Pricing methods and strategies MCQs With Answer

Pricing methods and strategies MCQs With Answer provide B. Pharm students a focused review of pharmaceutical pricing concepts essential for pharmacy practice, industry roles, and regulatory exams. This concise guide covers pricing methods such as cost-plus pricing, value-based pricing and market-based pricing, and strategies like price skimming, penetration pricing, bundling and discounting. It examines drug pricing determinants including production costs, competitive dynamics, reimbursement systems, international reference pricing and regulatory price controls. Questions integrate pharmacoeconomics, markup vs margin calculations, tendering, health technology assessment and real-world price optimisation to build analytical skills. These MCQs also touch on drug affordability, health economics, reimbursement policies and strategies to balance profit margins with patient access. Now let’s test your knowledge with 30 MCQs on this topic.

Q1. Which pricing method sets the selling price by adding a fixed percentage markup to the unit production cost?

• Value-based pricing
• Cost-plus pricing
• Market-based pricing
• Penetration pricing

Correct Answer: Cost-plus pricing

Q2. Which strategy involves launching a drug at a high initial price and lowering it over time to recover R&D quickly?

• Penetration pricing
• Price skimming
• Bundle pricing
• Reference pricing

Correct Answer: Price skimming

Q3. Which pricing approach bases price primarily on perceived patient or payer value rather than production cost?

• Cost-plus pricing
• Market-based pricing
• Value-based pricing
• Tiered pricing

Correct Answer: Value-based pricing

Q4. International reference pricing (external price referencing) is a regulatory tool that sets a drug’s price by:

• Adding a fixed markup to domestic production cost
• Benchmarking prices in selected foreign countries
• Using only health technology assessment outcomes
• Setting identical prices for generics and innovator drugs

Correct Answer: Benchmarking prices in selected foreign countries

Q5. If unit production cost = 50 and a manufacturer applies a 40% markup on cost, the selling price is:

• INR 60
• INR 70
• INR 80
• INR 90

Correct Answer: INR 70

Q6. What is the correct formula for gross margin percentage?

• (Selling price − Cost) / Cost × 100
• (Selling price − Cost) / Selling price × 100
• Cost / Selling price × 100
• Selling price / Cost × 100

Correct Answer: (Selling price − Cost) / Selling price × 100

Q7. In tender bidding for supply to public hospitals, the most competitive price is usually determined by:

• Highest listed retail price
• Lowest bid price meeting specifications
• Average market price across pharmacies
• Manufacturer’s suggested retail price

Correct Answer: Lowest bid price meeting specifications

Q8. Price discrimination in pharmaceuticals can legally occur when companies:

• Charge the same price to all buyers
• Charge different prices to different markets based on ability to pay
• Set prices only by cost-plus method
• Use international reference pricing exclusively

Correct Answer: Charge different prices to different markets based on ability to pay

Q9. Which factor least influences pharmaceutical pricing decisions?

• Regulatory price controls
• Production cost and scale
• Competitive landscape and substitutes
• Manufacturer’s CEO personal preference

Correct Answer: Manufacturer’s CEO personal preference

Q10. A drug has cost = 100, selling price = 150. What is the markup percentage on cost?

• 25%
• 33.3%
• 50%
• 66.7%

Correct Answer: 50%

Q11. Which pricing strategy aims to rapidly gain market share by setting a low introductory price?

• Price skimming
• Penetration pricing
• Value-based pricing
• Loss-leader pricing

Correct Answer: Penetration pricing

Q12. Reference pricing systems most directly affect which stakeholder?

• Patients paying full cash price only
• Payers and reimbursement authorities
• Only hospital procurement staff
• Pharmacists dispensing OTC vitamins

Correct Answer: Payers and reimbursement authorities

Q13. Which is an example of indirect price control by governments?

• Price ceilings on all medicines
• Regulating reimbursement levels and formularies
• Prohibiting any discounts
• Dictating manufacturer profit margins

Correct Answer: Regulating reimbursement levels and formularies

Q14. Which metric helps evaluate whether a proposed price covers fixed and variable costs at expected sales volume?

• Break-even analysis
• Pharmacovigilance report
• Bioavailability study
• Clinical trial phase 3 outcome

Correct Answer: Break-even analysis

Q15. In a two-part tariff used by some suppliers, the total price typically includes:

• A fixed fee plus a variable per-unit charge
• Only a one-time registration fee
• Only a per-unit cost with no fixed element
• Free supply for the first year then fixed price

Correct Answer: A fixed fee plus a variable per-unit charge

Q16. Which pricing approach is most appropriate when there is a single lifesaving drug with no close substitutes?

• Pure market-based pricing with many competitors
• Value-based or indication-based pricing reflecting therapeutic benefit
• Randomized discount pricing
• Wholesale-only pricing with no retail

Correct Answer: Value-based or indication-based pricing reflecting therapeutic benefit

Q17. What is parallel trade in pharmaceuticals?

• Importing drugs illegally without licenses
• Purchasing drugs in a low-price country and reselling in a higher-price country
• Selling clinical trial supplies to hospitals
• Government procurement of generics only

Correct Answer: Purchasing drugs in a low-price country and reselling in a higher-price country

Q18. When calculating ex-factory price, which costs are typically excluded?

• Manufacturing and packaging costs
• Wholesale and retail markups, taxes and distribution fees
• Active pharmaceutical ingredient costs
• Quality control testing costs

Correct Answer: Wholesale and retail markups, taxes and distribution fees

Q19. Which term describes a lower price offered to public procurement agencies compared with private retail markets?

• Tiered pricing
• Monopsony pricing
• Price skimming
• Shadow pricing

Correct Answer: Tiered pricing

Q20. Health Technology Assessment (HTA) primarily informs pricing decisions by evaluating:

• Manufacturing site locations
• Clinical outcomes, cost-effectiveness and budget impact
• Marketing campaign effectiveness
• Physical stability of dosage forms

Correct Answer: Clinical outcomes, cost-effectiveness and budget impact

Q21. A manufacturer sells at a price of 200, cost is 140. What is the gross margin percentage?

• 20%
• 30%
• 40%
• 60%

Correct Answer: 30%

Q22. Which practice can reduce the effective price paid by payers without lowering the list price?

• Offering confidential rebates to payers
• Increasing R&D announcements
• Switching to larger packaging only
• Raising ex-factory price publicly

Correct Answer: Offering confidential rebates to payers

Q23. For generic substitution, price competition typically results in:

• Higher prices than originator brand forever
• Progressive price reductions and narrow margins
• No change in market prices
• Elimination of wholesale distribution

Correct Answer: Progressive price reductions and narrow margins

Q24. Which concept measures how quantity demanded responds to price changes?

• Price elasticity of demand
• Therapeutic index
• Bioequivalence coefficient
• Inventory turnover ratio

Correct Answer: Price elasticity of demand

Q25. Bundling strategy in pharmaceuticals means:

• Selling multiple products together at a combined price
• Setting higher prices for single units only
• Government-controlled procurement only
• Charging per-pill variable licensing fees to prescribers

Correct Answer: Selling multiple products together at a combined price

Q26. Which pricing model reimburses based on achievement of agreed patient outcomes?

• Cost-plus model
• Outcomes-based (performance-based) contracting
• List-price only model
• Wholesale-only reimbursement

Correct Answer: Outcomes-based (performance-based) contracting

Q27. Which is a primary aim of value-based pricing for medicines?

• Maximize list price regardless of benefit
• Align the price with therapeutic benefit and health system value
• Ensure identical pricing in all countries
• Exclude payers from pricing decisions

Correct Answer: Align the price with therapeutic benefit and health system value

Q28. Transfer pricing in multinational pharmaceutical companies primarily concerns:

• Setting prices for transactions between related company entities
• Retail pharmacy markup regulations
• Patient co-payment calculations
• Over-the-counter pricing mandates

Correct Answer: Setting prices for transactions between related company entities

Q29. Which option best describes markdowns used by wholesalers or retailers?

• Permanent increase in manufacturer price
• Temporary reduction from list price to stimulate sales or clear stock
• Regulatory fines applied to pharmacies
• Reimbursement penalties from insurers

Correct Answer: Temporary reduction from list price to stimulate sales or clear stock

Q30. When a regulator sets a maximum allowable reimbursement price, pharmacies may respond by:

• Not dispensing any medicines
• Charging patients extra out-of-pocket fees above reimbursement where permitted
• Refusing to stock generics
• Increasing manufacturer R&D budgets immediately

Correct Answer: Charging patients extra out-of-pocket fees above reimbursement where permitted

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