Drug Innovations and Welfare Measures Computed from Market Demand: The Case of Anti-Cholesterol Drugs

Abe Dunn

BEA Working Papers from Bureau of Economic Analysis

Abstract: The pharmaceutical industry is characterized as having substantial investment in R&D and a large number of new product introductions, which poses special problems for price measurement caused by the quality of drug products changing over time. This paper applies recent demand estimation techniques to individual level data to construct a constant-quality price index for anti-cholesterol drugs. Although the average price for anti-cholesterol drugs does not change over the sample period, I find that the constant-quality price index drops by 27 percent, a pace more in line with our expectations in such a dynamic segment of the industry.

JEL-codes: E6 (search for similar items in EconPapers)
Date: 2010-10
New Economics Papers: this item is included in nep-com, nep-hea, nep-ino and nep-mac
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Citations: View citations in EconPapers (7)

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Journal Article: Drug Innovations and Welfare Measures Computed from Market Demand: The Case of Anti-cholesterol Drugs (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:bea:wpaper:0057

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