Price indexes for pharmaceuticals used by the elderly

Area of Science:

• Health Economics
• Pharmaceutical Policy
• Geriatric Medicine

Background:

• Elderly populations often incur substantial healthcare expenditures.
• Understanding prescription drug cost drivers is crucial for effective healthcare management.
• Existing price indexes like the Producer Price Index (PPI) and Consumer Price Index (CPI) do not adequately capture drug-specific trends for the elderly.

Purpose of the Study:

• To identify prescription drug entities significantly contributing to retail expenditures among the elderly.
• To develop specialized price indexes for drugs utilized by the elderly population.
• To analyze historical price trends for elderly-specific drug groupings.

Main Methods:

• Utilized commercial databases to gather prescription drug expenditure data for the elderly.
• Developed fixed-weight Laspeyres price indexes tailored to the elderly drug market.
• Analyzed price trends from 1981 to 1988 using the newly developed indexes.

Main Results:

• Identified specific drug entities that represent a significant portion of elderly prescription drug retail costs.
• Manufacturers' prices for these drugs increased at an average annual rate of 9.1% from 1981-1988.
• Retail prices for these drugs increased at an average annual rate of 6.6% during the same period.

Conclusions:

• The developed price indexes offer a powerful tool for analyzing drug price trends in the elderly population.
• Accurate drug price trend analysis is essential for forecasting and managing drug program expenditures.
• These findings highlight the need for targeted strategies to manage prescription drug costs for seniors.