Applications of pharmacoeconomics in healthcare decision making MCQs With Answer

Introduction:

This quiz set on the applications of pharmacoeconomics in healthcare decision making is designed for M.Pharm students to deepen their practical understanding of economic evaluation tools used in healthcare policy, formulary decisions, and clinical practice. Questions cover cost-effectiveness, cost-utility, cost-benefit analyses, budget impact, modeling techniques (including Markov and decision trees), perspectives, discounting, thresholds, sensitivity analysis, and health technology assessment (HTA). Each item emphasizes real-world application and interpretation of results to guide resource allocation, reimbursement, and clinical guidelines. Use these MCQs to test conceptual knowledge, analytical thinking, and the ability to apply pharmacoeconomic principles to complex healthcare decisions.

Q1. Which type of pharmacoeconomic analysis compares the cost per unit of health outcome where outcomes are measured in natural units (e.g., life-years gained)?

• Cost-minimization analysis
• Cost-effectiveness analysis
• Cost-utility analysis
• Cost-benefit analysis

Correct Answer: Cost-effectiveness analysis

Q2. When an economic evaluation measures outcomes in quality-adjusted life years (QALYs), what is the analysis called?

• Cost-minimization analysis
• Cost-effectiveness analysis
• Cost-utility analysis
• Cost-benefit analysis

Correct Answer: Cost-utility analysis

Q3. A manufacturer claims two drugs have equivalent clinical effectiveness. Which pharmacoeconomic method is most appropriate to compare costs?

• Cost-utility analysis
• Cost-effectiveness analysis
• Cost-minimization analysis
• Cost-benefit analysis

Correct Answer: Cost-minimization analysis

Q4. The incremental cost-effectiveness ratio (ICER) is best defined as:

• The ratio of total cost to total health outcomes for one intervention
• The difference in costs divided by the difference in outcomes between two interventions
• The ratio of indirect costs to direct costs
• The total budget impact of a new intervention

Correct Answer: The difference in costs divided by the difference in outcomes between two interventions

Q5. In a Markov model used for chronic disease, which element represents the probability of moving from one health state to another over a cycle?

• Transition probability
• Discount rate
• Utility weight
• Willingness-to-pay threshold

Correct Answer: Transition probability

Q6. From which perspective does an economic evaluation include only direct medical costs borne by the healthcare payer?

• Societal perspective
• Healthcare payer perspective
• Patient perspective
• Provider perspective

Correct Answer: Healthcare payer perspective

Q7. Which sensitivity analysis examines how results change when two or more parameters are varied simultaneously within plausible ranges?

• One-way sensitivity analysis
• Two-way sensitivity analysis
• Probabilistic sensitivity analysis
• Threshold analysis

Correct Answer: Two-way sensitivity analysis

Q8. What does a probabilistic sensitivity analysis (PSA) typically present to decision-makers?

• A single deterministic ICER value
• Confidence intervals for costs only
• A cost-effectiveness acceptability curve showing probability an intervention is cost-effective across thresholds
• Net monetary benefit for a fixed willingness-to-pay only

Correct Answer: A cost-effectiveness acceptability curve showing probability an intervention is cost-effective across thresholds

Q9. Which discount rate element is applied in pharmacoeconomic evaluations?

• Discounting future costs and outcomes to present value
• Inflating past costs to current year only
• Adjusting utility weights for patient age
• Converting costs to a different currency without inflation

Correct Answer: Discounting future costs and outcomes to present value

Q10. In budget impact analysis (BIA), the primary purpose is to:

• Determine quality-adjusted life years for a new drug
• Assess long-term cost-effectiveness over a lifetime horizon
• Estimate short- to medium-term financial consequences of adopting a new intervention for a specific budget holder
• Calculate ICER for regulatory approval

Correct Answer: Estimate short- to medium-term financial consequences of adopting a new intervention for a specific budget holder

Q11. A new vaccine reduces hospitalization rates significantly but has high acquisition cost. Which analytic approach would best capture both costs and patient preferences?

• Cost-minimization analysis
• Cost-benefit analysis using monetary valuation of health
• Cost-utility analysis using QALYs
• Budget impact analysis only

Correct Answer: Cost-utility analysis using QALYs

Q12. Which of the following is a limitation when using cost-effectiveness thresholds rigidly in decision making?

• They provide clear guidance for every context without exceptions
• They ignore equity, budget constraints, and local priorities
• They remove the need for sensitivity analysis
• They are universally agreed across countries

Correct Answer: They ignore equity, budget constraints, and local priorities

Q13. In a cost-benefit analysis (CBA), health outcomes are valued in monetary terms. What is a common challenge of CBA?

• Converting all costs into QALYs
• Attaching credible monetary values to life and health
• Estimating transition probabilities
• Performing a budget impact projection

Correct Answer: Attaching credible monetary values to life and health

Q14. When an economic evaluation adopts a societal perspective, which costs are typically included in addition to direct medical costs?

• Only hospital administrative costs
• Indirect costs such as productivity losses and informal care
• Only medication acquisition costs
• Only costs to the payer

Correct Answer: Indirect costs such as productivity losses and informal care

Q15. A decision-analytic model shows an intervention is cost-saving and more effective than comparator. This situation is described as:

• Dominated
• Dominant
• Cost-effective with high ICER
• Not cost-effective

Correct Answer: Dominant

Q16. Which outcome measure combines both quantity and quality of life, often used in cost-utility analyses?

• Life-years gained (LYG)
• Quality-adjusted life years (QALYs)
• Disability-adjusted life years (DALYs) in monetary terms
• Hospitalization days avoided

Correct Answer: Quality-adjusted life years (QALYs)

Q17. Health Technology Assessment (HTA) uses pharmacoeconomic evidence to inform which of the following decisions?

• Clinical trial design only
• Facility-level inventory management only
• Reimbursement, pricing, clinical guidelines, and coverage decisions
• Pharmacovigilance signal detection only

Correct Answer: Reimbursement, pricing, clinical guidelines, and coverage decisions

Q18. Which parameter is most appropriate to vary in a one-way sensitivity analysis to assess model robustness?

• Only the sample size of a clinical trial
• Key cost inputs, utilities, and efficacy estimates one at a time
• All parameters simultaneously using distributions
• Only discount rate while keeping other parameters fixed

Correct Answer: Key cost inputs, utilities, and efficacy estimates one at a time

Q19. A payer uses a willingness-to-pay threshold of $50,000 per QALY. An intervention has an ICER of $40,000/QALY. This implies:

• The intervention is not cost-effective under this threshold
• The intervention is cost-effective under this threshold
• The intervention is cost-saving automatically
• The intervention must be rejected due to budget impact

Correct Answer: The intervention is cost-effective under this threshold

Q20. In modeling chronic disease, why might a Markov model be preferred over a simple decision tree?

• Markov models cannot handle recurrent events
• Markov models are simpler for one-time acute decisions
• Markov models handle time-dependent transitions and recurring health states over long horizons effectively
• Decision trees are better for long-term cyclical processes

Correct Answer: Markov models handle time-dependent transitions and recurring health states over long horizons effectively

Download