Price Indexes for the Treatment of Depression

42 Pages Posted: 17 Jul 2000 Last revised: 16 Jul 2022

See all articles by Richard G. Frank

Richard G. Frank

Harvard Medical School; National Bureau of Economic Research (NBER)

Ernst R. Berndt

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

Susan H. Busch

Yale University - Department of Health Policy and Management

Date Written: February 1998

Abstract

We construct price indexes for treatment of a specific illness, acute phase major depression, using treatment episodes of care (rather than fixed input bundles) to define quantity. We identify different treatment service bundles that combine varying quantities of prescription drugs, medical management and psychotherapy. We make use of results from clinical research and official government guidelines for standards of care to identify therapeutically similar treatment bundles. We then employ various index number formulae that involve differing assumptions on the extent of ex ante substitutability among these treatment bundles. Rather than using list prices, we utilize actual transactions data based on a MEDSTAT retrospective medical claims data base covering more than 400,000 individuals over the 1991-95 time period. We distinguish between consumers' direct payments (a CPI index) and total payments received by providers (a PPI). Although not directly comparable to BLS indexes indicating 15-25% price growth 1991-95, our CPI and PPI price indexes decline 20-30%, implying an average annual price differential from BLS indexes of about -15%.

Suggested Citation

Frank, Richard G. and Berndt, Ernst R. and Busch, Susan H., Price Indexes for the Treatment of Depression (February 1998). NBER Working Paper No. w6417, Available at SSRN: https://ssrn.com/abstract=226165

Richard G. Frank (Contact Author)

Harvard Medical School ( email )

Department of Health Care Policy
Boston, MA 02115
United States
617-432-0178 (Phone)
617-432-1219 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Ernst R. Berndt

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

Room E52-452
Cambridge, MA 02142
United States
617-253-2665 (Phone)
617-258-6055 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Susan H. Busch

Yale University - Department of Health Policy and Management ( email )

New Haven, CT
United States

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