Rx Watchdog Report Comparative Measures of Price Change ...

Rx Watchdog Report Comparative Measures of Price Change for

Prescription Drugs and Other Goods

Stephen W. Schondelmeyer PRIME Institute, University of Minnesota

Leigh Purvis AARP Public Policy Institute

David J. Gross AARP Office of Policy Integration

Rx Watchdog Report Comparative Measures of Price Change for

Prescription Drugs and Other Goods

By Stephen W. Schondelmeyer PRIME Institute, University of Minnesota

Leigh Purvis AARP Public Policy Institute

David J. Gross AARP Office of Policy Integration

AARP's Public Policy Institute informs and stimulates public debate on the issues we face as we age. Through research, analysis, and dialogue with the nation's leading experts, PPI promotes development of sound, creative policies to address our common need for economic security, health care, and quality of life.

The views expressed herein are for information, debate, and discussion, and do not necessarily represent official policies of AARP.

#2009-16 November 2009 ? 2009, AARP Reprinting with permission only. AARP, 601 E Street, NW, Washington, DC 20049

TABLE OF CONTENTS

EXECUTIVE SUMMARY ............................................................................................. II INTRODUCTION............................................................................................................. 1 AARP MEASURES OF PRICE CHANGE FOR DRUGS WIDELY USED BY MEDICARE PART D ENROLLEES ............................................................................. 1 VARIOUS COMPARATIVE MEASURES OF PRICE CHANGE FOR DRUGS AND OTHER GOODS ..................................................................................................... 5

CPI-U ALL ITEMS............................................................................................................ 5 CPI FOR MEDICAL CARE.................................................................................................. 6 CPI FOR PRESCRIPTION DRUGS........................................................................................ 6 NATIONAL HEALTH EXPENDITURES-PRICE INDEX FOR PRESCRIPTION DRUG EXPENDITURES ................................................................................................................ 8 PBM PRICE COMPONENT OF DRUG EXPENDITURE GROWTH ........................................... 9 ANNUAL TRENDS IN MANUFACTURER PRICE CHANGES FOR MOST WIDELY USED PRESCRIPTION DRUGS: AARP TREND IN COMPARISON TO OTHER MEASURES .............................................................................................. 11 AARP MEASURES OF PRICE CHANGE FOR DRUGS WIDELY USED BY MEDICARE PART D ENROLLEES.................................................................................................................... 11 CONSUMER PRICE INDEX MEASURES OF INFLATION ....................................................... 13 OTHER MEASURES OF DRUG PRICE INFLATION................................................................ 15 CONCLUSION ............................................................................................................... 16

LIST OF FIGURES

FIGURE 1: COMPONENTS OF ANNUAL PERCENT CHANGE IN MANUFACTURER PRICES FOR AARP COMBINED MARKET BASKET OF MOST WIDELY USED PRESCRIPTION DRUGS, 2004 TO 2008.................................................................................................. 12

FIGURE 2: COMPARISON OF AVERAGE ANNUAL CHANGE IN MANUFACTURER PRICES FOR MOST WIDELY USED PRESCRIPTION DRUGS TO ALTERNATE MEASURES OF INFLATION, 2004 TO 2008............................................................................................ 14

FIGURE 3: COMPARISON OF AVERAGE ANNUAL CHANGE IN MANUFACTURER PRICES FOR MOST WIDELY USED PRESCRIPTION DRUGS TO ALTERNATE MEASURES OF PRESCRIPTION DRUG PRICE GROWTH, 2004 TO 2008 .................................................. 15

LIST OF TABLES

TABLE 1. AARP PRICE CHANGE INDICES FOR PRESCRIPTION DRUGS: COMPARISON OF DESCRIPTION, DESIGN, AND SPECIAL CONSIDERATIONS................................................ 3

TABLE 2. OTHER PRICE CHANGE INDICES FOR PRESCRIPTION DRUGS: COMPARISON OF DESCRIPTION, DESIGN, AND SPECIAL CONSIDERATIONS................................................ 4

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