Question 1

The FDA tends to focus more on reducing _______ errors since the victims are _______ identifiable than those from _______ errors.&#10;A) type 1; less; type 2&#10;B) type 2; more; type 1&#10;C) type 2; less; type 1&#10;D) type 1; more; type 2&#10;E) None of the above

Accepted Answer

Type 2 errors are errors of omission, meaning that a drug or medical device that could have benefited a patient was not approved or made available. The victims of these errors are more identifiable since they are typically patients with a specific condition or disease that could have been treated with the drug or device in question. In contrast, type 1 errors are errors of commission, meaning that a drug or medical device is approved and marketed but later found to be unsafe or ineffective. The victims of these errors are less identifiable since they can include anyone who used the product, even those who did not experience adverse effects. Therefore, the FDA tends to focus more on reducing type 2 errors.

Question 2

Which of the following serves as a barrier to entry in the pharmaceutical industry?&#10;A) Government patents&#10;B) Certificates of need&#10;C) Brand-loyalty advantage&#10;D) Both a and c&#10;E) All of the above

Accepted Answer

Government patents restrict other companies from producing a drug with the same formula, providing a barrier to entry. Brand-loyalty advantage also acts as a barrier as consumers tend to trust established brands, making it difficult for new entrants to compete. Certificates of need regulations apply only to healthcare facilities and not drug manufacturers, so it does not serve as a barrier to entry in the pharmaceutical industry.

Question 3

_______ advertising is supported by evidence showing that _______ detailed advertising of older products tends to be targeted at younger physicians.&#10;A) Informative; more&#10;B) Persuasive; less&#10;C) Informative; less&#10;D) Persuasive; more&#10;E) both a and d

Accepted Answer

B

Question 4

Which of the following would explain why large firms possess a greater incentive to engage in research and development of new drugs than small firms do?&#10;A) Resource capability&#10;B) Risk absorption&#10;C) Research economies&#10;D) All of the above&#10;E) None of the above

Accepted Answer

Large firms have greater resource capability, which means they have more money, personnel, and expertise to put into research and development. They also have the ability to absorb more risk, as they have diversified portfolios and revenue streams. Additionally, large firms can benefit from research economies of scale, meaning they can spread the costs of research and development over a larger number of products and customers. All of these factors give large firms a greater incentive to engage in research and development of new drugs than small firms.

Question 5

What percentage of industry output is accounted for by the four largest drug manufacturers?&#10;A) 35%&#10;B) 50%&#10;C) 40%&#10;D) 45%&#10;E) 60%

Accepted Answer

The four largest drug manufacturers account for 35% of industry output.

Question 6

The FDA might delay the drug approval process to decrease the likelihood of a type 1 error.

Accepted Answer

The answer of The FDA might delay the drug approval...

Question 7

Drug-utilization reviews are used by third-party payers to rein in costs.

Accepted Answer

Drug-utilization reviews help third-party payers to identify overutilization or inappropriate use of drugs by patients, which can lead to excessive costs. By implementing DUR programs, third-party payers can ensure that patients are receiving the most appropriate and cost-effective treatments.

Question 8

Which of the following methods has been used by third-party payers to control pharmaceutical costs?&#10;A) Formularies&#10;B) Drug utilization review&#10;C) Generic substitution&#10;D) Both b and c&#10;E) All of the above

Accepted Answer

All of the options listed (formularies, drug utilization review, and generic substitution) have been used by third-party payers to control pharmaceutical costs. Formularies are lists of drugs preferred by an insurance plan or other third-party payer. Drug utilization review involves reviewing prescribing and dispensing patterns to ensure appropriate and cost-effective use of medication. Generic substitution involves substituting a less expensive generic drug for a brand-name drug when possible. Therefore, the correct answer is E, all of the above.

Question 9

Entrance of generic drugs into the market tends to _______ the price of the brand name drug since the remaining consumers of the brand name drug are typically _______ price-sensitive.&#10;A) increase; more&#10;B) decrease; more&#10;C) increase; less&#10;D) not affect; equally&#10;E) decrease; less

Accepted Answer

The answer of Entrance of generic drugs into the market...

Question 10

The U.S. government decreases competition within the pharmaceutical industry through the issuing of patents.

Accepted Answer

When a pharmaceutical company is granted a patent, they are given exclusive rights to produce and sell a particular drug for a certain period of time, typically 20 years. This decreases competition within the industry, as no other company can legally produce and sell the same drug during that time period. However, it is argued that this is necessary to incentivize innovation and investment in research and development by pharmaceutical companies.

Question 11

High profits in the pharmaceutical industry may be a reflection of the greater risk incurred due to large research and development costs.

Accepted Answer

The answer of High profits in the pharmaceutical industry may...

Question 12

While pharmaceutical manufacturers compete in a _______ concentrated industry than pharmacy benefit management companies, mergers between the two help to _______ costs.&#10;A) less; increase&#10;B) less; decrease&#10;C) more; increase&#10;D) more; decrease&#10;E) similarly; decrease

Accepted Answer

The answer of While pharmaceutical manufacturers compete in a _______...

Question 13

Which of the following accounts for the largest share of expenditures on prescription drugs?&#10;A) Private insurance&#10;B) Medicare&#10;C) Medicaid&#10;D) Medigap&#10;E) Out-of-pocket

Accepted Answer

The answer of Which of the following accounts for the...

Question 14

Patents award pharmaceutical firms the sole right to produce a product for _______ years and _______ the financial incentive for firms to develop new drugs.&#10;A) 25; increase&#10;B) 18; decrease&#10;C) 20; increase&#10;D) 15; increase&#10;E) 25; decrease

Accepted Answer

The answer of Patents award pharmaceutical firms the sole right...

Question 15

Unconstrained physicians are more inclined to purchase brand-name instead of generic products because they are unaffected financially by the drug choice.

Accepted Answer

The answer of Unconstrained physicians are more inclined to purchase...

Deck 14: The Pharmaceutical Industry