Pharmacoeconomic evaluation methods overview MCQs With Answer

Pharmacoeconomic evaluation methods overview MCQs With Answer is designed for M.Pharm students preparing for advanced exams and practical decision-making in healthcare. This collection provides a focused review of key pharmacoeconomic concepts — including cost-minimization, cost-effectiveness, cost-utility, and cost-benefit analyses — and how they apply to drug selection, reimbursement, and health policy. Each multiple-choice question is framed to test conceptual understanding, methodological choices (perspective, time horizon, discounting), interpretation of results (ICER, dominance, net monetary benefit), and analytical techniques (Markov models, sensitivity analysis). Answers are provided to reinforce learning and enable quick self-assessment for coursework and professional practice.

Q1. Which pharmacoeconomic method is appropriate when two interventions have demonstrated equivalent clinical outcomes and the objective is to select the least costly option?

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

Correct Answer: Cost-minimization analysis (CMA)

Q2. The incremental cost-effectiveness ratio (ICER) is best described as:

• The ratio of total cost to total health benefit for a single intervention
• The difference in costs divided by the difference in effectiveness between two alternatives
• The net monetary benefit expressed in currency units
• The absolute cost savings achieved by adopting a new intervention

Correct Answer: The difference in costs divided by the difference in effectiveness between two alternatives

Q3. Cost-utility analysis commonly uses which outcome measure to combine quantity and quality of life?

• Life-years gained (LYG)
• Quality-adjusted life years (QALYs)
• Disability-adjusted life years (DALYs)
• Number needed to treat (NNT)

Correct Answer: Quality-adjusted life years (QALYs)

Q4. Which perspective typically includes both direct medical costs and productivity losses due to illness?

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

Correct Answer: Societal perspective

Q5. Discounting in pharmacoeconomic evaluations is applied to:

• Adjust future costs and benefits to their present value
• Inflate past costs to current price levels
• Account for uncertainty in clinical outcomes
• Translate clinical outcomes into monetary units

Correct Answer: Adjust future costs and benefits to their present value

Q6. Which analytic method models transitions between health states over time and is especially useful for chronic diseases?

• Decision tree analysis
• Markov model
• Cross-sectional analysis
• Meta-analysis

Correct Answer: Markov model

Q7. In cost–benefit analysis (CBA), outcomes are expressed as:

• Natural health units (e.g., mmHg reduction)
• Quality-adjusted life years (QALYs)
• Monetary units for both costs and benefits
• Relative risk reductions

Correct Answer: Monetary units for both costs and benefits

Q8. When one strategy is both less costly and more effective than its comparator, the economic term for this is:

• Dominated
• Dominant
• Extended dominance
• Incrementally efficient

Correct Answer: Dominant

Q9. Sensitivity analysis in pharmacoeconomics is performed primarily to:

• Eliminate uncertainty by collecting more data
• Test robustness of results to changes in key parameters
• Calculate exact ICER values
• Convert clinical endpoints to utilities

Correct Answer: Test robustness of results to changes in key parameters

Q10. The human capital approach to estimating productivity costs values lost productivity as:

• The replacement wage paid to hire a temporary worker
• The market wage lost over the period of illness or premature death
• The monetary value individuals are willing to pay to avoid illness
• A fixed percentage of healthcare costs

Correct Answer: The market wage lost over the period of illness or premature death

Q11. Net monetary benefit (NMB) is calculated by:

• Multiplying the ICER by the willingness-to-pay threshold
• Subtracting total costs from total benefits expressed in natural units
• Converting benefits into monetary units using a threshold and subtracting costs
• Adding total costs and total QALYs

Correct Answer: Converting benefits into monetary units using a threshold and subtracting costs

Q12. Extended dominance occurs when:

• An intervention is both cheaper and more effective than all alternatives
• An intervention is less effective but also less costly than the comparator
• A combination of two strategies is more efficient than an intermediate option
• An intervention is dominated by another single intervention

Correct Answer: A combination of two strategies is more efficient than an intermediate option

Q13. Which type of cost is usually excluded from the payer perspective but included in the societal perspective?

• Direct medical costs such as hospitalization
• Direct non-medical costs such as transportation
• Indirect costs such as productivity losses
• Drug acquisition costs

Correct Answer: Indirect costs such as productivity losses

Q14. The cost-effectiveness plane plots incremental cost on the vertical axis and incremental effectiveness on the horizontal axis. Which quadrant indicates greater effectiveness and higher cost?

• Northeast quadrant
• Southeast quadrant
• Northwest quadrant
• Southwest quadrant

Correct Answer: Northeast quadrant

Q15. Willingness-to-pay (WTP) threshold in many countries is often related to:

• Median age of the population
• Gross domestic product (GDP) per capita
• Prevalence of the disease
• Number of available hospital beds

Correct Answer: Gross domestic product (GDP) per capita

Q16. Which of the following best describes probabilistic sensitivity analysis (PSA)?

• Altering one parameter at a time to see effect on outcome
• Assigning probability distributions to parameters and running simulations
• Using deterministic point estimates with no variability
• Qualitatively describing uncertainty in results

Correct Answer: Assigning probability distributions to parameters and running simulations

Q17. A budget impact analysis differs from a cost-effectiveness analysis because it primarily:

• Assesses long-term health outcomes across a lifetime horizon
• Estimates the short- to medium-term financial consequences for a specific payer
• Converts health outcomes into monetary terms
• Focuses exclusively on societal productivity effects

Correct Answer: Estimates the short- to medium-term financial consequences for a specific payer

Q18. Which outcome is most appropriate for comparing interventions that affect quality of life rather than only survival?

• Cost per life-year gained
• Cost per case avoided
• Cost per QALY gained
• Cost per hospitalization averted

Correct Answer: Cost per QALY gained

Q19. Incremental net benefit (INB) is positive when:

• ICER is greater than the willingness-to-pay threshold
• Costs exceed benefits after conversion to monetary units
• The monetary value of incremental effectiveness exceeds incremental cost
• An intervention is dominated by the comparator

Correct Answer: The monetary value of incremental effectiveness exceeds incremental cost

Q20. Which choice best describes choice of time horizon in an economic evaluation?

• It should be as short as possible to reduce uncertainty
• It should capture all relevant costs and outcomes for the interventions compared
• It must always be lifetime for drug interventions
• It is unimportant if discounting is applied

Correct Answer: It should capture all relevant costs and outcomes for the interventions compared

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