Price indexes for pharmaceuticals used by the elderly

The analysis presented in this report was undertaken to identify those drug entities that account for a significant proportion of the retail expenditures for prescription drugs used by the elderly. Commercial data bases were used to develop fixed weight Laspeyres price indexes based specifically on drugs used in the elderly population. The indexes provide the capability to analyze price trends for drug groupings that are not possible with the producer price index (PPI) or the Consumer Price Index (CPI). From 1981 through 1988, the average annual rate of increase in manufacturers' prices was 9.1 percent, and retail prices increased at an average annual rate of 6.6 percent. The indexes represent potentially powerful tools in analyzing drug price trends, an important component of drug program expenditure forecasting and management.