Price Indexes for Clinical Trial Research: A Feasibility Study

37 Pages Posted: 22 Mar 2013 Last revised: 8 Oct 2014

See all articles by Ernst R. Berndt

Ernst R. Berndt

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Iain M. Cockburn

Boston University Questrom School of Business; National Bureau of Economic Research (NBER)

Date Written: March 2013

Abstract

We estimate hedonic price indexes for clinical trial research, an important component of biomedical R&D, using a large sample of agreements between trial sponsors and clinical investigators obtained from Medidata Solutions Worldwide Inc. Nominal prices measured as total grant cost per patient rose by a factor of 4.5 between 1989 and 2011, while the NIH Biomedical R&D Price Index (BRDPI) focused on input costs rose only 2.2-fold. Most of the disparity appears to be attributable to changes in the nature and organization of clinical trials: during this period the average number of patients per site fell substantially while "site work effort" more than doubled. After controlling for these changes in the characteristics of investigator agreements using a variety of methods based on hedonic regressions, we find that the estimated rate of inflation in clinical trials costs tracks the BDRPI very closely. Results from this study suggest that it should be feasible for statistical agencies to develop a producer price index for this type of R&D activity, contributing to broader efforts to develop a deflator for contracted R&D services.

Suggested Citation

Berndt, Ernst R. and Cockburn, Iain M., Price Indexes for Clinical Trial Research: A Feasibility Study (March 2013). NBER Working Paper No. w18918, Available at SSRN: https://ssrn.com/abstract=2237830

Ernst R. Berndt (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

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Iain M. Cockburn

Boston University Questrom School of Business ( email )

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National Bureau of Economic Research (NBER) ( email )

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