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


  • Gafni, Amiram
  • Birch, Stephen


Despite the central role of the threshold incremental cost-effectiveness ratio (ICER), or lambda ([lambda]), in the methods and application of cost-effective analysis (CEA), little attention has been given to the determining the value of [lambda]. In this paper we consider 'what explains the silence of the [lambda]'? The concept of the threshold ICER is critically appraised. We show that there is 'silence of the [lambda]' with respect to justification of the value of ICER thresholds, their use in decision-making and their relationship to the opportunity cost of marginal resources. Moreover, the 'sound of silence' extends to both 'automatic cut-off' and more sophisticated approaches to the use of [lambda] in determining recommendations about health care programs. We argue that the threshold value provides no useful information for determining the efficiency of using available resources to support new health care programs. On the contrary, the threshold approach has lead to decisions that resulted in increased expenditures on health care programs and concerns about the sustainability of public funding for health care programs without any evidence of increases in total health gains. To improve efficiency in resource allocation, decision-makers need information about the opportunity costs of programs.

Suggested Citation

  • Gafni, Amiram & Birch, Stephen, 2006. "Incremental cost-effectiveness ratios (ICERs): The silence of the lambda," Social Science & Medicine, Elsevier, vol. 62(9), pages 2091-2100, May.
  • Handle: RePEc:eee:socmed:v:62:y:2006:i:9:p:2091-2100

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    References listed on IDEAS

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    Blog mentions

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    10. McKenna, Claire & Chalabi, Zaid & Epstein, David & Claxton, Karl, 2010. "Budgetary policies and available actions: A generalisation of decision rules for allocation and research decisions," Journal of Health Economics, Elsevier, vol. 29(1), pages 170-181, January.
    11. James O’Mahony & Diarmuid Coughlan, 2016. "The Irish Cost-Effectiveness Threshold: Does it Support Rational Rationing or Might it Lead to Unintended Harm to Ireland’s Health System?," PharmacoEconomics, Springer, vol. 34(1), pages 5-11, January.
    12. Peacock, Stuart J. & Richardson, Jeff R.J. & Carter, Rob & Edwards, Diana, 2007. "Priority setting in health care using multi-attribute utility theory and programme budgeting and marginal analysis (PBMA)," Social Science & Medicine, Elsevier, vol. 64(4), pages 897-910, February.
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    16. Daniel Howdon & James Lomas, 2017. "Pricing implications of non-marginal budgetary impacts in health technology assessment: a conceptual model," Working Papers 148cherp, Centre for Health Economics, University of York.


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