Question

Developing a new drug can be an expensive​ process, resulting in high costs to patients. A pharmaceutical company has developed a new drug to reduce​ cholesterol, and it will conduct a clinical trial to compare the effectiveness to the most widely used current treatment. The results will be analyzed using a hypothesis test. Complete parts a and b below.

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Part 1
​a) If the test yields a low​ P-value and the researcher rejects the null hypothesis that the new drug is not more​ effective, but it actually is not​ better, what are the consequences of such an​ error? Select all that apply.
A.
People will pay more money for a drug that is no better than the most widely used current treatment.
B.
The company will lose potential revenue from selling the drug.
C.
The company may lose some of its reputation for reliable quality and honest advertising.
D.
People will miss an opportunity to use a more effective treatment for cholesterol.

Answer 1

A low P-value leading to the rejection of the null hypothesis would imply that the drug is effective when it is not. This may cause patients to pay more for no additional benefit and could damage the company's reputation.

Therefore, the correct answer is: option c) The company may lose some of its reputation for reliable quality and honest advertising.

Step-by-step explanation:

If the clinical trial for the new cholesterol drug yields a low P-value and the null hypothesis is rejected, suggesting the drug is more effective when it actually is not, several consequences may ensue.

First, patients might end up paying more for a drug that is no better than the existing treatment (Option A).

Second, if the claim of greater effectiveness is proven false later, the company might lose its reputation for reliable quality and honest advertising (Option C).

Option B does not apply as the company will not lose revenue but may gain it inappropriately.

Option D is incorrect as well; it would apply if the drug was indeed more effective but was not adopted.

Regarding the other reference scenarios, the Type II error would be to conclude the drug is safe when it's not (Option a).

In testing hypotheses, such as the efficacy of a drug, the null hypothesis typically represents no effect or no difference between treatments, while the alternative hypothesis indicates the presence of an effect.

Clinical trials and hypothesis testing are critical in determining the efficacy of a treatment and can have profound implications for patient health and company ethics.