An Evaluation of the CPI Indexes for Prescription Drugs

22 Pages Posted: 22 Jan 2018

See all articles by Barry Bosworth

Barry Bosworth

Brookings Institution - Economic Studies Program

John Bieler

U.S. Bureau of Labor Statistics

Michael Kleinrock

IMS Institute for Healthcare Informatics

Eric Koepcke

Brookings Institution

Ernst R. Berndt

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

Date Written: January 2018

Abstract

The prescription drug component of the Consumer Price Index (CPI measures recent and past drug price changes, and provides the basis for projecting future price trends and health care expenditures. However, there are concerns about the adequacy of the price data because of recent changes in the structure of the market for prescription drugs. We compare the prescription drug data of the CPI with a large alternative data set from the IQVIA Institute for Human Data Science. We analyze the overall consistency if the data from the two sources, and examine the influence of the large shift from brand to generic drug sales and the increased reliance on third party insurance plans that are excluded from the CPI sampling frame.

Suggested Citation

Bosworth, Barry and Bieler, John and Kleinrock, Michael and Koepcke, Eric and Berndt, Ernst R., An Evaluation of the CPI Indexes for Prescription Drugs (January 2018). NBER Working Paper No. w24210. Available at SSRN: https://ssrn.com/abstract=3106598

Barry Bosworth (Contact Author)

Brookings Institution - Economic Studies Program ( email )

1775 Massachusetts Avenue, NW
Washington, DC 20036
United States
202-797-6000 (Phone)
202-797-6181 (Fax)

John Bieler

U.S. Bureau of Labor Statistics

Behavioral Science Research Center
Washington, DC
United States

Michael Kleinrock

IMS Institute for Healthcare Informatics ( email )

11 Waterview Boulevard
Parsippany, NJ 07054
United States

Eric Koepcke

Brookings Institution

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

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