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

Dr Mike Paulden, University of Alberta @mikepaulden [email protected] 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 [email protected]

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


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 $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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