Definitions

Incremental cost

Incremental cost-effectiveness ratio

The incremental cost-effectiveness ratio of an intervention in health care is a term used in cost-effectiveness analysis in pharmacoeconomics. It is defined as the ratio of the change in costs of a therapeutic intervention (compared to the alternative, such as doing nothing or using the best available alternative treatment) to the change in effects of the intervention.

The term "incremental" does not have the standard economic meaning. Normally, the effects of an incremental change refer to the effect of an additional unit of a specific measurement - for example, the effect of an additional dollar spent on a public health awareness campaign. However, in this case, we are not comparing the effects of an incremental change in some intervention, but rather the effect of switching interventions.

Often, the change in effects is measured in terms of the number of quality-adjusted life years gained by the intervention.

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