Sequential incremental cost-effectiveness ratio

Signature

ICER_i = (C_i - C_(i-1)) / (E_i - E_(i-1))

Inputs
Inputs	Definition	Unit
`C_i`	Total relevant cost of alternative i	currency per defined population or person
`C_(i-1)`	Total relevant cost of the next less effective non-dominated alternative	the same currency basis as C_i
`E_i`	Expected outcome for alternative i	the shared natural outcome measure
`E_(i-1)`	Expected outcome for the next less effective non-dominated alternative	the same natural outcome measure as E_i

Output
`ICER_i`	Additional cost per additional unit of effect for alternative i relative to the next less effective alternative	currency per outcome unit

Maps an effectiveness-ordered set of non-dominated alternatives to sequential incremental cost-effectiveness ratios.

C_iC_(i-1)E_iE_(i-1)

Ordered by effectiveness
Alternatives are ordered from least to most effective before sequential comparisons are calculated.
Common outcome measure
Every alternative uses the same natural outcome definition and unit.
Strict dominance removed
Any alternative that costs no less and produces no more effect than another alternative, and is strictly worse on at least one of the two, is removed before sequential ICERs are calculated. This includes ties, such as equal cost with lower effect.
Extended dominance addressed
After strict dominance is removed, any alternative whose sequential ICER exceeds the sequential ICER of the next more effective alternative is removed as extendedly dominated. Sequential ICERs are then recalculated against the new adjacent alternatives, and the check is repeated until they increase with effectiveness.
Positive incremental effect
The denominator E_i minus E_(i-1) is greater than zero for every calculated sequential ICER.

Sequential comparison of three alternatives
Current care costs £10,000 and produces 8.0 life-years. Intervention A costs £12,500 and produces 8.5 life-years. Intervention B costs £16,000 and produces 8.8 life-years. Neither intervention is dominated and the ratios increase with effectiveness, so no option is removed. The sequential ICERs are £5,000 and approximately £11,667 per life-year gained. The calculation shows the first step, Intervention A against current care.
```
C_i = 12500; C_(i-1) = 10000; E_i = 8.5; E_(i-1) = 8.0; ICER_i = 5000
```
Removing strict and extended dominance
Five illustrative alternatives are measured in life-years. A costs £10,000 for 4.0, B costs £13,000 for 4.3, X costs £20,000 for 4.4, C costs £18,000 for 4.5 and D costs £22,000 for 4.8. Ordered by effect, X is strictly dominated by C, which costs less and produces more, so X is removed. The sequential ICERs are then £10,000 for B, £25,000 for C and approximately £13,333 for D per life-year gained. Because the ICER for C exceeds the ICER for D, C is extendedly dominated and removed. Recalculation gives £10,000 for B and £18,000 for D, which increase with effectiveness, so A, B and D form the frontier.
```
C_A = 10000; E_A = 4.0; C_B = 13000; E_B = 4.3; C_X = 20000; E_X = 4.4; C_C = 18000; E_C = 4.5; C_D = 22000; E_D = 4.8; ICER_B = 10000; ICER_D = 18000; frontier = A, B, D
```

Comparing every alternative with a common baseline
Using the same baseline for every ratio can retain dominated strategies and fails to construct the cost-effectiveness frontier.

NICE manual for cost-effectiveness analysis
National Institute for Health and Care Excellence. NICE technology appraisal and highly specialised technologies guidance: the manual (PMG36). Published 2022; last updated 13 October 2026. Chapter 4 Economic evaluation, sections 4.2.16 and 4.10.8 (fully incremental analysis with dominated and extendedly dominated technologies removed).
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