Signature
H_d = Delta_C / k; INHB = Delta_E - Delta_C / k
| Inputs | Definition | Unit |
|---|---|---|
Delta_C | Cost of the intervention minus that of the comparator | currency per person |
k | Cost per QALY forgone elsewhere, ideally a supply-side estimate, or a value set by the decision maker such as £25,000 or £35,000 per QALY in NICE's presentation | currency per QALY |
Delta_E | QALYs of the intervention minus those of the comparator | QALYs per person |
H_d | QALYs expected to be forgone elsewhere in the system because of the intervention's incremental cost | QALYs per person |
|---|---|---|
INHB | Incremental health gain minus the health displaced by the incremental cost | QALYs per person |
Function
Supply-side threshold function
Maps a change in health-care expenditure under a fixed budget, and the change in population health that results, to the cost at which the health system gains or loses one unit of health at the margin. This is the opportunity-cost basis of the threshold, distinct from a demand-side value placed on health.
Try this function
Implementations
Excel
Incremental net health benefit in one cell
Excel subtracts the incremental cost divided by the threshold from the incremental effect, using named cells.
=IncrementalEffect-IncrementalCost/Threshold
Assumptions
Positive threshold and consistent differences
k is greater than zero, and Delta_E and Delta_C both take the intervention minus the comparator. The measure keeps its meaning in every quadrant of the cost-effectiveness plane, unlike the ICER.
Modifiers weight QALYs rather than change k
In the NICE manual, decision-making modifiers act qualitatively or through QALY weighting, and net health benefit is presented at £25,000 and £35,000 per QALY with and without the weighting.
Worked examples
Treatment judged at the NHS opportunity-cost estimate
A treatment costs £6,000 more than current care and adds 0.40 QALYs, an ICER of £15,000 per QALY. At k of £12,936 per QALY, the £6,000 displaces about 0.4638 QALYs elsewhere, so incremental net health benefit is about minus 0.0638 QALYs, a loss of population health even though the ICER lies below NICE's range. The figures are illustrative and match the article.
Delta_E = 0.40; Delta_C = 6000; k = 12936; H_d = 0.4638; INHB = -0.0638
Same treatment at £25,000 per QALY
At £25,000 per QALY, the lower value NICE uses to present net health benefit, the £6,000 displaces 0.24 QALYs and incremental net health benefit is 0.16 QALYs. At £35,000 per QALY it is about 0.229 QALYs.
Delta_E = 0.40; Delta_C = 6000; k = 25000; H_d = 0.24; INHB = 0.16
Common errors
Reading an ICER below NICE's range as a health gain
An ICER below £25,000 per QALY can still reduce population health if the opportunity cost of spending is lower. In the worked example the ICER is £15,000 per QALY, yet INHB is negative at k of £12,936 per QALY.
Treating negative unweighted INHB as automatic rejection
NICE states that a technology with negative unweighted net health benefit may still be recommended when decision-making modifiers apply, because the health it produces is given greater value.
Sources
NICE manual on net health benefit and opportunity cost
National Institute for Health and Care Excellence. NICE technology appraisal and highly specialised technologies guidance: the manual (PMG36). Published 31 January 2022, last updated 31 March 2026. Chapter 6 Committee recommendations, sections 6.2.11 (modifiers applied qualitatively or through QALY weighting), 6.3.1 (the maximum acceptable ICER reflects the opportunity cost of programmes displaced) and 6.3.2 (net health benefits at £25,000 and £35,000 per QALY, with and without QALY weighting; positive values increase population health).
Net health benefit definition
Stinnett AA, Mullahy J. Net health benefits: a new framework for the analysis of uncertainty in cost-effectiveness analysis. Medical Decision Making. 1998;18(2 Suppl):S68-S80.
Central estimate used in the worked example
Claxton K, Martin S, Soares M, Rice N, Spackman E, Hinde S, Devlin N, Smith PC, Sculpher M. Methods for the estimation of the National Institute for Health and Care Excellence cost-effectiveness threshold. Health Technology Assessment. 2015;19(14):1-503, v-vi.
Canonical Identity
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