Question

Information has been gathered on the costs and effectiveness of the two treatments,

A and B. In this problem, costs and consequences are not discounted. Calculate the incremental

cost-effectiveness ratio (ICER) of the two treatments below and interpret your results. Show your

calculation.

Strategy	Cost	Benefit
Treatment A	$8500	9.5 yrs
Treatment B	$34000	19.6 yrs

** costs represent the average cost per patient.

**benefit is measured in terms of improvement in life expectancy (in yrs.)

Check my work:

8500 - 3400 = -25500      -25500/-10.1 = 2524.75

9.5    - 19.6 = -10.1

$2524.75

What does it mean?

Answer 1

The incremental cost-effectiveness ratio shows the effect of change in cost in terms of both cost and effectiveness.

The first part (8500-34000) shows the difference in cost of both the Treatment

It helps to analyse which process is better in terms of cost. In this case the negative result shows that Treatment A is more cost effective

and the second part (9.5-19.6) yrs shows the difference in benefit of using both treatments.

It helps to analyse which process is better in terms of benefit. In this case the negative result shows that Treatment B is more beneficial than Treatment B in terms of effectiveness.

The third part which is the Ratio shows the overall effect of Cost and effect combined. The positive result shows that per unit incremental cost for Treatment B over Treatment A saves $2524 per year.