Methods for drug expenditure analysis MCQs With Answer

Methods for drug expenditure analysis MCQs With Answer

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Introduction

Drug expenditure analysis is a core topic for B. Pharm students that equips them to evaluate the economic impact of medicines and support evidence-based formulary and policy decisions. Key concepts include pharmacoeconomic methods such as cost-minimization, cost-effectiveness, cost-benefit and cost-utility analyses, budget impact analysis, unit costing, micro- and gross-costing, discounting, sensitivity analysis, and calculation of ICER, QALY and DALY. Emphasis on perspectives, direct and indirect costs, time horizon and data sources strengthens study design and interpretation. Mastering these tools is vital for cost containment, formulary management and rational allocation of healthcare resources. Now let’s test your knowledge with 30 MCQs on this topic.

Q1. What is the primary purpose of drug expenditure analysis?

  • To measure clinical efficacy of new drugs in randomized trials
  • To evaluate the costs associated with drug therapies and their outcomes
  • To determine adverse drug reaction rates in populations
  • To set retail prices for pharmaceuticals

Correct Answer: To evaluate the costs associated with drug therapies and their outcomes

Q2. Which pharmacoeconomic method compares costs and outcomes using natural health units (e.g., life-years gained)?

  • Cost-utility analysis (CUA)
  • Cost-benefit analysis (CBA)
  • Cost-effectiveness analysis (CEA)
  • Cost-minimization analysis (CMA)

Correct Answer: Cost-effectiveness analysis (CEA)

Q3. Which analysis expresses outcomes in monetary terms to compare costs and benefits directly?

  • Cost-utility analysis (CUA)
  • Cost-benefit analysis (CBA)
  • Cost-effectiveness analysis (CEA)
  • Budget impact analysis (BIA)

Correct Answer: Cost-benefit analysis (CBA)

Q4. What outcome measure is most commonly used in cost-utility analysis?

  • Life-years gained (LYG)
  • Quality-adjusted life years (QALY)
  • Number needed to treat (NNT)
  • Total drug expenditure

Correct Answer: Quality-adjusted life years (QALY)

Q5. Cost-minimization analysis is appropriate when:

  • Two interventions have equivalent outcomes and only costs differ
  • Outcomes are measured in QALYs
  • Benefits are converted into monetary units
  • Budget constraints are not considered

Correct Answer: Two interventions have equivalent outcomes and only costs differ

Q6. Which component is considered a direct medical cost in drug expenditure studies?

  • Lost productivity due to illness
  • Caregiver time
  • Drug acquisition price
  • Patient pain and suffering

Correct Answer: Drug acquisition price

Q7. What is an incremental cost-effectiveness ratio (ICER)?

  • The ratio of total cost to total effectiveness for a single intervention
  • The additional cost per additional unit of health outcome when comparing two interventions
  • The fixed cost divided by number of patients
  • The budget impact over a 5-year horizon

Correct Answer: The additional cost per additional unit of health outcome when comparing two interventions

Q8. Which perspective includes all costs regardless of who pays (healthcare system, patient, employer)?

  • Payer perspective
  • Societal perspective
  • Provider perspective
  • Patient perspective

Correct Answer: Societal perspective

Q9. In costing methods, what distinguishes micro-costing from gross-costing?

  • Micro-costing uses aggregated costs; gross-costing measures individual resource use
  • Micro-costing measures individual resource units and unit costs in detail; gross-costing uses aggregated average costs
  • Micro-costing ignores overheads while gross-costing includes them
  • They are identical terms with no difference

Correct Answer: Micro-costing measures individual resource units and unit costs in detail; gross-costing uses aggregated average costs

Q10. Which type of sensitivity analysis assesses the effect of varying one parameter at a time?

  • Probabilistic sensitivity analysis
  • One-way (univariate) sensitivity analysis
  • Threshold analysis
  • Scenario analysis

Correct Answer: One-way (univariate) sensitivity analysis

Q11. Budget impact analysis (BIA) primarily answers which question?

  • Is intervention cost-effective per QALY gained?
  • What is the short-term financial consequence of adopting a new intervention for a specific budget holder?
  • What is the societal willingness-to-pay threshold?
  • How to convert health outcomes into monetary units?

Correct Answer: What is the short-term financial consequence of adopting a new intervention for a specific budget holder?

Q12. Which cost is classified as an indirect cost?

  • Hospital stay charges
  • Medication dispensing fees
  • Lost wages due to illness
  • Purchase price of equipment

Correct Answer: Lost wages due to illness

Q13. When conducting a drug expenditure analysis, why is discounting applied?

  • To adjust future costs and outcomes to present value because of time preference
  • To inflate costs for inflation only
  • To convert costs into different currencies
  • To remove uncertainty from estimates

Correct Answer: To adjust future costs and outcomes to present value because of time preference

Q14. Which outcome is measured by DALY?

  • Quality-adjusted life years gained
  • Disability-adjusted life years, representing years of healthy life lost
  • Total healthcare expenditure per capita
  • Direct medical costs

Correct Answer: Disability-adjusted life years, representing years of healthy life lost

Q15. In an ICER calculation comparing Drug A (cost 2000, effect 3 QALYs) and Drug B (cost 1000, effect 2 QALYs), what is the ICER of A vs B?

  • 1000 per QALY
  • 2000 per QALY
  • 500 per QALY
  • 1500 per QALY

Correct Answer: 1000 per QALY

Q16. Which source is best for obtaining unit costs for hospital services in an economic evaluation?

  • Clinical trial protocol text only
  • Hospital accounting and billing databases
  • Patient self-reported estimates only
  • Marketing brochures from suppliers

Correct Answer: Hospital accounting and billing databases

Q17. What does dominance mean in cost-effectiveness analysis?

  • An intervention is both more effective and more costly
  • An intervention is less effective and less costly
  • An intervention is more effective and less costly (dominant)
  • An intervention has equal cost and effect to comparator

Correct Answer: An intervention is more effective and less costly (dominant)

Q18. Which threshold is commonly cited from older WHO guidance for judging cost-effectiveness?

  • ICER less than 0.1 times GDP per capita
  • ICER equal to total national health budget
  • ICER less than 1–3 times GDP per capita
  • ICER greater than average drug price

Correct Answer: ICER less than 1–3 times GDP per capita

Q19. In top-down costing, costs are allocated how?

  • From aggregate expenditure divided across services or patients
  • By measuring each resource consumed per patient in detail
  • Only for capital items, not recurrent costs
  • Using patient self-reports exclusively

Correct Answer: From aggregate expenditure divided across services or patients

Q20. Which analysis would convert health outcomes into monetary units to compare overall net benefit?

  • Cost-effectiveness analysis (CEA)
  • Cost-minimization analysis (CMA)
  • Cost-benefit analysis (CBA)
  • Cost-utility analysis (CUA)

Correct Answer: Cost-benefit analysis (CBA)

Q21. For chronic therapies, which time horizon is generally most appropriate in economic evaluation?

  • Short-term horizon of a few weeks
  • Single-visit horizon
  • Lifetime or sufficiently long to capture relevant costs and outcomes
  • Only the trial enrollment period

Correct Answer: Lifetime or sufficiently long to capture relevant costs and outcomes

Q22. Probabilistic sensitivity analysis (PSA) is useful because it:

  • Varies one parameter at a time deterministically
  • Provides a distribution of possible results by sampling parameter uncertainty simultaneously
  • Eliminates the need for model assumptions
  • Is used only for budget impact analysis

Correct Answer: Provides a distribution of possible results by sampling parameter uncertainty simultaneously

Q23. Which cost category includes depreciation of medical equipment?

  • Direct non-medical costs
  • Indirect costs
  • Capital costs
  • Intangible costs

Correct Answer: Capital costs

Q24. Which measure assesses the affordability of adopting a new drug for a specific payer over a set period?

  • Cost-utility analysis (CUA)
  • Budget impact analysis (BIA)
  • Cost-effectiveness analysis (CEA)
  • Cost-minimization analysis (CMA)

Correct Answer: Budget impact analysis (BIA)

Q25. When transferring results between countries, which factor most limits transferability of drug cost estimates?

  • Language of the original study
  • Differences in unit costs, health system structure and clinical practice
  • Statistical methods used for QALY calculation only
  • Number of authors on the paper

Correct Answer: Differences in unit costs, health system structure and clinical practice

Q26. What is the main advantage of bottom-up costing in drug expenditure studies?

  • It is quicker and less resource-intensive than top-down
  • It provides detailed, patient-level resource use and accurate unit costs
  • It requires no primary data collection
  • It always underestimates total costs

Correct Answer: It provides detailed, patient-level resource use and accurate unit costs

Q27. Which of the following is an example of an intangible cost?

  • Medication purchase price
  • Hospital bed-day charge
  • Pain, suffering and decreased quality of life not expressed monetarily
  • Transportation to clinic

Correct Answer: Pain, suffering and decreased quality of life not expressed monetarily

Q28. If an intervention reduces hospitalizations, which type of cost savings is primarily realized?

  • Increased indirect costs
  • Reduced direct medical costs
  • Higher intangible costs
  • Increased capital costs

Correct Answer: Reduced direct medical costs

Q29. Which analytical tool models patient transitions across health states over time, often used in chronic disease economic evaluations?

  • Decision tree only
  • Markov model
  • Linear regression without states
  • Cross-sectional survey

Correct Answer: Markov model

Q30. A study finds Drug X costs $5,000 and yields 4.0 QALYs; Drug Y costs $3,000 and yields 3.5 QALYs. Which statement is correct?

  • Drug X is dominated by Drug Y
  • ICER of X vs Y = $4000 per QALY, indicating the additional cost per QALY gained
  • Drug Y is more effective and more costly than X
  • There is no incremental benefit to compare

Correct Answer: ICER of X vs Y = $4000 per QALY, indicating the additional cost per QALY gained

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