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Incremental Cost-Effectiveness Ratio

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1. Briefly explain the concept of incremental cost-effectiveness ratio (ICER).

2. Using the data below, calculate the average and incremental ICERs. Assume that the options are mutually exclusive.
Hint: Sort options according to cost.

Comment about the dominance of Beclomethasone over Salmeterol-high dose.

Indicate your choice when the 3-month budget is USD 200 and USD 300.

If Ipratropium treatment is the existing one, and if your incremental threshold ratio is USD 500 per FEV1 unit, what are the feasible options?

Cost (USD) over 3-month study period
Placebo 60.00

Salmeterol: low dose 170.00

Salmeterol: high dose 360.00

Ipratropium 90.00

Beclomethasone 280.00

Change in FEV1 (l)

Placebo 1.1

Salmeterol: low dose 1.5

Salmeterol: high dose 1.6

Ipratropium 1.3

Beclomethasone 1.7

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Solution Summary

The incremental cost-effectiveness ratios are examined. The dominance of Beclomethasone over Salmeterol-high dose is provided.

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ICER-Cost Effectiveness
The concept of incremental cost-effectiveness ratio (ICER).

Part 1:
Incremental cost effectiveness ratio (ICER) often comes up when discussing drug comparisons, and facilitate the understanding of costs, as it basically tells us how much each additional unit of FEV1 costs using a particular treatment. In order to determine ICER, we must first order the treatments by cost, then calculate how an/the increase in cost for the next treatment increases the FEV1. In essence, ICERs relate the costs of a drug treatment to its clinical benefit in terms of a ratio expression, and can be directly compared to a pre-specified willingness to pay (WTP) benchmark, which usually represents the maximum costs that health care insurers would invest to achieve one clinical benefit unit (Krummenauer & Landwehr, 2005). Incremental cost-effectiveness ratio (ICER) = (C1 - C0) / (E1 - E0) wherein C1 is the cost of the medicine; C0 is the cost of the comparator technology; E1 and E0 are the consequences of the medicine and the comparator, respectively. As well, the change in effects is usually measured in terms of the number of life-years gained or quality-adjusted life years gained by the intervention (Gabi, 2010).
Part II:
Beclomethasone, Ipratropium and Salmeterol are used in the treatment and ...

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