PHRM 3750 EXAM 1 | ACE EVERY QUIZ |
CONFIDENCE BACKED BY ACCURACY!
What is health care? - answer: goods and services whose primary purpose is to improve or
prevent deterioration in health
What is health? - answer: state of complete physical, mental, and social well-being and not
merely the absence of disease or infirmity
What is health care system? - answer: configuration of services that delivers quality services to
all people when and where they need them; requires robust financing mechanism, well-trained
and adequately paid workforce, reliable information on which to base decisions and policies,
well-maintained facilities and logistics to deliver quality medicines and technologies.
How is health care different from other services? (characteristics of health care) - answer: -
uncertainty due to presence of third party payers
-asymmetry of information
-presence of externalities
-derived demand
-restrictions on competition
-barriers to entry
-equity and need
-government interventions/subsidies, public provision
-non-profit firms
Uncertainty in healthcare - answer: -present in both demand (uncertain about type and frequency
of health care needed) and supply (uncertain about outcome of treatment)
-leads to presence of insurance
1
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,Asymmetry of information - answer: -occurs when one party in transaction has more
information than the other party, which may allow the better informed party to exploit the less
informed party
-occurs between providers and patients and can go both ways (physician may know more about
diagnosis, patient may know more about symptoms or history)
Exacerbated by:
-limited time to shop/seek information
-occurs at times when individual is vulnerable or cognitively impaired
-inability to learn from experience
Externalities in healthcare - answer: -occur when someone external to the market transaction
(someone who is neither the buyer nor seller) is affected by transaction and *not* compensated
-positive - beneficial effect (ex: herd immunity)
-negative - negative/harmful effect (ex: smoking, pollution)
Derived demand for healthcare - answer: -most consumers would be happy to never need to
consume health care
-we consume healthcare to benefit for the longterm, but the need in the short term is usually bad
or painful (vaccination, tooth filling, stitches)
Restrictions on competition/barriers to entry for healthcare - answer: many practices in
healthcare markets effectively restrict competition or entry into the sector
Ex: *patent protection*, licensure requirements for providers, restrictions on advertising
Equity and need - answer: -need for health care can be unlimited, but resources are limited
2
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, -"need" is difficult to define in context of healthcare
What is economics? - answer: study of how people use their scarce resources to satisfy their
unlimited wants/incentives
What is health economics? - answer: branch of economics that focuses on issues related to
efficiency, effectiveness, value, and behavior in the production and consumption of health and
healthcare
What is pharmacoeconomics? - answer: identifies, measures, and compares the costs, risks, and
benefits of pharmaceutical products, services, or programs
-determines which alternative produces the best health outcome for the resources invested, and
finds if added benefit of product is worth the added costs
-serves to guide optimal healthcare resource allocation in a standardized and scientifically
grounded manner
Misperceptions in pharmacoeconomics - answer: -pe means cost-containment or cost-
effectiveness; these are not the only goals of pe analysis.
-pe means drug utilization evaluation; some due studies consider resources utilized and other
variables, but not always the case.
-pe means outcomes research; outcomes research is broad discipline that involves evaluating
impact of healthcare interventions, while pe is one of the tools used in evaluating impact of drug
or intervention on outcomes and in guiding decision-making.
-cost savings means cost benefit analysis; two terms are used interchangeably, but are
fundamentally different. Cba includes all benefits by incorporating individual references using
contingent valuation or willingness to pay method, while studies measuring only cost savings are
in effect cost analyses since do not incorporate *all benefits*
Types of full pe studies - answer: -cost minimization analysis (cma); measures lowest monetary
cost
3
APPHIA - Crafted with Care and Precision for Academic Excellence.
CONFIDENCE BACKED BY ACCURACY!
What is health care? - answer: goods and services whose primary purpose is to improve or
prevent deterioration in health
What is health? - answer: state of complete physical, mental, and social well-being and not
merely the absence of disease or infirmity
What is health care system? - answer: configuration of services that delivers quality services to
all people when and where they need them; requires robust financing mechanism, well-trained
and adequately paid workforce, reliable information on which to base decisions and policies,
well-maintained facilities and logistics to deliver quality medicines and technologies.
How is health care different from other services? (characteristics of health care) - answer: -
uncertainty due to presence of third party payers
-asymmetry of information
-presence of externalities
-derived demand
-restrictions on competition
-barriers to entry
-equity and need
-government interventions/subsidies, public provision
-non-profit firms
Uncertainty in healthcare - answer: -present in both demand (uncertain about type and frequency
of health care needed) and supply (uncertain about outcome of treatment)
-leads to presence of insurance
1
APPHIA - Crafted with Care and Precision for Academic Excellence.
,Asymmetry of information - answer: -occurs when one party in transaction has more
information than the other party, which may allow the better informed party to exploit the less
informed party
-occurs between providers and patients and can go both ways (physician may know more about
diagnosis, patient may know more about symptoms or history)
Exacerbated by:
-limited time to shop/seek information
-occurs at times when individual is vulnerable or cognitively impaired
-inability to learn from experience
Externalities in healthcare - answer: -occur when someone external to the market transaction
(someone who is neither the buyer nor seller) is affected by transaction and *not* compensated
-positive - beneficial effect (ex: herd immunity)
-negative - negative/harmful effect (ex: smoking, pollution)
Derived demand for healthcare - answer: -most consumers would be happy to never need to
consume health care
-we consume healthcare to benefit for the longterm, but the need in the short term is usually bad
or painful (vaccination, tooth filling, stitches)
Restrictions on competition/barriers to entry for healthcare - answer: many practices in
healthcare markets effectively restrict competition or entry into the sector
Ex: *patent protection*, licensure requirements for providers, restrictions on advertising
Equity and need - answer: -need for health care can be unlimited, but resources are limited
2
APPHIA - Crafted with Care and Precision for Academic Excellence.
, -"need" is difficult to define in context of healthcare
What is economics? - answer: study of how people use their scarce resources to satisfy their
unlimited wants/incentives
What is health economics? - answer: branch of economics that focuses on issues related to
efficiency, effectiveness, value, and behavior in the production and consumption of health and
healthcare
What is pharmacoeconomics? - answer: identifies, measures, and compares the costs, risks, and
benefits of pharmaceutical products, services, or programs
-determines which alternative produces the best health outcome for the resources invested, and
finds if added benefit of product is worth the added costs
-serves to guide optimal healthcare resource allocation in a standardized and scientifically
grounded manner
Misperceptions in pharmacoeconomics - answer: -pe means cost-containment or cost-
effectiveness; these are not the only goals of pe analysis.
-pe means drug utilization evaluation; some due studies consider resources utilized and other
variables, but not always the case.
-pe means outcomes research; outcomes research is broad discipline that involves evaluating
impact of healthcare interventions, while pe is one of the tools used in evaluating impact of drug
or intervention on outcomes and in guiding decision-making.
-cost savings means cost benefit analysis; two terms are used interchangeably, but are
fundamentally different. Cba includes all benefits by incorporating individual references using
contingent valuation or willingness to pay method, while studies measuring only cost savings are
in effect cost analyses since do not incorporate *all benefits*
Types of full pe studies - answer: -cost minimization analysis (cma); measures lowest monetary
cost
3
APPHIA - Crafted with Care and Precision for Academic Excellence.
