Median-Based Incremental Cost-Effectiveness Ratio (ICER)

Abstract

Cost-effectiveness analysis (CEA) is a type of economic evaluation that examines the costs and health outcomes of alternative strategies and has been extensively applied in health sciences. The incremental cost-effectiveness ratio (ICER), which represents the additional cost of one unit of outcome gained by one strategy compared with another, has become a popular methodology in CEA. Despite its popularity, limited attention has been paid to summary measures other than the mean for summarizing cost as well as effectiveness in the context of CEA. Although some apparent advantages of other central tendency measures, such as median for cost data that are often highly skewed, are well understood, thus far, the median has rarely been considered in the ICER. In this paper, we propose the median-based ICER, along with inferential procedures, and suggest that mean- and median-based ICERs be considered together as complementary tools in CEA for informed decision making, acknowledging the pros and cons of each. If the mean- and median-based CEAs are concordant, we may feel reasonably confident about the cost-effectiveness of an intervention, but if they provide different results, our confidence may need to be adjusted accordingly, pending further evidence.

Keywords:

• 62G09
• 62-07
• 62P20

Keywords:

• Cost-effectiveness analysis
• Cost-effectiveness plane
• Mean cost
• Median cost

Acknowledgment

We want to thank Dr. Robert Obenchain and Dr. Andrew Willan for providing deidentified data. We also appreciate Ms. Ya-Lin Chiu's advice in programming and two reviewers for constructive, thoughtful and comprehensive comments. This research was supported by grant R01 HL096575 from the National, Heart, Lung, and Blood Institute.