 20 D D D

G $1,000,000 30 ED ED ED

B $1,300,000 34 $800,000 8 $100,000

F $100,000 6 N/A N/A N/A

H $350,000 8 ED ED ED

C $400,000 16 ED ED ED

D $500,000 26 $100,000 10 $10,000

A $600,000 24 D D D

E $700,000 20 D D D

G $1,000,000 30 ED ED ED

B $1,300,000 34 $800,000 8 $100,000

Step 7:

Recalculate incremental

values

F $100,000 6 N/A N/A N/A

H $350,000 8 ED ED ED

C $400,000 16 ED ED ED

D $500,000 26 $100,000 10 $10,000

A $600,000 24 D D D

E $700,000 20 D D D

G $1,000,000 30 ED ED ED

B $1,300,000 34 $800,000 8 $100,000

F $100,000 6 N/A N/A N/A

H $350,000 8 ED ED ED

C $400,000 16 ED ED ED

D $500,000 26 $400,000 20 $20,000

A $600,000 24 D D D

E $700,000 20 D D D

G $1,000,000 30 ED ED ED

B $1,300,000 34 $800,000 8 $100,000

Calculation complete

Result:

ICERs can be difficult to

calculate in evaluations of

multiple strategies

Interpreting ICERs where

there are multiple strategies

Decision rule:

The most cost-effective

strategy is that with the highest

ICER below the threshold

F $100,000 6 N/A N/A N/A

H $350,000 8 ED ED ED

C $400,000 16 ED ED ED

D $500,000 26 $400,000 20 $20,000

A $600,000 24 D D D

E $700,000 20 D D D

G $1,000,000 30 ED ED ED

B $1,300,000 34 $800,000 8 $100,000

Question:

Can ICERs be used to rank

strategies from most to least

cost-effective?

Limitations of ICERs in comparisons of multiple strategies

1. The decision rule to identify the most cost-effective strategy is unintuitive:

it is the strategy with the highest ICER below the threshold

○ If all ICERs are above the threshold, the cheapest strategy is cost-effective

2. A threshold is required to determine the most cost-effective strategy,

unless one strategy dominates all others

3. It is not possible to to rank strategies from most to least cost-effective

Result:

ICERs are difficult to interpret

with multiple strategies and

any interpretation is limited

Calculating NHB or NMB

NHB = QALYs - Cost / λ

NMB = QALYs * λ - Cost

Key differences vs ICERs: not incremental and requires λ for calculation

Threshold for this example:

λ = $50,000 per QALY

Strategy Cost QALYs NHB NMB

F $100,000 6

H $350,000 8

C $400,000 16

D $500,000 26

A $600,000 24

E $700,000 20

G $1,000,000 30

B $1,300,000 34

F $100,000 6 4

H $350,000 8

C $400,000 16

D $500,000 26

A $600,000 24

E $700,000 20

G $1,000,000 30

B $1,300,000 34

F $100,000 6 4 $200,000

H $350,000 8

C $400,000 16

D $500,000 26

A $600,000 24

E $700,000 20

G $1,000,000 30

B $1,300,000 34

F $100,000 6 4 $200,000

H $350,000 8 1 $50,000

C $400,000 16 8 $400,000

D $500,000 26 16 $800,000

A $600,000 24 12 $600,000

E $700,000 20 6 $300,000

G $1,000,000 30 10 $500,000

B $1,300,000 34 8 $400,000

Result:

NHB/NMB is easy to calculate

for any number of strategies

Interpreting NHB or NMB

Strategies with greater NHB or

NMB are more cost-effective

Strategy Cost QALYs NHB Ranking

F $100,000 6 4

H $350,000 8 1

C $400,000 16 8

D $500,000 26 16 1st

A $600,000 24 12

E $700,000 20 6

G $1,000,000 30 10

B $1,300,000 34 8

F $100,000 6 4

H $350,000 8 1

C $400,000 16 8

D $500,000 26 16 1st

A $600,000 24 12 2nd

E $700,000 20 6

G $1,000,000 30 10

B $1,300,000 34 8

F $100,000 6 4 7th

H $350,000 8 1 8th

C $400,000 16 8 4th=

D $500,000 26 16 1st

A $600,000 24 12 2nd

E $700,000 20 6 6th

G $1,000,000 30 10 3rd

B $1,300,000 34 8 4th=

Result:

NHB/NMB is easy to interpret

for any number of strategies

The need to specify a threshold

● A threshold is required for calculating NHB/NMB

● Yet a threshold is also required for interpreting ICERs

○ Without interpretation, ICERs cannot be used for decision making

● The need to specify a threshold is identical for ICERs and NHB/NMB

● Ultimately, unless one strategy ‘dominates’ all others, trade-offs must be

made between costs and QALYs, and using ICERs does not avoid this

Summary

● NHB/NMB are easier to calculate than ICERs

○ ICERs are difficult to calculate for comparisons of multiple strategies

○ NHB/NMB are easy to calculate, regardless of the number of strategies

● NHB/NMB are easier to interpret than ICERs

○ ICERs are difficult to interpret, regardless of the number of strategies

○ NHB/NMB are easy to interpret, regardless of the number of strategies

● ICERs have many limitations compared to NHB/NMB

○ A higher/lower ICER does not imply that a strategy is more/less cost-effective

● It’s time to abandon the ICER and use measures of NHB/NMB instead

Any questions?

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why it’s time to abandon the icer · dr mike paulden, university of alberta @mikepaulden...

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