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The cost-effectiveness of a treatment is the cost (resource use) per unit of effect; for example, the cost per death, or stroke prevented.
In economic evaluations of treatments, cost-effectiveness is reported as the incremental cost-effectiveness ratio (ICER), which is the difference in cost of two treatments being compared divided by the difference in their effects.
Often effects are reported as quality- adjusted life years (QALYs) and the ICER is the difference in costs divided by the net benefits (the desirable effects minus the undesirable effects), measured as QALYs. This type of cost-effectiveness is sometimes called cost utility.
Cost utility ratios make it possible to compare the ICERs (efficiency) of different treatments with different outcomes.
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