1. If we say, 'less good drugs approved", indicate if each is True or False
   1. FDA became stricter
   2. FDA became more leinient
   3. More bad drugs approved
   4. More bad drugs disapproved
   5. More good drugs disapproved
   6. Less bad drugs approved
   7. Less good drugs disapproved
   8. Less bad drugs disapproved
   9. Type 1 errors decrease
   10. Type 2 errors increase

1. Given

Treatment A Cost: $4,000 Effectiveness: 60%

Treatment B Cost: $5,000 Effectiveness: 70%

Treatment C Cost: $3,000 Effectiveness: 50%

Treatment D Cost: $4,000 Effectiveness: 70%

Treatment E Cost: $5,000 Effectiveness: 80%

Treatment F Cost: $3,000 Effectiveness: 60%

Treatment G Cost: $3,000 Effectiveness: 70%

Treatment H Cost: $4,000 Effectiveness: 50%

Treatment I Cost: $2,000 Effectiveness: 60%

1. Rearrange table so it will be ready for obvious domination analysis
2. Use the ___ obviously dominates ____ (or ___OD ___) method
3. What are the treatments left for ICER analysis (or marginal domination analysis)
4. Use ICER to determine if any treatments are marginally dominated.
5. Draw the CEF graph

1. If the FDA reduces the number of steps required to pass Phase 3, say if the following would be True or False:
   1. Increase in Type 1 errors
   2. More good drugs will be approved
   3. More good drugs will be approved
   4. Less good drugs will be approved
   5. Less good drugs will be disapproved
   6. Decrease in Type 1 errors

1. When the pharmaceutical company's patent expired, the company was in the middle of implementing a process that would make it cheaper to produce the drug without compromising quality. Which of the following is true?
   1. Patent expired on the positive slope side of the innovation graph
   2. Patent expired on the negative slope side of the innovation graph
   3. Patent expired at the very top of innovation graph

1. 1. Given the different treatment options available below, determine obvious domination for each using the "IS OBVIOUSLY DOMINATED BY (__IODB___)" method
   2. Which of the following treatments are obviously dominated?
   3. Which treaments are not obviously dominated and will move on the ICER analysis
   4. From Z where will the patient go next?
   5. From W where will the patient go next?

Treatment Cost Benefit

Treatment A $4,000 12 years

Treatment B $4,000 15 years

Treatment X $5,000 10 years

Treatment Q $6,000 12 years

Treatment W $3,000 9 years

Treatment E $6,000 16 years

Treatment R $7,000 15 years

Treatment T $4,000 14 years

Treatment Y $5,000 11 years

Treatment U $8,000 15 years

Treatment V $8,000 24 years

Treatment Z $2,000 7 years

1. When uninsured cost of office visits was $400 and patient goes twice a year.

When insurance was acquired, coinsurance = 30%, and patient went every month.

1. Using classical theory is there moral hazard with the acquisition of insurance? What is the social loss.
2. Using the Nyman theory, assume the patient really needs to go every month given a certain condition he/she has that requires frequent monitoring. What kind of moral hazard is this? What is the value of social loss from the insurance?
3. Using the IHL theory,
   1. Assume IHL is achieved at 2 office visits a year. What is the social loss value?
   2. Assume IHL is achieved at 12 office visits a year. What is the social loss value?