Incremental cost-effectiveness ratios (ICERs): the silence of the lambda

Area of Science:

• Health Economics
• Decision Analysis
• Public Health Policy

Background:

• Cost-effectiveness analysis (CEA) relies heavily on the threshold incremental cost-effectiveness ratio (ICER), known as lambda (λ).
• The determination and justification of lambda values in CEA have received insufficient attention.
• Existing methods for using lambda in decision-making lack critical appraisal.

Purpose of the Study:

• To critically appraise the concept and application of the threshold ICER (lambda).
• To investigate the reasons behind the lack of justification for lambda values in health economics.
• To examine the relationship between lambda, opportunity costs, and resource allocation efficiency in healthcare.

Main Methods:

• Critical appraisal of the threshold ICER concept.
• Analysis of the 'silence' surrounding lambda's justification and application.
• Review of decision-making processes using lambda in healthcare programs.

Main Results:

• Significant 'silence' exists regarding the justification of ICER thresholds and their link to opportunity costs.
• The threshold approach, including 'automatic cut-off' methods, fails to provide useful efficiency information.
• Implementation of threshold ICERs has led to increased healthcare expenditures without demonstrable gains in total health.

Conclusions:

• The threshold ICER (lambda) offers no valid information for efficient resource allocation in healthcare.
• The current reliance on threshold ICERs may lead to suboptimal spending and sustainability concerns.
• Decision-makers require information on opportunity costs, not threshold ICERs, to improve healthcare resource allocation efficiency.