An Evaluation of the CPI Indexes for Prescription Drugs

The prescription drug component of the Consumer Price Index (CPI measures recent and past drug price changes, and provides the basis for projecting future price trends and health care expenditures. However, there are concerns about the adequacy of the price data because of recent changes in the structure of the market for prescription drugs. We compare the prescription drug data of the CPI with a large alternative data set from the IQVIA Institute for Human Data Science. We analyze the overall consistency if the data from the two sources, and examine the influence of the large shift from brand to generic drug sales and the increased reliance on third party insurance plans that are excluded from the CPI sampling frame.