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Price index of pharmaceutical Price index of pharmaceutical products, other medical products and products, other medical products and appliances in the HICP/CPIappliances in the HICP/CPIPia Skare Rønnevik

Price index of pharmaceutical products, other medical products and appliances

• Before January 2012

- scanner data and data collected from paper and web forms

- the data was only used for some representative items

- scanner data from two of the three major pharmacy chains since 2004

- in 2010 the last chain agreed to deliver scanner data

• From January 2012

- scanner data from the three largest pharmacy chains

- scanner data from the five largest grocery chains

Data collection – monthly scanner data

• The scanner data refers to the midweek of the month (includes the 15th every month), and contains information on the following variables:

- unique identifier of the stores

- unique identifier of the product

- product description

- product size

- group identifier

- group description

- quantity sold (in the midweek of the month)

- average price

- period

- week identifier

The sample• The sample of stores from the pharmacy chains

- is selected according to the general sampling plan for the CPI

- the establishments make up a panel sample in which 1/6 of the sample is rotated every year

- the selection is made after stratifying the population by industry and region

- the probability to be selected is proportional to the size of the turnover

- consists of 3 chains that deliver scanner data for 118 stores

- receives 530 000 observation from the pharmacy chains

The classification levels of medical products, appliances and equipment

061 Medical products, appliances and equipment

0611 Pharmaceutical products

0612 Other medical products

06110 Pharmaceutical products

06121 Pregnancy tests and mechanical contraceptive devises

06129 Other medical products

06110_01296 Prescription products06110_01297 Non-prescription pain-reliever06110_01298 Non-prescription allergy06110_01299 Non-prescription nose/throat medicine06110_01300 Non-prescription digestion06110_01301 Non-prescription food supplement

06121_01302 Pregnancy tests and mechanical contraceptive devises

06129_01303 Other medical products

The attrition rate

• The average attrition rate between current month and previous month:

- 46 % for the prescription products

- 31 % for the non-prescription products

- 42 % for other medical products

• The 12 months attrition rate:

- 62 % for the prescription products

- 49 % for the non-prescription products

- 59 % for other medical products

Cut-off analyses

• To reduce the attrition rate, we performed various cut-off analyses and decided to use:

- the frequency of the products as the cut-off variable

- a product is included if it has been sold at least 50 items or more in one of the months

through the reference year, and if the product has been sold in the price reference month

Index formula

• We conducted several analyses with and without weights at elementary level (at a national COICOP level 6) for the chains separately, before we decided:

- unweighted geometric index formula (Jevons index)

• The reasons for us to make unweighted geometric indices on COICOP level 6 are:

- weighted and unweighted indices didn’t give us that different results

- the index for the medical products has by itself so low weight in the total CPI that we don’t want to establish very resource demanding methods

Index formula

Other medical products

88

90

92

94

96

98

100

102

104

106

200906 200907 200908 200909 200910 200911 200912 201001 201002 201003 201004 201005 201006

Tornguist_kutt_mean

Jevens_kutt_mean

Prescription drugs

97

98

99

100

101

200906 200907 200908 200909 200910 200911 200912 201001 201002 201003 201004 201005

Tornguist_kutt_mean

Jevens_kutt_mean

Non-prescription drugs

94

95

96

97

98

99

100

101

102

103

104

200906 200907 200908 200909 200910 200911 200912 201001 201002 201003 201004 201005 201006

Tornguist_kutt_mean

Jevens_kutt_mean

The price indices for one of the chains (June 2010=100)

Imputation

• We have chosen to impute missing prices in both current and price reference month:

- impute missing prices with respect to the rate of change of the other observations within the same item

- impute missing prices with respect to the rate of change of the other observations within the same category that the item belongs to

- impute missing prices with respect to the rate of change rate of the total for 5-digit COICOP level

• An observation that has price ratio (pt/pt-1) less or equal to 0.3333 or higher or equal to 3 is declared as an extreme observation:

- we choose to impute an extreme value based on the same imputation rules as the other imputed observations

Prescription drugs and ATC-codes

• We discovered in our analyzes that prescription drugs have a downward trend in price indices over time:

- this trend can be explained by the fact that these prescription drugs have a so-called step-ladder system.

• The results of what happens if we created indices for different ATC-codes:

- the use of ATC-codes seem to make the index for prescription drugs more stable, and the downward trend is reduced.