Question 1

Which policy simplified and streamlined the process for FDA approval of generic drugs in exchange for granting patent extensions to innovative drugs?

Accepted Answer

A) Hatch-Waxman Act 
B) 1962 Drug Amendment 
C) Medicare Modernization Act 
D) None of the above 
A) Hatch-Waxman Act 
B) 1962 Drug Amendment 
C) Medicare Modernization Act 
D) None of the above A

Question 2

What is the rationale for FDA regulation of drugs?

Accepted Answer

A) To protect the consumer from dangerous drugs 
B) To remedy the lack of information about new drugs among physicians 
C) Both a and b 
D) Neither a nor b 
A) To protect the consumer from dangerous drugs 
B) To remedy the lack of information about new drugs among physicians 
C) Both a and b 
D) Neither a nor b C

Question 3

If the demand for Lipitor is P = 1000 - 10Q (MR = 1000 -20Q)in the United States and P = 500 -20Q (MR = 500 - 40Q)in Canada,at what price would Lipitor sell at in each country? Assume marginal cost is equal to $100.

Accepted Answer

We can find the profit-maximizing price where MC = MR
In the United States
MR = 1000 - 20Q = 100 → 900 = 20Q → Q = 45
Price is then P = 1000 - 10(Q)= 1000 - 10(45)= 1000 - 450 = $550
In Canada
MR = 500 - 40Q = 100 → 400 = 40Q → Q = 10
Price is then P = 500 - 20(Q)= 500 - 20(10)= 500 - 200 = $300

Question 4

When a pharmaceutical company sells a patented drug in different countries,we expect

Accepted Answer

A) A higher price in countries with more price-elastic demand 
B) A higher price in countries with less price-elastic demand 
C) Similar price across countries (assuming similar MC across countries) 
D) Any of the above is likely 
A) A higher price in countries with more price-elastic demand 
B) A higher price in countries with less price-elastic demand 
C) Similar price across countries (assuming similar MC across countries) 
D) Any of the above is likely

Question 5

Which of the following are types of prescription drug advertising?

Accepted Answer

A) Direct-to-Consumer Advertising (DTC
A)  
B) Detailing 
C) Free samples 
D) All of the above 
A) Direct-to-Consumer Advertising (DTC
A)  
B) Detailing 
C) Free samples 
D) All of the above

Question 6

Most pharmaceutical drug discoveries fail to lead to a marketable drug due to

Accepted Answer

A) Abandonment before reaching Phase III trials 
B) Abandonment due to failure during Phase III trials 
C) Abandonment for economic reasons despite success during Phase III trials 
A) Abandonment before reaching Phase III trials 
B) Abandonment due to failure during Phase III trials 
C) Abandonment for economic reasons despite success during Phase III trials

Question 7

Describe methods used by brand-name pharmaceutical companies to delay the entry of generic drugs.

Accepted Answer

"Pay to Delay" is a practice where the b

Question 8

Suppose there is a new drug in the pipeline that will reduce infant mortality in half from .05 to .025,but the drug will not be approved by the FDA for 3 years.If 10,000 children are afflicted each year,what is the number of statistical deaths that could have been avoided with earlier FDA approval?

Accepted Answer

Start the answer with the form

Question 9

When generic versions enter the market after the patent on a branded drug has expired

Accepted Answer

A) The branded drug increases market share and price 
B) The branded drug increases market share and decreases price 
C) The branded drug decreases market share and increases price 
D) The branded drug decreases market share and decreases price 
A) The branded drug increases market share and price 
B) The branded drug increases market share and decreases price 
C) The branded drug decreases market share and increases price 
D) The branded drug decreases market share and decreases price

Question 10

Drugs that treat a small portion of the population are called

Accepted Answer

A) Small drugs 
B) "Me-too" drugs 
C) Unique drugs 
D) Orphan drugs 
A) Small drugs 
B) "Me-too" drugs 
C) Unique drugs 
D) Orphan drugs

Question 11

Research and development (R&D)is considered a _____ because _____:

Accepted Answer

A) Variable cost;more R&D leads to more quantity produced 
B) Variable cost;more R&D leads to higher profits 
C) Fixed cost;it does not vary with current output 
D) Fixed cost;it is related to advertising 
A) Variable cost;more R&D leads to more quantity produced 
B) Variable cost;more R&D leads to higher profits 
C) Fixed cost;it does not vary with current output 
D) Fixed cost;it is related to advertising

Question 12

Long lags in FDA approval lead to

Accepted Answer

A) Statistical deaths 
B) Less innovation 
C) Both a and b 
D) Neither a nor b 
A) Statistical deaths 
B) Less innovation 
C) Both a and b 
D) Neither a nor b

Question 13

Which drug type is expected to have a higher markup over cost?

Accepted Answer

A) Innovation drugs 
B) "Me-too" drugs 
C) Both have about the same markup 
A) Innovation drugs 
B) "Me-too" drugs 
C) Both have about the same markup

Question 14

Explain what would happen to the price of drugs,both domestic and abroad,if the United States allowed the reimportation of drugs.

Accepted Answer

Because drugs are not allowed to be reim

Question 15

The economic rationale for patent protection for prescription drugs is the

Accepted Answer

A) Creation of a monopoly that will maximize consumer surplus 
B) Redistribution of income to wealthy corporations 
C) Privatization of a public good to make it excludable 
D) Incentive it provides for medical drug innovation 
A) Creation of a monopoly that will maximize consumer surplus 
B) Redistribution of income to wealthy corporations 
C) Privatization of a public good to make it excludable 
D) Incentive it provides for medical drug innovation

Question 16

Suppose you are the manager of drug development at a new pharmaceutical company and you are trying to decide how to price your newly released drug.The drug has a marginal cost of $20 and the demand elasticity for the drug is -2.What is the optimal price?

Accepted Answer

Price = MC/(1 + 1/-P

Question 17

Drug after formularies

Accepted Answer

A) Help manufacturers determine which drugs are efficacious 
B) Help salesmen determine what to sell 
C) Determine which drugs will be covered by third-party payers 
D) Both b and c 
A) Help manufacturers determine which drugs are efficacious 
B) Help salesmen determine what to sell 
C) Determine which drugs will be covered by third-party payers 
D) Both b and c

Question 18

For pharmaceutical drugs,R&D expenditures account for

Accepted Answer

A) Over two-thirds of expenses 
B) Between one-third and two-thirds of total expenses 
C) Less than one-third of expenses 
A) Over two-thirds of expenses 
B) Between one-third and two-thirds of total expenses 
C) Less than one-third of expenses

Question 19

According to Duggan and Morton,the reduction in overall drug expenditures

Accepted Answer

A) Is due to a decrease in prices by pharmaceutical companies 
B) Is due to an increase in prices by pharmaceutical companies 
C) Is due to the ability of private plans to drive the use of drugs toward less expensive therapeutic substitutes 
D) Is due to the ability of Medicare Part D plans to drive the use of drugs toward less expensive therapeutic substitutes 
A) Is due to a decrease in prices by pharmaceutical companies 
B) Is due to an increase in prices by pharmaceutical companies 
C) Is due to the ability of private plans to drive the use of drugs toward less expensive therapeutic substitutes 
D) Is due to the ability of Medicare Part D plans to drive the use of drugs toward less expensive therapeutic substitutes

Question 20

Pharmaceutical firms charge different prices in different countries after because

Accepted Answer

A) Government regulations are different between countries 
B) Demand elasticities are different between countries 
C) Both a and b 
D) Neither a nor b 
A) Government regulations are different between countries 
B) Demand elasticities are different between countries 
C) Both a and b 
D) Neither a nor b

Which policy simplified and streamlined the process for FDA approval of generic drugs in exchange for granting patent extensions to innovative drugs?

What is the rationale for FDA regulation of drugs?

If the demand for Lipitor is P = 1000 - 10Q (MR = 1000 -20Q)in the United States and P = 500 -20Q (MR = 500 - 40Q)in Canada,at what price would Lipitor sell at in each country? Assume marginal cost is equal to $100.

When a pharmaceutical company sells a patented drug in different countries,we expect

Which of the following are types of prescription drug advertising?

Most pharmaceutical drug discoveries fail to lead to a marketable drug due to

Describe methods used by brand-name pharmaceutical companies to delay the entry of generic drugs.

Suppose there is a new drug in the pipeline that will reduce infant mortality in half from .05 to .025,but the drug will not be approved by the FDA for 3 years.If 10,000 children are afflicted each year,what is the number of statistical deaths that could have been avoided with earlier FDA approval?

When generic versions enter the market after the patent on a branded drug has expired

Drugs that treat a small portion of the population are called

Research and development (R&D)is considered a _ because _:

Long lags in FDA approval lead to

Which drug type is expected to have a higher markup over cost?

Explain what would happen to the price of drugs,both domestic and abroad,if the United States allowed the reimportation of drugs.

The economic rationale for patent protection for prescription drugs is the

Suppose you are the manager of drug development at a new pharmaceutical company and you are trying to decide how to price your newly released drug.The drug has a marginal cost of $20 and the demand elasticity for the drug is -2.What is the optimal price?

Drug after formularies

For pharmaceutical drugs,R&D expenditures account for

According to Duggan and Morton,the reduction in overall drug expenditures

Pharmaceutical firms charge different prices in different countries after because

An Introduction to the Economics of Medical Care

The Role of Government in Health and Medical Care

Health Policy and the Legislative Marketplace

The Production of Health: the Impact of Medical Services on Health

An Overview of the Medical Care Sector

The Demand for Medical Care

The Demand for Health Insurance

The Supply of Medical Care: an Overview

Market Competition in Medical Care

The Market for Health Insurance: Its Performance and Structure

The Physician Services Market

The Market for Hospital Services

Health Manpower Shortages and Surpluses: Definitions, measurement, and Policies

The Market for Physician Manpower

The Market for Medical Education: Equity and Efficiency

The Market for Registered Nurses

National Health Insurance: an Approach to the Redistribution of Medical Care

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Exam 13: The Pharmaceutical Industry

Which policy simplified and streamlined the process for FDA approval of generic drugs in exchange for granting patent extensions to innovative drugs?

What is the rationale for FDA regulation of drugs?

If the demand for Lipitor is P = 1000 - 10Q (MR = 1000 -20Q)in the United States and P = 500 -20Q (MR = 500 - 40Q)in Canada,at what price would Lipitor sell at in each country? Assume marginal cost is equal to $100.

When a pharmaceutical company sells a patented drug in different countries,we expect

Which of the following are types of prescription drug advertising?

Most pharmaceutical drug discoveries fail to lead to a marketable drug due to

Describe methods used by brand-name pharmaceutical companies to delay the entry of generic drugs.

Suppose there is a new drug in the pipeline that will reduce infant mortality in half from .05 to .025,but the drug will not be approved by the FDA for 3 years.If 10,000 children are afflicted each year,what is the number of statistical deaths that could have been avoided with earlier FDA approval?

When generic versions enter the market after the patent on a branded drug has expired

Drugs that treat a small portion of the population are called

Research and development (R&D)is considered a _____ because _____:

Long lags in FDA approval lead to

Which drug type is expected to have a higher markup over cost?

Explain what would happen to the price of drugs,both domestic and abroad,if the United States allowed the reimportation of drugs.

The economic rationale for patent protection for prescription drugs is the

Suppose you are the manager of drug development at a new pharmaceutical company and you are trying to decide how to price your newly released drug.The drug has a marginal cost of $20 and the demand elasticity for the drug is -2.What is the optimal price?

Drug after formularies

For pharmaceutical drugs,R&D expenditures account for

According to Duggan and Morton,the reduction in overall drug expenditures

Pharmaceutical firms charge different prices in different countries after because

An Introduction to the Economics of Medical Care

The Role of Government in Health and Medical Care

Health Policy and the Legislative Marketplace

The Production of Health: the Impact of Medical Services on Health

An Overview of the Medical Care Sector

The Demand for Medical Care

The Demand for Health Insurance

The Supply of Medical Care: an Overview

Market Competition in Medical Care

The Market for Health Insurance: Its Performance and Structure

The Physician Services Market

The Market for Hospital Services

Health Manpower Shortages and Surpluses: Definitions, measurement, and Policies

The Market for Physician Manpower

The Market for Medical Education: Equity and Efficiency

The Market for Registered Nurses

National Health Insurance: an Approach to the Redistribution of Medical Care

Filters

Research and development (R&D)is considered a _ because _: