In health economics and pharmacoepidemiology literature, **ICE methods** are a
special case of what is generally called **Cost-Effectiveness Analysis** (**CEA**) or **
Cost-Benefit Analysis** (**CBA**.) When several alternative treatments for a given
medical condition are available, treatments not actually on the "**Frontier**" are
not competitive:

ICE methods address the so-called** "incremental" case**
where just two treatments are compared head-to-head. In typical notation, these treatments
are denoted by a subscript of either T => new treatment or else S => standard or control
treatment. Overall average differences ("Deltas") on effectiveness and
cost are then combined to form a pair of overall outcome differences:

Overall outcome pairs are typically standardized by expressing
both of their components in the same units ...of either both in
**cost** or else both in
**effectiveness**. To make
this conversion, the numerical value of a truly **key
quantity** (called Lambda) is needed:

Note that Lambda has both the ESSENTIAL
property that it is a **constant** as well as the UNFORTUNATE property that
it is an **unknown**. The most frequently cited numerical value for Lambda is
$50,000 per QALY. Unfortunately, converting all of the different effectiveness
measure used in various specific disease states into QALYs is a formidable
problem. Given some numerical value for Lambda, the standardization process goes
as follows:

Black WC. [The CE plane.
*Medical Decision Making *
1990; 10: 212-214] suggested
using 2-dimensional Cartesian co-ordinates **(x, y)**
in** ** "a
graphic representation of cost-effectiveness".
Because the **x** co-ordinate is the
average treatment difference in
effectiveness while the **y** co-ordinate is the
average treatment difference in cost, a purist might insist that this **(****x****, **
**y****)**
graphical representation should be called the **(effectiveness,
cost)** plane ...but this is not accepted
terminology. On the other hand, note that the vector from **
(0, 0)** to **(****x****, **
**y****) **
does** **have slope **
s = y /
x **...and this statistic is quite
appropriately called the standardized **ICE Ratio** (or **ICER**.)

Laupacis A, Feeny D, Detsky AS, Tugwell PX. [How
attractive does a new technology have to be to warrant adoption and utilization?
Tentative guidelines for using clinical and economic evaluations.
*Can Med Assoc J* 1992; 146
(4): 473-81] suggested
dividing the ICE Plane up into Wedge-Shaped sub-regions suggestive of a "Pie
Chart."