Pharmacoeconomics is the practice of which of the following?

• A. Sets drug prices in the market.
• B. Regulates drug advertising.
• C. Tests drug safety in labs.
• D. Evaluates cost and outcomes of medications to inform coverage decisions.

Answer: (D)

Pharmacoeconomics focuses on the value of medications by comparing costs to the health outcomes they produce, with the goal of informing coverage and formulary decisions. This means evaluating whether a drug provides enough additional benefit to justify its cost, guiding payers on what to reimburse and how to allocate limited resources. The approach often uses analyses that weigh costs against outcomes (like improvements in health or quality of life, sometimes summarized as QALYs) and considers the broader budget impact. It isn’t about setting market prices, regulating advertising, or testing safety in the lab; those are outside its scope.