Question: Which of the following simplifies the approval process for generic drugs and facilitates their entry onto the market?
Answer Options:
a. Food and Drug Administration (FDA)
b. Trade-Related Aspects of Intellectual Property Rights (TRIPS)
c. General Agreement on Tariffs and Trade (GATT)
d. Abbreviated New Drug Application (ANDA)
Answer: d. Abbreviated New Drug Application (ANDA)
Question: Consolidation activity in the hospital industry:
Answer Options:
a. has slowed due to federal government legislation
b. has occurred almost exclusively at the local level
c. has created a large number of nationwide for-profit hospital chains
d. occurs for the same reasons that cause consolidation in other industries
Answer: d. occurs for the same reasons that cause consolidation in other industries
Question: Which of the following statements is true of direct-to-consumer advertising?
Answer Options:
a. Pharmaceutical advertising does little to educate patients. Its sole purpose is to promote product use
b. direct-to-consumer advertising attracts more patients to consider using the product who might not have known about the drug
c. There is a positive correlation between a drug’s price and the amount of direct-to-consumer advertising practiced
d. The majority of pharmaceutical spending on advertising is focused on the patient
e. direct-to-consumer advertising increases pharmaceutical profits but does little to improve consumer welfare
Answer: b. direct-to-consumer advertising attracts more patients to consider using the product who might not have known about the drug
Question: On average, biopharmaceutical companies spend approximately what percentage of their sales revenue on research and development?
Answer Options:
a. 10–15 percent
b. 25–30 percent
c. 20–25 percent
d. 5–10 percent
e. 15–20 percent
Answer: e. 15–20 percent
Question: In 2019, Medicare covered approximately how many Americans?
Answer Options:
a. 50 million
b. 60 million
c. 80 million
d. 90 million
e. 70 million
Answer: b. 60 million
Question: The merger of two community hospitals located in the same geographic market is called:
Answer Options:
a. a real shame, as one of the hospitals will likely close
b. vertical integration
c. a conglomerate merger
d. a leveraged buyout
e. horizontal integration
Answer: e. horizontal integration
Question: The Medicare pay-as-you-go system is jeopardized by:
Answer Options:
a. allowing physicians to balance bill their patients
b. The changing demographics of the United States’ population, with an increasing percentage over the age of 65
c. an overly generous fee schedule that pays physicians more than private insurance for most procedures
d. the rising costs of long-term care
e. a reliance on the premiums paid by the elderly themselves to fund a majority of the total cost of the system
Answer: b. The changing demographics of the United States’ population, with an increasing percentage over the age of 65
Question: Changes caused by the shift from charge-based rates to negotiated rates has had which of the following results?
Answer Options:
a. Most hospitals experience a gap between the amount they receive from their payers and the amount billed, with receipts as low as 20 percent of amount billed
b. A growing percentage of patients with insurance are paying billed rates
c. Charging master rates serve as a powerful guide for optimal resource allocation in the industry
d. The change has increased the importance of Ramsey pricing principles in setting rates
Answer: a. Most hospitals experience a gap between the amount they receive from their payers and the amount billed, with receipts as low as 20 percent of amount billed
Question: Pharmaceutical companies receive patents as an exclusive right to produce a drug. This results in:
Answer Options:
a. normal profits on orphan drug status
b. lower prices for patients requiring the drug
c. fewer new chemical compounds being discovered
d. normal profits on the patented drug
e. monopoly rights in the production of the drug
Answer: e. monopoly rights in the production of the drug
Question: Compared to the not-for-profit organizational form, the for-profit environment:
Answer Options:
a. does not provide charity care
b. allows for the transfer of assets
c. gives shareholders higher returns on their investment
d. lacks a profit motive
e. provides patients with higher quality of care
Answer: b. allows for the transfer of assets
Question: One of the primary reasons that costly technology is being introduced into the health care system is:
Answer Options:
a. third-party insurance finances most of the cost of care
b. research scientists have successfully mapped the human genome
c. better access to technology, especially diagnostic imaging, results in lower spending
d. high cost is synonymous with better outcomes
Answer: a. third-party insurance finances most of the cost of care
Question: Physicians who own their own diagnostic testing facilities tend to order more tests, charge higher fees for them, and have higher total bills to patients. This practice of self-referral is an example of:
Answer Options:
a. moral hazard
b. cognitive dissonance
c. adverse selection
d. res ipsa loquitur
e. physician-induced demand
Answer: e. physician-induced demand
Question: What percentage of the new drugs introduced in the United States between 1940 and 1990 were discovered by firms in the United States?
Answer Options:
a. 15 percent
b. 45 percent
c. 75 percent
d. 60 percent
e. 30 percent
Answer: b. 45 percent