Price Indexes for Drugs: A Review of the Issues

摘要

Price indexes provide a way to summarize changes in prices of individual goods and services using an aggregate statistic. An important use of these indexes is to decompose changes in spending into price and quantity components. This is the role that price indexes play in the National Income and Product Accounts to obtain measures of real output and productivity. Price indexes are also used in the National Health Expenditure Accounts to provide information on the drivers of spending growth in the nations health care sector. More broadly, health economists have used similar decompositions to inform policy debates about which levers may be used to contain cost growth (Merlis 2000). Numerically, most price indexes can be expressed as functions of weighted averages of price change; many of the measurement issues discussed in the literature relate to which particular formula and weights is most appropriate in constructing the index. There has been significant research into these issues and, indeed, the Bureau of Labor Statistics official statistics have undergone substantial improvements in recent decades owing to research that pointed to deficiencies in existing indexes and provided new methods to improve those measures