Why the DEA Stride Data are Still Useful for Understanding Drug Markets

38 Pages Posted: 18 Aug 2008 Last revised: 2 Sep 2008

See all articles by Jeremy Arkes

Jeremy Arkes

RAND Corporation

Rosalie Liccardo Pacula

Health Economics, Finance and Organization, RAND Corporation; National Bureau of Economic Research (NBER)

Susan Paddock

University of California, Los Angeles (UCLA) - RAND Health Sciences Program

Jonathan P. Caulkins

Carnegie Mellon University

Peter H. Reuter

University of Maryland

Date Written: August 2008

Abstract

In 2001, use of the STRIDE data base for the purposes of analyzing drug prices and the impact of public policies on drug markets came under serious attack by the National Research Council (Manski et al., 2001; Horowitz, 2001). While some of the criticisms raised by the committee were valid, many of the concerns can be easily addressed through more careful use of the data. In this paper, we first disprove Horowitz's main argument that prices are different for observations collected by different agencies within a city. We then revisit other issues raised by the NRC and discuss how certain limitations can be easily overcome through the adoption of random coefficient models of drug prices and by paying serious attention to drug form and distribution levels. Although the sample remains a convenience sample, we demonstrate how construction of city-specific price and purity series that pay careful attention to the data and incorporate existing knowledge of drug markets (e.g. the expected purity hypothesis) are internally consistent and can be externally validated. The findings from this study have important implications regarding the utility of these data and the appropriateness of using them in economic analyses of supply, demand and harms.

Suggested Citation

Arkes, Jeremy and Pacula, Rosalie Liccardo and Paddock, Susan M. and Caulkins, Jonathan P. and Reuter, Peter H., Why the DEA Stride Data are Still Useful for Understanding Drug Markets (August 2008). NBER Working Paper No. w14224. Available at SSRN: https://ssrn.com/abstract=1230852

Jeremy Arkes

RAND Corporation ( email )

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Rosalie Liccardo Pacula (Contact Author)

Health Economics, Finance and Organization, RAND Corporation ( email )

P.O. Box 2138
1776 Main Street
Santa Monica, CA 90407-2138
United States
310-393-0411 (Phone)
310-451-6930 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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Susan M. Paddock

University of California, Los Angeles (UCLA) - RAND Health Sciences Program ( email )

Los Angeles, CA 90095
United States

Jonathan P. Caulkins

Carnegie Mellon University ( email )

Pittsburgh, PA 15213-3890
United States

Peter H. Reuter

University of Maryland ( email )

College Park
College Park, MD 20742
United States

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