Drug Innovations and Welfare Measures Computed from Market Demand: The Case of Anti-Cholesterol Drugs
利用个体层面数据构建抗胆固醇药物的恒定质量价格指数，发现尽管平均价格未变，但恒定质量价格指数下降27%，反映了药品质量改进对福利的影响。
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.