Examples
Worked examples
- Is an instance
Drug A costs GBP 15,000 more than standard care and produces 1.5 more QALYs over a patient's remaining lifetime. ICER = GBP 15,000 / 1.5 = GBP 10,000 per QALY gained -- comfortably inside a typical GBP 20,000-30,000/QALY threshold range, so the incremental cost is likely judged acceptable relative to the health gained.
- Is an instance
Drug B costs GBP 60,000 more than standard care for only 0.5 additional QALYs. ICER = GBP 60,000 / 0.5 = GBP 120,000 per QALY -- well above a typical threshold, so an appraisal committee would need another justification (severity modifiers, a managed access agreement, a confidential price discount) for a positive recommendation.
Counter-examples
Looks similar, but isn't
- Not an instance
A technology that costs the same as standard care but produces more QALYs, or costs less while producing the same or more QALYs, is described as 'dominant' -- its ICER calculation is not a meaningful positive ratio (the denominator or numerator can be zero or the result negative), because there is no cost-per-QALY trade-off to weigh: the technology is simply preferred outright without a threshold comparison.
Editorial commentary
The ICER (incremental cost-effectiveness ratio) is the core output of a
cost-utility analysis: the additional cost of one intervention compared with another, divided
by the additional health benefit — usually measured in QALYs — that the more
expensive option produces. It answers a single, decision-relevant question: how much extra do
you have to pay for each additional unit of health gained by choosing the more expensive
option over the next-best alternative?
The formula
ICER = (Cost of intervention A − Cost of intervention B) ÷ (QALYs from
intervention A − QALYs from intervention B). Both the numerator (incremental cost) and
the denominator (incremental QALYs) are calculated against the same comparator, usually the
current standard of care, so the ICER expresses the price of the marginal health gain a new
technology buys over what is already being done.
How an ICER is used in a technology appraisal
An appraisal committee does not evaluate a technology’s ICER against a single hard cutoff in
isolation — it weighs the ICER against a cost-effectiveness threshold
(a maximum acceptable cost per QALY) alongside other factors the committee is required to
consider, such as the severity of the condition and the quality of the underlying clinical and
economic evidence. NICE has historically applied a threshold range of £20,000 to £30,000 per
QALY gained for most technology appraisals; in December 2025 NICE confirmed it will move to a
new range of £25,000 to £35,000 per QALY once it has the legal power to do so, following a
change agreed at policy level — readers relying on the exact live figure for a submission
should confirm the current threshold directly on NICE’s own site, since the effective date of
that change was not independently confirmed for this page. CASRAI’s NICE technology appraisal process guide
covers where the ICER-versus-threshold comparison sits inside the wider appraisal decision.
ICER vs. related terms
- Not the same ICER as the US nonprofit. “ICER” also names the Institute for
Clinical and Economic Review, a US nonprofit that publishes independent cost-effectiveness
assessments of drugs. The acronym collision is a real source of confusion in the literature;
context (a formula/ratio vs. an organisation) disambiguates which one a given source means. - Cost-effectiveness ratio (average) vs. incremental. A simple
cost-effectiveness ratio divides one intervention’s total cost by its total QALYs in
isolation. An ICER is always incremental — a comparison between two specific
alternatives — because a technology appraisal decision is never “is this good in the
abstract” but “is this better value than what a patient would otherwise receive.”
Frequently asked questions
What does a “dominant” intervention mean in this context?
An intervention is described as dominant when it is both less costly and more effective
(more QALYs) than the comparator — in that case the ICER calculation produces a negative
number that is not meaningfully interpreted as a ratio; the intervention is simply preferred
outright without needing a threshold comparison.
Does a lower ICER always win?
Usually, but not automatically — an appraisal committee weighs the ICER against the
cost-effectiveness threshold and against other explicit modifiers (condition severity, evidence
quality, equity considerations), so two technologies with similar ICERs can still receive
different recommendations.
Machine-readable encodings
Use in your systems
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