ICER Calculator

The calculator compares a new intervention with a comparator, usually current care. It works with the difference between the two options, not with their totals.

C_new, C_comp

Total expected cost per patient of the new intervention and of the comparator, over the same time horizon, in the same currency and price year.

E_new, E_comp

Total expected health effect per patient, in QALYs or life years.

ΔC, ΔE

Incremental cost and incremental effect: the new intervention minus the comparator.

λ (threshold)

Willingness to pay for one extra unit of health: the most the decision-maker is prepared to pay per QALY or life year gained.

ICER

Extra cost per extra unit of health. Only defined when ΔE is not zero.

INMB

Incremental net monetary benefit: the health gain valued in money at the threshold, minus the extra cost. Positive means cost-effective at that threshold.

NHB

Net health benefit: the health gain minus the health the extra cost could have produced elsewhere at the threshold (ΔC ÷ λ). Positive means cost-effective.

Whenever the ICER is defined, the three decision rules agree: the ICER is on the right side of the threshold exactly when INMB and NHB are positive, because INMB = λ × NHB. Net benefit is often easier to work with. It is defined even when ΔE is zero, it has no sign ambiguity, and it can be averaged across the runs of a probabilistic sensitivity analysis.

The four quadrants of the cost-effectiveness plane

The plane puts the incremental effect on the horizontal axis and the incremental cost on the vertical axis, with the comparator at the origin. The threshold is a line through the origin with slope λ.

• North-east (ΔE > 0, ΔC > 0): more effective, more costly. The ICER is the extra cost per unit of health gained. The new intervention is cost-effective if the ICER is below the threshold.
• South-east (ΔE > 0, ΔC < 0): more effective, less costly. The new intervention dominates the comparator. A negative ICER is not reported; the result is simply “dominant”.
• North-west (ΔE < 0, ΔC > 0): less effective, more costly. The new intervention is dominated and is not cost-effective at any threshold.
• South-west (ΔE < 0, ΔC < 0): less effective, less costly. The ICER is the saving per unit of health lost, and the decision rule reverses: the new intervention is cost-effective only if the ICER is above the threshold. A lower ICER in this quadrant is worse, not better.

When ΔE is zero the ICER is undefined because it would mean dividing by zero. The options then differ only in cost, and net monetary benefit still gives the answer. A point exactly on the threshold line means the decision-maker is indifferent on cost-effectiveness grounds.

A new treatment costs £40,000 per patient and produces 6.3 QALYs. Current care costs £24,000 and produces 5.5 QALYs. The threshold is £30,000 per QALY. All numbers are hypothetical and chosen to keep the arithmetic simple. They are the default inputs of the calculator above.

1. ΔC = £40,000 − £24,000 = £16,000
2. ΔE = 6.3 − 5.5 = 0.8 QALYs
3. ICER = £16,000 ÷ 0.8 = £20,000 per QALY gained
4. INMB = £30,000 × 0.8 − £16,000 = £24,000 − £16,000 = £8,000
5. NHB = 0.8 − £16,000 ÷ £30,000 = 0.8 − 0.533 = 0.267 QALYs

The point lies in the north-east quadrant, the ICER of £20,000 per QALY is below the threshold, and both net benefit measures are positive, so at £30,000 per QALY the new treatment is cost-effective. Lower the threshold to £18,000 and INMB becomes £18,000 × 0.8 − £16,000 = −£1,600: the verdict flips.

HTA bodies that use cost-effectiveness analysis look at the ICER of a technology against the relevant comparators, together with the clinical evidence, the uncertainty around the estimate and other factors such as severity, unmet need and budget impact. Some state an explicit threshold or range; others weigh cost-effectiveness without a fixed cut-off. Thresholds and methods differ between countries, so this page does not quote them: the articles below explain how two systems work.

In a submission the ICER does not come from two point estimates typed into a form. It comes from a full economic model, such as a Markov or partitioned survival model, run with deterministic and probabilistic sensitivity analysis, often against several comparators at once. In the United States, the acronym ICER also refers to the Institute for Clinical and Economic Review, an organisation that publishes evidence reports including cost-effectiveness analyses.

The cost-effectiveness plane, the ICER, thresholds and net benefit are taught step by step in Module 7: Cost-Effectiveness and the ICER, and the models that produce the costs and QALYs in Module 8: Economic Modelling.

• BlogICER: The Incremental Cost-Effectiveness Ratio and Thresholds
• BlogNICE Technology Appraisal: How the Process Works in 2026
• BlogHealth Technology Assessment in the US: ICER, Medicare and QALYs
• BlogProbabilistic Sensitivity Analysis (PSA) in Health Economics
• BlogBudget Impact Analysis (BIA): Methods, Inputs and an Example
• BlogWhat Is a QALY? The Quality-Adjusted Life Year Explained
• Course · Module 7Cost-Effectiveness and the ICER
• Course · Module 8Economic Modelling