Price Indexes for the Treatment of Depression

Richard G. Frank, Ernst R. Berndt and Susan H. Busch

No 6417, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We construct price indexes for treatment of a specific illness, acute phase major depression, using treatment episodes of care (rather than fixed input bundles) to define quantity. We identify different treatment service bundles that combine varying quantities of prescription drugs, medical management and psychotherapy. We make use of results from clinical research and official government guidelines for standards of care to identify therapeutically similar treatment bundles. We then employ various index number formulae that involve differing assumptions on the extent of ex ante substitutability among these treatment bundles. Rather than using list prices, we utilize actual transactions data based on a MEDSTAT retrospective medical claims data base covering more than 400,000 individuals over the 1991-95 time period. We distinguish between consumers' direct payments (a CPI index) and total payments received by providers (a PPI). Although not directly comparable to BLS indexes indicating 15-25% price growth 1991-95, our CPI and PPI price indexes decline 20-30%, implying an average annual price differential from BLS indexes of about -15%.

JEL-codes: C43 I11 (search for similar items in EconPapers)
Date: 1998-02
Note: EH PR
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published as Triplett, Jack E. (ed.) Measuring the prices of medical treatments. Washington, D.C.: Brookings Institution Press, 1999.

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