Incremental cost-effectiveness ratio and average CER MCQs With Answer

Introduction: This quiz collection focuses on Incremental Cost-Effectiveness Ratio (ICER) and Average Cost-Effectiveness Ratio (CER) tailored for M.Pharm students studying Pharmacoepidemiology & Pharmacoeconomics. Through 20 carefully designed multiple-choice questions, you’ll review core definitions, calculation methods, interpretation of ICERs and CERs, dominance and extended dominance concepts, handling negative or dominated results, cost-effectiveness planes, and decision rules including willingness-to-pay thresholds. The questions emphasize practical calculations, comparative evaluations among multiple interventions, and common pitfalls encountered in economic evaluations. Use these items to test and deepen your understanding of how cost and effectiveness metrics guide rational healthcare decision-making and policy recommendations.

Q1. What is the correct formula for the Incremental Cost-Effectiveness Ratio (ICER)?

• Difference in effectiveness divided by difference in cost
• Difference in cost divided by difference in effectiveness
• Total cost of intervention divided by total effectiveness
• Average cost per patient divided by baseline effectiveness

Correct Answer: Difference in cost divided by difference in effectiveness

Q2. Which statement best distinguishes average CER from incremental CER?

• Average CER compares two alternatives while ICER compares each to a common comparator
• Average CER is cost per unit effect for a single intervention; ICER measures extra cost per extra effect when moving between interventions
• Average CER always equals ICER when interventions are ordered by cost
• Average CER is used only in cost-utility analysis while ICER is used only in cost-effectiveness analysis

Correct Answer: Average CER is cost per unit effect for a single intervention; ICER measures extra cost per extra effect when moving between interventions

Q3. Intervention A costs $5,000 and yields 2.5 QALYs; usual care costs $2,000 and yields 1.5 QALYs. What is the ICER of A vs usual care?

• $3,000 per QALY
• $2,000 per QALY
• $1,000 per QALY
• $5,000 per QALY

Correct Answer: $3,000 per QALY

Q4. When is an intervention described as “dominated” in cost-effectiveness analysis?

• When it has both higher cost and higher effectiveness than comparator
• When it has lower cost and lower effectiveness than comparator
• When it has higher cost and lower effectiveness than comparator
• When its ICER equals the willingness-to-pay threshold

Correct Answer: When it has higher cost and lower effectiveness than comparator

Q5. What is “extended dominance” (weak dominance)?

• When an intervention is less effective and less costly than another
• When a combination of two interventions is more effective and less costly than a third
• When an intervention has an ICER higher than that of a more effective alternative, making it inefficient compared with a combination of options
• When an intervention’s ICER equals zero

Correct Answer: When an intervention has an ICER higher than that of a more effective alternative, making it inefficient compared with a combination of options

Q6. If intervention B is both cheaper and more effective than intervention A, what is the ICER of B vs A?

• Positive finite number
• Negative (dominant); B dominates A
• Zero
• Undefined because effectiveness difference is zero

Correct Answer: Negative (dominant); B dominates A

Q7. You have three interventions sorted by increasing cost: I1 (cost 100, effectiveness 2.0), I2 (cost 160, effectiveness 2.4), I3 (cost 250, effectiveness 3.0). What is the incremental cost per unit effectiveness from I2 vs I1?

• 60/0.4 = 150 per unit
• 60/0.4 = 150 per unit-effectiveness
• 160/2.4 = 66.7 per unit
• 50/0.6 = 83.3 per unit

Correct Answer: 60/0.4 = 150 per unit-effectiveness

Q8. In decision making, a commonly used willingness-to-pay (WTP) threshold represents:

• The maximum clinical effectiveness acceptable for an intervention
• The maximum cost the payer is willing to pay per unit of health gained
• The average cost-effectiveness ratio for standard of care
• The minimum price at which an intervention can be sold

Correct Answer: The maximum cost the payer is willing to pay per unit of health gained

Q9. When calculating ICER, which of the following must always be true to avoid division by zero?

• Difference in costs must be zero
• Difference in effectiveness must be non-zero
• Total cost of comparator must be higher than intervention
• Effectiveness values must be equal

Correct Answer: Difference in effectiveness must be non-zero

Q10. Which graphical plane is most commonly used to plot incremental cost and effectiveness differences?

• ROC curve
• Cost-effectiveness plane (quadrant diagram)
• Kaplan-Meier survival curve
• Precision-recall plot

Correct Answer: Cost-effectiveness plane (quadrant diagram)

Q11. If ICER = $50,000 per QALY and the WTP threshold is $30,000 per QALY, the intervention should generally be:

• Considered cost-effective and adopted
• Considered not cost-effective at that threshold
• Dominant and therefore always adopted
• Irrelevant because ICER must be negative to decide

Correct Answer: Considered not cost-effective at that threshold

Q12. Which interpretation is correct when ICER is negative because the numerator is negative and denominator positive?

• The intervention is less costly and less effective
• The intervention is less costly and more effective — it dominates
• The intervention is more costly and less effective — it is dominated
• ICER negative means calculation error and is ignored

Correct Answer: The intervention is less costly and more effective — it dominates

Q13. Why is ordering interventions by increasing cost before calculating incremental comparisons important?

• It ensures you always pick the least effective first
• It helps identify dominated and extendedly dominated alternatives correctly and compute sequential ICERs
• It prevents any intervention from being dominated
• It guarantees that ICERs will be below the WTP

Correct Answer: It helps identify dominated and extendedly dominated alternatives correctly and compute sequential ICERs

Q14. A researcher reports average CER for intervention X as $2,000 per LYG (life-year gained). This value means:

• Switching from comparator to X costs $2,000 per additional life-year
• On average, each life-year gained by X costs $2,000 when considered in isolation
• X is dominated if the average CER equals $2,000
• This is the ICER of X vs all alternatives

Correct Answer: On average, each life-year gained by X costs $2,000 when considered in isolation

Q15. How should one interpret an ICER that is extremely large (very high positive value)?

• The intervention is likely cost-saving
• The incremental effectiveness is tiny while incremental costs are substantial, often making it not cost-effective
• The intervention is clearly dominant
• The ICER indicates negative effectiveness and should be ignored

Correct Answer: The incremental effectiveness is tiny while incremental costs are substantial, often making it not cost-effective

Q16. In an incremental analysis among multiple alternatives, which option should be removed before final ICER comparison?

• Any option with the highest effectiveness
• Dominated options and those subject to extended dominance
• Any option with lower average CER than others
• Options with the smallest cost only

Correct Answer: Dominated options and those subject to extended dominance

Q17. Which of the following is a limitation of using average CER instead of ICER for decision-making?

• Average CER requires ordering by cost to be valid
• Average CER ignores incremental differences and may mislead when comparing multiple alternatives
• Average CER always underestimates true value of interventions
• Average CER can be negative which ICER cannot

Correct Answer: Average CER ignores incremental differences and may mislead when comparing multiple alternatives

Q18. In sensitivity analysis for ICER, probabilistic sensitivity analysis (PSA) is used primarily to:

• Calculate a single deterministic ICER value
• Explore uncertainty in input parameters and generate cost-effectiveness acceptability curves
• Ensure the ICER equals the average CER
• Eliminate dominated options automatically

Correct Answer: Explore uncertainty in input parameters and generate cost-effectiveness acceptability curves

Q19. Two interventions have identical effectiveness. Intervention A costs less than B. Which statement is correct?

• A is dominated by B
• B dominates A
• A dominates B because equal effect and lower cost
• ICER is positive and equals difference in effect divided by cost

Correct Answer: A dominates B because equal effect and lower cost

Q20. When comparing cost per QALY across countries, why must caution be used in applying a single WTP threshold universally?

• Because QALYs are measured differently in each trial
• Because willingness-to-pay thresholds vary by country’s income, budget impact, and social preferences
• Because ICER formulas differ across nations
• Because average CER is always superior to ICER internationally

Correct Answer: Because willingness-to-pay thresholds vary by country’s income, budget impact, and social preferences

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