Collaborative Research: TLS: An Experimental Producer Price Index for Clinical Trials

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Project Description.This research project studies the feasibility of constructing price indexes specifically for clinical trials, an important component of healthcare R&D. Increasing health care R&D spending is an important policy issue, but changes in expenditure are very difficult to evaluate without knowing whether these increases are due to changes in the prices of inputs to biomedical research, as opposed to changes in the quantity of research being performed.Intellectual MeritThe project constructs a "price deflator" that decomposes growth in total expenditure into price and quantity components. Very few of these price indexes have been constructed specifically for scientific research, not least because R&D activities tend to be highly heterogeneous, and therefore difficult to compare meaningfully year-to-year or across different contexts. Sufficiently detailed data make it possible both to make price comparisons that hold constant factors such as the stage of clinical development, therapeutic area, and number of patients, and to control for the complexity and work burden associated with different trial designs, The methodology that is used "hedonic price analysis" has been well-established in many areas, such as constructing deflators for IT products, but not has not previously been applied to scientific research activity. These price indexes, combined with data on clinical trial activity published in public registries such as clinicaltrials.gov, allow the construction of broad-based estimates of clinical trial expenditures broken out by state, country, and type of R&D performer. Broader Impact.Along with evidence on the evolution of the price of clinical research, this project sheds light on a number of methodological issues relating to the integration of R&D investment into the national income accounts, and informs important policy debates surrounding the "outsourcing" and "offshoring" of US R&D, and the global competitiveness of American medical research establishments. Clinical trials are increasingly being performed outside traditional US academic medical centers, at physicians' offices, clinics, and provider networks, as well as by specialized for-profit entities. Moreover, trials have become increasingly global, with a single protocol collecting data from sites in many different countries. These new features of clinical trials are one example of broader changes under way in the distribution of R&D activity across geographies, actors, and institutions. This research project helps develop a better understanding of the economic forces underlying this phenomenon.This approach can be used by BEA and other agencies in developing estimates of the impact of R&D on real and nominal gross domestic product, even at the state or regional level, which is very difficult to do with current data.