FPGEE for National Association of Boards of Pharmacy (NABP) Practice Exam

What type of analysis does Cost Benefit Analysis replace?

1. Cost Effectiveness Analysis

2. Cost of Illness Analysis

3. Cost Utility Analysis

4. Cost Minimization Analysis

The correct answer is: Cost Effectiveness Analysis

Cost Benefit Analysis is a method used to evaluate the economic efficiency of different projects or interventions by comparing the total expected costs to the total expected benefits, expressed in monetary terms. It is a comprehensive approach that considers all relevant costs and benefits over time, allowing decision-makers to determine the best option for maximizing welfare or achieving desired outcomes. In this context, Cost Benefit Analysis replaces Cost Effectiveness Analysis when the goal is to evaluate options based on their financial implications rather than merely their effectiveness in achieving specific health outcomes or outputs. Cost Effectiveness Analysis, on the other hand, focuses on comparing the relative costs and outcomes (effects) of different courses of action but does not necessarily quantify both benefits and costs in monetary terms. Therefore, while both analyses assess different aspects of economic models in healthcare and other fields, Cost Benefit Analysis takes a broader monetary perspective, thus providing a more comprehensive analysis than Cost Effectiveness Analysis.