Use the information below to answer the following questions.

Cost Effectiveness

Cost of Current Treatment: $100,000, Effectiveness: 4 life-years gained

Cost of New Treatment: $250,000, Effectiveness: 10 life-years gained

A. Calculate the ICER for the new treatment, assuming that the new treatment would replace the old one.

B. In what quadrant is the ICER located in Figure 3-4? Is cost effectiveness analysis relevant?

C. How does the answer change if the cost of the new treatment equals $75,000?

Incremental costs Quadrant II Inferior Quadrant | Trade-off Threshold CE ratio Cost-effective: iCERThreshold Quadrant III Trade-off Quadrant IV Superior Figure 7. Diagram shows trade-off between costs and effectiveness. Incremental costs Quadrant II Inferior Quadrant | Trade-off Threshold CE ratio Cost-effective: iCERThreshold Quadrant III Trade-off Quadrant IV Superior Figure 7. Diagram shows trade-off between costs and effectiveness