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  1. What did the 1962 Kefauver-Harris amendment to the FD&C act stipulate?
    Stipulated that drugs must be proved "safe" and "effective prior to marketing
  2. What separates efficacy from effectiveness?
    Efficacy are the benefits of the drug in IDEAL circumstances vs effectiveness are benefits of the drug obtained in ACTUAL, real world use
  3. List the stages of NDA process in order
    1. Preclinical Stage 2. Clinical Stage 1 (Phase 1) 3. Clinical Stage 2 (Phase 2) 4. Phase 3 clinical trials 5. Phase 4 - Post Marketing monitoring
  4. What happens in preclinical stage?
    • All activity prior to use in humans
    • ie Drug discovery, animal testing to determine potential uses, SE, toxicity, and safe dosage parameters
  5. What is an orphan drug?
    Drug that may show therapeutic benefit but not economically promising
  6. What happens in clinical stage 1?
    Drug enters IND (Investigation New Drug) status when used in humans
  7. When is first use of the drug in humans to establish the drug's action, safe dosage range, and pharmacokinetics?
    Phase 1 of clinical pharmacology
  8. What is pharmacokinetics?
    Study of absorption, metabolism, & excretion rates of the drug and its metabolites
  9. Who are the typical subjects in phase 1?
    Typically young, healthy, male volunteers
  10. What happens in phase 2?
    Drug's first use in patients with the disease of interest.
  11. What happens in phase 3?
    • Drug is given to patients in a "natural" setting.
    • Note: not enough patients are used in this stage to see rare SE (1 in 10k)
  12. What happens in phase 4?
    • Post market monitoring
    • Not a legal, required phase
  13. How long is the FDA review process suppose to take? And usually how long
    • does it actually take?
    • Suppose to be 180 days following its submission but can be up to 7 years
    • on avg ~ 12 months in 1997
  14. What are the 2 FDA drug classification system?
    • Therapeutic type
    • Chemical type
  15. What are the 2 therapeutic types?
    • Type P: Priority is for REVIEW not approval
    • Type S: Standard
  16. What is the fee for submitting an NME?
    $200k
  17. What are the 3 chemical type?
    • Type 1: new molecular/Chemical entity NME/MCE
    • Type 2: New salt, ester, or derivative
    • Type 3: New formulation
  18. What are some problems with new drug approval in the U.S?
    • 1. Limited Number of subjects
    • 2. Time Consideration
    • 3. Expensive
    • 4. Artificial Environment
    • 5. Usually little formal monitoring of drug effect after approval
  19. What is the rule of thumb for the number of test subjects?
    • 3 times the reciprocal of the incidence in order to have a 95% chance of seeing an event
    • Example: 1:1000 = 3k subjects needed
  20. What are the concerns with time consideration?
    • Too short - not enough time to observe delayed effects such as DES and uterine cancer in female offspring
    • Too long - depresses and discourages new drug development, limits # of developers, and keeps new drugs from patients
  21. What is the current estimated cost over 10-15 years to bring a new drug to market?
    1.25 billion + dollars
  22. What is so bad about artificial environment?
    Clinical studies do not duplicate "real world" use of drug
  23. What is a patent?
    A grant of legal monopoly to any person who "invents or discovers a new and useful process / thing"
  24. What is a monopoly?
    A market in which there is only one seller and many buyers
  25. What is another mechanism that encourages innovation?
    Awards
  26. In what sense is the award system not very good?
    The governing body chooses the direction of innovation
  27. How long did a patent last? How long does it last now and due to what act?
    At first 17 years now 20 years due to Uruguay Agreements Act of 1994
  28. What does the patent essentially do?
    Protects intellectual property
  29. What are the rights of a patent?
    • ONLY TO EXCLUDE all others from making, using, or selling their invention. No right for owner to make, use or sell.
    • Patent owner's right is a ______right.
    • negative
  30. What is a trademark?
    Any work, name, symbol or device, or any combo thereof adopted and used by a manufacturer or merchant to identify and distinguish his product from the others
  31. What is the purpose of a trademark?
    • 1. Indicates origin or source
    • 2. Used to extend monopoly through identification and loyalty
    • 3. Product differentiation through marketing
  32. Brand names are an example of what?
    Trademarks
  33. What did the Drug Price Competition and Patent Term Restoration Act of 1984 do?
    Made it easier for generics to be approved while it also allowed Brand company to extend patent and the first to come out with the generic
  34. What is GNP and GDP?
    • Gross National Product
    • Gross Domestic Product
  35. What is the difference between GNP and GDP?
    GNP is everything the US produces in the world vs GDP is everything the US produces inside the US
  36. Which one is most often used to compare US to other countries?
    GDP
  37. Which one better shows short term trends in the economy?
    GDP
  38. What is CPI and its definition?
    Consumer Price Index and it measures changes in the prices of goods purchased by the typical urban family of 4
  39. What is MPI and what does it do?
    Medical Price Index and its a sub-index of CPI, looking at the medical field
  40. What is PPI and what does it do?
    Producer Price Index and it measures changes in the prices for a manufacturer
  41. CPI is the ratio of what?
    new price to the original price x 100
  42. What happened to the role of government in the 1960s?
    It became the payor due to medicare and medicaid
  43. What are the 4 major factors for health care inflation?
    • 1. Health care expenditures
    • 2. Population increase
    • 3. Increased utilization/intensity of services
    • 4. Inflation/health care inflation
  44. What are the two factors we can do nothing about and the two factors we have control over?
    • Can't do anything about: Population increase and general inflation
    • We can control health care inflation and health care utilization
    • Compare and contrast price indexes include change over time for selected health care goods and services
  45. In terms of CPI what has increased at a greater rate than all others?
    Medical care
  46. What are the top two contributors to the high costs of CPI?
    • Hospital service is major
    • Rx drugs are a close second
  47. What has happened to the burden on household income over time? Burden on business and gov't?
    • Household: burden not changed much at all
    • Business and Gov't: Burden increased ALOT
  48. Who are the employers shifting the cost of premiums to?
    The employees
  49. For personal health care payments the direct out of pocket payment has done what?
    It has steadily dropped
  50. Where does the US lie in health spending as a % of GDP vs other countries?
    US has the highest health spending of % GDP
  51. For the amount of money the US spends on health care where do we rank in
    • Infant Mortality Rate and Male Life expectancy?
    • US and Cuba have nearly the same IMR and we are not the highest for MLE
  52. What two states did Victor Fuchs do his study on?
    Nevada and Utah
  53. What is the primary cause of death in young americans, Middle age death, and late middle age death?
    • Young Americans: Accidents
    • Middle Age Death: Heart disease
    • Late Middle Age Death: Heart, cancer, stroke, liver "life style disease"
  54. What are the four hallmarks of a competitive market?
    • 1. Many buyers and sellers in the market
    • 2. Offerings are for a standardized product or service which has an elastic demand
    • 3. Market entry for new firms is free from barriers and resources are easily transferable
    • 4. Consumers have complete info on prices, quality, and other factors
  55. What is elastic demand?
    A condition where there is a definite relationship between the price of a product and the quantity which would be purchased
  56. How is health care a nearly universal demand?
    Everyone gets sick therefore everyone is a buyer
  57. What are the characteristics that make the health care market unique from purely competitive market?
    • 1. Nearly universal demand
    • 2. Unpredictability of illness
    • 3. Inelastic demand and supply
    • 4. Health care as a "right"
    • 5. Variation in products/services
    • 6. Barriers to market entry
    • 7. Lack of consumer information/interest
    • 8. Physician as agent
    • 9. Third partyism/insurance
  58. Elasticity tends to be more common for what kind of items?
    • Health care is considered what kind of item?
    • Elasticity tends to be more common for luxury items while most health care is deemed a necessity
  59. How is the idea of health care as a right related to in elasticity?
    Because society deems it as a right they see to it that the goods/services should be paid for by the gov't and thus ignore the price of health care being charged yet still demanding the same level of care
  60. What are the barriers to market entry for health care?
    • Education
    • Certification
    • Licensure
  61. What can explain third-party insurance taking an active role in patient's health care?
    Limited information for both price and quality
  62. What are the factors that can affect the demand and/or supply for health care?
    • Change in per capita income
    • Change in tastes of preference
    • Change in relative price
    • Change in financial system
    • Supply of manpower/facilities
  63. Describe how change in per capita income affects health care demand and supply
    More $ = more demand
  64. If health insurance covers it...why not?
    • Describe how change in tastes and preference affects health care demand and supply
    • Individuals decide they want more or less Health care, preference- preventative vs acute MD vs non-MD
  65. Describe how change in relative price affects health care demand and supply
    price increase = demand decrease
  66. Describe how change in financing system affects health care demand and supply
    • Patient increased out of pocket cost
    • Physicians: HMO can put them at risk
  67. What is the idea about risk in insurance?
    To spread risk
  68. What are the 4 basic elements which constitutes an "insurable hazard"?
    • Probabilistic event over a population
    • Irregular event on an individual basis
    • Event must result in substantial loss
    • Loss must be measurable
  69. To be insurable what must be possible?
    The ability to determine the probability of an event or hazard occurring.
  70. For individuals, the insurable event has what 2 things?
    • Low frequency
    • poor predictability
  71. What are the 2 basic functions of insurance?
    • 1. Transfer risk
    • 2. Pooling of risk
  72. How do you calculate a premium?
    Premium = [(Probability of loss)(amount of loss)(risk factor)]+administrative costs
  73. What are the 4 terms that all relate to patient cost-sharing?
    • Premium
    • Deductible
    • Copayment
    • Coinsurance
  74. What is a premium?
    The periodic payment required to keep a health insurance policy active
  75. What is a copayment?
    An amount that must be paid by the insured to the provider for each visit
  76. What is a deductible?
    An amount that must be paid by the insured before benefits will kick in. This amount is renewalable over a specific time frame
  77. What is coinsurance
    An occurrence where both the insured person and the insurance company share the covered cost in a specific ratio 20:80
  78. What are the advantages of cost sharing?
    Makes the patient be aware of the price of health care, decreases the cost of the insurer
  79. What is persons covered?
    Individual(s) covered on the insurance policy
  80. What is defining the peril?
    Seeing what is covered, what kind of events you are being insured against
  81. What are exclusions on an insurance policy?
    Things and events that your insurance will not cover
  82. What are covered expenses?
    The conditions and services that your insurance police will cover. Lots of stipulations like generics only or step therapy
  83. What is waiting period?
    Also known as elimination period, refers to the time between the date on which you apply for insurance and when the insurance is effective
  84. What is cancellation and renewability?
    Cancellation is when the insurance company voids your policy and Renewability refers to whether insured has the right to continue coverage
  85. What is the ideal policy called?
    Non cancelable guaranteed renewable
  86. What is incontestability?
    Refers to a clause that states that after a certain period of time no misstatements on your application will void the policy, unless they can prove you did it on purpose
  87. What are coordination of benefits?
    Refers to the fact that a claim will not be double paid if there are two insurance
  88. What is indemnity?
    Refers to situations in which benefits are paid, often to the patient, predetermined amount to cover the loss.
  89. What is hospitalization insurance?
    Covers specifically services which patients receive while hospitalized. (lab work) Excludes physician care
  90. What is physician/medical insurance?
    Covers physician care
  91. What is major medical insurance?
    Sometimes referred to as catastrophic insurance Idea that covers very expensive illness
  92. What are the 2 basic types of major medical plans?
    • 1. Supplement to a "basic" hospital-physician-surgeon expense policy
    • 2. Combination of "basic" and "supplemental" policies into one which provides comprehensive protection, esp. for large, unpredictable medical expenses.
  93. What is medicare supplement "medigap" insurance?
    Policies designed specifically for the elderly/ for medicare
  94. What is long term care insurance?
    Designed to provide a range of maintenance and health services for the chronically ill, disabled, or mentally retarded
  95. What are the 3 major problems with the traditional health insurance system?
    • 1. Ineffective at cost control
    • 2. Often results in overutilization of health care
    • 3. Some remain uninsured or underinsured
  96. What are possible solutions to ineffective cost control?
    • 1. Increase cost sharing to decrease utilization and make consumers more cost conscious
    • 2. Standardize payment schedules, rather than basing payments on historic provider changes
    • 3. Place health care providers at financial risk
  97. What are the possible solutions to overutilization?
    • 1. Increase cost sharing
    • 2. Institute prior approval mechanism
    • 3. Encourage substitution of outpatient for inpatient care when appropriate
  98. What are some possible solutions to those who are uninsured or underinsured?
    • 1. Encourage use of comprehensive HMOs
    • 2. Set "higher" minimum standards of health ins.
    • 3. Expand government programs/NHI
  99. What is the approx % of American who don't have health insurance?
    Approx 16% or 45-58 million people
  100. What are the 4 particular characteristics of the uninsured American?
    • 1. Young - many uninsured are children
    • 2. Not terribly poor
    • 3. Working
    • 4. Work for small companies
  101. What are the two segments of the health industry?
    • 1. Public
    • 2. Private
  102. Where is most of the money spend in the public sector?
    Medicare and Medicaid
  103. What are the 3 basic forms of private ins?
    • Commercial ins
    • Blue Cross/Blue Shield
    • Self-insured employers
  104. What is adverse selection?
    Refers to situations where an insurer has a group of very ill patient ie expensive patients
  105. What are the 3 cost advantages of group contracts over individual contracts for health insurance?
    • 1. Decrease chance of adverse selection
    • 2. Lower administrative costs
    • 3. Tax advantage for employees
  106. What are the 2 reasons why there is lower administrative costs for a group contract?
    • 1. 1 salesman for a group contract of 1000 vs 20 or 30 sales for 1000 individual contracts
    • 2. Less paperwork / individual check up to determine premium ie less work overall
  107. What type of coverage has the most expensive administrative costs?
    Private individual
  108. What is title 18 and 19 known as?
    Medicare and Medicaid respectively
  109. Medicare is based on what philosophy?
    Insurance philosophy that people have paid taxes into Social Security, so now they're receiving the benefits they paid for previously
  110. Medicaid is based on what philosophy?
    Welfare philosophy, designed to redistribute the wealth from the have to the have nots
  111. Medicare is administered by whom?
    Entirely the federal government
  112. Medicaid is administered by whom?
    funded jointly by the state and the federal govt.
  113. In this joint force to regulate medicaid what does the feds do and what does the state do?
    • Fed - establishes the regulations and guidelines
    • State - responsible for the actual direction and day-to-day operations
  114. What are the key points in defining the term managed care?
    integration of financing and provision of care
  115. What are the 4 primary types of managed health care plans?
    • 1. HMOs (health maintenance organizations)
    • 2. PPOs (preferred provider organizations)
    • 3. Managed fee-for-service
    • 4. Point of service
  116. What are the characteristics that an be used to define an HMO?
    • 1. Serves a voluntarily enrolled population
    • 2. Assumes responsibility for assuring delivery of a stated range of comprehensive health care services
    • 3. Receives fixed payments from enrollees which are relatively independent of use of services
    • 4. Assumes much of the financial risk or gain in the provision of health care services
  117. What is the key to the second characteristic of HMOs?
    • The responsibility for delivery of services
    • The comprehensive nature of those health care services
  118. How are HMOs different than traditional health care in the sense of receiving payments?
    HMOs only require a minimum cost-sharing
  119. What happens when HMOs assume much of the financial risk?
    HMOs demand for a higher quality of care and better utilization because their money is at risk. Prevention vs treatment
  120. Name the 4 HMO models
    • Staff model
    • Group model
    • Independent practice association
    • Network model
  121. What is the staff model?
    • HMO employs the physicians
    • Physicians paid a flat rate and fixed hours
  122. What is the group model?
    • HMO contracts with existing medical groups to serve the HMO's membership.
    • Medical groups are paid usually on capitation
  123. What is the IPA model?
    • HMOs contract with individual physicians
    • Physicians may be paid on a fee-for-basis or a capitation basis
  124. What is the network model?
    Groups models with contract with more than one group practice and groups models with contract with independent practitioners
  125. What is to be said about HMOs statistically?
    Over the years the number of HMOs has decreased due to mergers but the amount of people covered has increased
  126. What are the advantages to IPA model?
    • More acceptable to physicians
    • Lower capital investment
    • easier to cover a large geographic area
    • patient preferences
  127. What are the disadvantages to IPA?
    • Less physician loyalty to HMO
    • Uncertainty about ability of IPA to control cost
  128. What are the 3 basic HMO pharmacy services?
    • 1. In house pharmacies
    • 2. Closed network
    • 3. Open network
  129. What is the distinguishing feature of an in-house pharmacy? And what model is associated with it?
    Distinguishing feature is that the pharmacy is owned by the HMO and it is most commonly affiliated with staff model HMOs
  130. What is said about closed network pharmacies?
    HMO is only contracted to a limited number of community pharmacies
  131. How do HMOs lower health care costs?
    • 1. Promoting health
    • 2. Reduce Utilization
    • 3. Putting providers at risk
    • 4. Quality Incentives
  132. What are some things that HMOs usually do to promote health?
    • Routine physicals
    • Immunizations
    • Well-baby care
    • ie preventive care, prevention programs
  133. HMO members tend to be more satisfied with what aspect of care?
    The technical aspect of care such as coverage of preventive care, lower out-of-pocket costs, less paper, etc
  134. Based on mortality rates and disability days what is the general finding of quality of care from HMOs?
    Just as good and very often better than traditional , fee-for-service plans
  135. What are the 5 distinguishing characteristics of PPOs?
    • 1. Discounted services
    • 2. Patient freedom-of-choice
    • 3. Provider risk
    • 4. Utilization review
    • 5. Provider benefits
  136. Describe the freedom-of-choice in PPOs
    Patients can seek physicians for health care at their own choice. Will have coverage regardless of the doc. but if out of network they will pay more
  137. What are the 2 benefits providers get for enrolling in PPOs?
    • 1. Allows for the potential for what could be a substantial increase in provider's patient base
    • 2. PPOs guarantee rapid payment of claims
  138. What are the benefits of PPO for consumers?
    • out-of-pocket cost savings
    • freedom-of-choice
    • increased access to care
  139. What are the benefits of PPO for insurers?
    • Reduced health care expenses
    • Counters cost shifting
    • utilization is monitored
  140. What are the benefits of PPO for pharmacies?
    • Maintain or expand patient base
    • Relatively quick claims payment
    • Still paid on a fee-for-service basis
  141. What did the 1935 Flood Control Act state?
    Projects should only be pursued if the benefits outweigh the costs
  142. What is the medical model?
    That it is assumed that if an intervention is available to help the patient it will be applied no matter what the cost
  143. What is the great failure to the medical model?
    By logic all of a society's resources would go to health care (not possible)
  144. What is the ECHO model refer to?
    Refers to Economics, Humanistic, and Clinical Outcomes
  145. What is the H to the ECHO model?
    Refers to humanistic ie the quality of life of the patient.
  146. What is the goal of the ECHO model?
    To give the best possible outcome achievable within the economic constraints
  147. What are the 4 key concepts of economics?
    • 1. Resources are limited
    • 2. There must be competing alternatives
    • 3. The costs of inputs must be available
    • 4. The consequences of inputs must be known
  148. What are the 4 E's of Economic evaluation?
    • 1. Efficacy
    • 2. Effectiveness
    • 3. Equity
    • 4. Efficiency
  149. What are the parameters to effectiveness?
    • How well the drug does in the real world
    • ie patient non compliance, SE, multiple disease
  150. What are the parameters to efficacy?
    How the drug performs under ideal conditions, defines the upper limits of the drug's ability to treat the drug ie perfectly used
  151. What are the parameters of equity?
    • Can patient get access to it
    • ie Barriers such as cost, geographical, knowledge or cultural restrictions
  152. What are the parameters of efficiency?
    • In the end is this drug worth doing.
    • Are all the resources put into this drug worth it
  153. What is the primary reason of utilizing pharmacoeconomic analysis?
    Efficiency
  154. What is pharmaceutical economics?
    • A sub-specialty of micro economics
    • Used to analyze pharmaceutical industry with micro econ tools
  155. What are macro and micro economics?
    The examination of the allocation of resources every. Macro is applied to large economies such as nations which micro is applied to ideal competitive markets to predict behavior
  156. What is health economics?
    Analysis of the market in the health sector since it is is different than normal competitive markets
  157. What is pharmacoeconomics?
    Looks at the very special case of pharmaceutical products
  158. What 2 things does pharmacoeconomics allow us to do?
    • 1. Allows us to see if an action is worth doing
    • 2. Allows us to determine which purchase or policy or action gives us the most value.
  159. What is the 6 general steps to the pharmacoeconomic process?
    • 1. Define problem
    • 2. Select the perspective
    • 3. Identify relevant alternatives
    • 4. Establish framework and scope of analysis
    • 5. Identify, Measure and Value Cost and Consequences
    • 6. Analyze, interpret and derive conclusions
  160. To define a problem it must be what?
    • It must be in an answerable form
    • It must be measurable
    • The key is to be very specific and define a narrow problem
  161. What are the common perspectives to chose from during the process?
    • Payer - direct cost that must be paid
    • Provider -Direct cost that impact budget
    • Public (society)- All direct and indirect cost regardless of who pays them
    • Patient - direct cost (out of pocket) and indirect cost (loss of work or travel expenses)
  162. What is the goal to establish framework and scope of analysis?
    To make the alternative courses of action/treatments and the consequences of each explicit
  163. By establishing framework and scope of analysis what should be defined?
    • The who
    • The what
    • The when and how of data collection
  164. What is our best estimate of the cost of the resource?
    The lost opportunity cost
  165. What is the economic definition of cost?
    The consumption of a resource that could otherwise have been used for something else
  166. What are factors that influence cost?
    • 1. influenced by the perspective that is adopted
    • 2. Common costs that are dropped
    • 3. The magnitude of costs (too small not considered, too big will dominate analysis)
  167. The most important costs should be subject to what?
    To sensitivity analysis
  168. What are the cost classifications?
    • Direct
    • Indirect
    • Medical
    • Nonmedical
  169. Define direct medical costs
    • Those resources consumed due to illness or intervention.
    • Can be clinical or therapeutic
  170. Define direct non-medical costs
    • non-clinical resources consumed in response to illness or treatment
    • Best example: costs to travel to get treatment
  171. Define indirect medical costs
    Things such as lost earnings or lower productivity of the patient
  172. Define indirect non-medical costs
    Costs like pain and suffering of patient
  173. How do we know know if indirect is more important that direct and vice versa?
    Depends on the perspective we take at the beginning of the process
  174. What is capital cost?
    Costs involving the financing of buildings, land, and equipment etc.
  175. What are operating costs?
    Costs involved in the resources being used during care or service
  176. What are fixed costs?
    Costs that are consumed regardless of whether a product or service will be provided ie mortgage on building, electric
  177. What are variable costs?
    Costs that are related to the amount of production or services provided
  178. What are total costs?
    Sum of all resources consumed
  179. What is average costs?
    Cost of the resources used per unit of production
  180. What is marginal cost aka incremental cost?
    Incremental increase in resources consumed to produce one more unit of product
  181. In economics what is considered the most efficient level of production?
    The lowest marginal cost
  182. What is most important in cost effective analysis?
    Marginal cost
  183. What is cost description?
    The simple determination or measurement of the cost of a single alternative
  184. What is COI?
    It is the Cost of illness also known when an entire disease state is examined
  185. What do COI's assess?
    How and where resources are being used
  186. What is cost analysis?
    When two or more alternatives are compared only on cost
  187. What is CMA?
    Cost Minimization Analysis, it compares 2 or more alternatives when the effect has been proven to be equal
  188. What is CBA?
    • Cost-benefit Analysis
    • The first and most formal economic analysis where everything is converted to monetary value
  189. What are some CBA limitations?
    Since everything is converted to a monetary value it is difficult to accurately assess direct benefits like improved standard of living
  190. What is CEA?
    Cost Effectiveness Analysis, intent is to determine which alternative produces units of change at the lowest cost per unite of change
  191. What is CUA?
    Cost utility analysis, a variant of CEA, it expresses the consequence in terms of utility

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