Price Indexes for Clinical Trial Research: A Feasibility Study

Ernst R. Berndt and Iain Cockburn

No 18918, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We estimate hedonic price indexes for clinical trial research, an important component of biomedical R&D, using a large sample of agreements between trial sponsors and clinical investigators obtained from Medidata Solutions Worldwide Inc. Nominal prices measured as total grant cost per patient rose by a factor of 4.5 between 1989 and 2011, while the NIH Biomedical R&D Price Index (BRDPI) focused on input costs rose only 2.2-fold. Most of the disparity appears to be attributable to changes in the nature and organization of clinical trials: during this period the average number of patients per site fell substantially while "site work effort" more than doubled. After controlling for these changes in the characteristics of investigator agreements using a variety of methods based on hedonic regressions, we find that the estimated rate of inflation in clinical trials costs tracks the BDRPI very closely. Results from this study suggest that it should be feasible for statistical agencies to develop a producer price index for this type of R&D activity, contributing to broader efforts to develop a deflator for contracted R&D services.

JEL-codes: E31 L65 O49 (search for similar items in EconPapers)
Date: 2013-03
New Economics Papers: this item is included in nep-hea, nep-ino and nep-mac
Note: PR
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Published as June 2014 Price indexes for clinical trial research: a feasibility study

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