Policy Approaches to Reducing Prescription Drug Prices
This paper examines the rising cost of prescription drugs in the United States and evaluates policy strategies aimed at reducing prices for consumers. Drawing on legislative developments from 2017 and 2018, the paper reviews four main approaches: improving price transparency, enabling federal price negotiation, addressing price gouging, and allowing importation of lower-cost drugs from other countries. The paper also offers recommendations including expedited FDA drug approvals, pharmacist substitution authority, patent loosening for generic manufacturing, and better consumer information about drug efficacy. The analysis concludes that a combination of political will and coordinated federal and state action can help bring U.S. prescription drug costs in line with those of other developed nations.
- Introduction: Legislative backdrop of U.S. drug pricing debate
- Improving Price Transparency: State laws requiring drug price disclosure
- Price Negotiation and Government Purchasing Power: Federal negotiation to lower drug contract prices
- Addressing Price Gouging: Attorney General powers against price inflation
- Drug Importation: Allowing cheaper foreign drug imports
- Conclusion and Recommendations: Five policy steps to curb drug costs
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What makes this paper effective
- The paper systematically organizes a complex policy topic into discrete, actionable approaches, making each strategy easy to evaluate independently.
- It supports claims with specific legislative examples, such as Nevada's insulin pricing law and the FDA Reauthorization Act of 2017, grounding abstract policy arguments in concrete evidence.
- The inclusion of a comparative price statistic (Copaxone costing over 287% more in the U.S. than in Switzerland) effectively illustrates the scope of the problem.
Key academic technique demonstrated
The paper demonstrates policy analysis writing, a technique that identifies a public problem, surveys existing or proposed solutions, and evaluates their practical implications. Rather than simply describing the issue, the author assesses each policy mechanism's potential impact on stakeholders — consumers, government agencies, and pharmaceutical companies — and concludes with targeted recommendations.
Structure breakdown
The paper opens with an introduction establishing the legislative and political context. It then moves through four numbered policy approaches: price transparency, price negotiation, anti-gouging measures, and drug importation. A brief conclusion is followed by a bulleted recommendations section that synthesizes the paper's findings into five actionable steps. References are provided in APA format. This structure mirrors a policy brief or executive summary report common at the undergraduate level.
Introduction
The ever-increasing cost of medication is a central concern in many forums, and neither the media nor politicians have failed to notice it. Over 25 bills and numerous committees were established to investigate the matter in 2017 alone. While the issue of pricing has not attracted homogenous views, efforts to increase market competition have drawn attention from across the political divide. The FDA Reauthorization Act of 2017, which passed both houses quite easily, identified a quick route to allow certain generics when the secretary determines that generic competition is not adequate (Mody and Blackwood, 2018).
In a recent Senate Health, Education, Labor, and Pensions Committee hearing, members from both sides of the aisle agreed on the need for competition and on the importance of thwarting anti-competitive practices. They agreed that it was important to introduce generics and biosimilars to the market whenever determined appropriate, and they also called for the abolition of pay-for-delay agreements.
Improving Price Transparency
While increasing transparency will not by itself fully reduce the price of prescription drugs, laws that enforce transparency practices are still required. Such laws will not only discourage pharmaceutical companies from raising prices without due justification, but will also lay a basis for future reform in the sector. The bills before legislatures in various states differ in their scope and thoroughness. The states of Nevada and California have signed into law bills designed to curb prescription drug price escalation. One such law in Nevada requires that those who price insulin must justify any increase above a certain threshold. The law demands that insulin manufacturers and dealers report their cost-and-revenue dynamics, including the profits they make each year (Benavides, 2018).
Transparency requirements also extend to Pharmacy Benefit Managers (PBMs) — the intermediaries that negotiate the price of prescription drugs on behalf of large pharmaceutical companies, insurance companies, and employers. Additionally, donations from pharmaceutical companies and other industry players are made public, thanks to interventions by patient advocacy groups.
Price Negotiation and Government Purchasing Power
There is a clear need for federal agencies to enter into direct negotiations for contracts on covered drugs. Such a move would position the government as a stronger purchaser of prescription drugs, enabling it to secure lower prices. The benefits would be felt across the health sector and by consumers directly. Encouraging competition is a central goal of this approach, with the ultimate aim of facilitating easier access to prescription drugs and medication in general.
The prices of the most expensive drugs would be tracked by the relevant government agencies, which would then seek to determine from pharmaceutical companies why particular drugs carry such high price tags, with a view to revising pricing downward. Where necessary, the government would use statutory authority to ensure that prices do not exceed a defined ceiling in cases where drugs are found to be overpriced (Huelskoetter, 2018; Benavides, 2018). Such a cap imposed by the authorities would serve as an enforceable upper limit.
Conclusion and Recommendations
Policymakers and consumer advocacy groups at both the federal and state levels can work in coordination to ensure that the prices of critical drugs are kept in check. While the pharmaceutical lobby is clearly powerful, with its immense financial resources, the country needs only political will to overcome the problem.
There are five key ways to address the issue of overly priced prescription medicine:
1. Government authorities should make information regarding the efficacy of drugs available so that consumers can make informed choices about which drugs provide the best value for the conditions they seek to treat.
2. Pharmacists should be empowered to substitute expensive drugs with lower-priced alternatives that offer similar therapeutic benefits.
3. The FDA could be directed to speed up drug approval processes to increase the availability of competing products.
4. Importation of drugs from other countries should be allowed where doing so would reduce costs for consumers or address local drug shortages.
5. Drug manufacturing authorities could facilitate the loosening of patents on certain drugs, thereby permitting generic manufacturing.
These measures could help the health sector manage the ever-increasing cost of medication and allow patients to access medicine more easily. In time, the cost of healthcare in the United States could compare more favorably with that of other developed countries.
References
Benavides, L. R. (2018). 2017 Legislative Recap: Important Bills from Nevada's 79th Legislative Session. Nevada Law Journal Forum, 2(1), 4.
Cox, C., Kamal, R., Jankiewicz, A., & Rousseau, D. (2016). Recent trends in prescription drug costs. JAMA, 315(13), 1326.
Huelskoetter, T. (2018). State Policies to Address Prescription Drug Prices. Center for American Progress.
Mody, P. R., & Blackwood, K. (2018). 5 Health Care Policy Issues to Follow in 2018. Arnold & Porter. Retrieved from https://www.arnoldporter.com/en/perspectives/publications/2018/01/5-health-care-policy-issues-to-follow-in-2018 on 8 November 2018.
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