Prescription medication can be very expensive, in part because of the high cost of research and development. The most expensive drug in the world is Soliris, which is used to treat a rare blood...

Prescription medication can be very expensive, in part because of the high cost of research and development. The most expensive drug in the world is Soliris, which is used to treat a rare blood disorder. Many insurance companies have adopted a tiered plan that allows the user to select a generic or preferred drug at a reduced cost or copay instead of the named or specialty drug at a higher copay. Medicare Blue RX has four tiers for prescription medication, each with different copays. Past records indicate that the proportions of users who select each tier are as follows: Tier 1, 0.35; Tier 2, 0.28; Tier 3, 0.12; Tier 4, 0.25. Suppose a random sample of policyholders who purchased medication was obtained and the frequency associated with each tier is given in the following table.