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1 1 (July 2018)

handle is hein.amenin/aeiaaol0001 and id is 1 raw text is: Prescription Drug Pricing: An Overview of the Legal, Regulatory, and Market Environment By Joseph Antos and James C. Capretta July 2018 Policy attention is now focused on prescription drug prices, which in some cases have grown sharply in recent years, and the financial burden that high prices can sometimes place on patients. The Trump administration has announced its intention to pursue changes in various policies to bring down prices or to slow their growth. The protection of intellectual property is an important component of dynamic economic growth and medical progress in the US. However, it does create pricing power for the inventors of new therapies, which in turn makes it difficult for policymakers to ensure access to effective care is within reach for all patients and is affordable for tax-subsidized programs. The pricing of prescription drugs occurs in a market influenced by a complex web of public policies and private-sector conventions that were assembled over many years on an ad hoc basis. These policies secure somewhat lower prices for some purchasers but likely raise the prices for others. While there are no simple solutions, policymakers should study the existing arrangements carefully and consider what can be done to promote more supply competition (thus minimizing monopolistic pricing) in all drug categories. They should also think creatively about how to promote more pricing leverage for consumers rather than adopt government price controls. The policy goal is to strengthen countervailing pressure from purchasers to negotiate better prices for consumers, rather than provide preferential pricing for narrow segments of the market. American consumers and policymakers are increasingly concerned about the high cost of prescription drugs. In a recent survey, 40 percent of respondents said that lowering prescription drug prices should be Congress'top priority (Demko 2017). Lower prescrip- tion prices paid in other advanced economies are frequently cited as evidence that new policies are needed to address this issue (Council of Economic Advisers 2018). Policies to moderate the cost of prescription drugs should be based on an understanding of the complex web of federal and state laws and regulations that govern the manufacture, sale, distribution, and pricing of pharmaceuticals. The interaction of govern- mental rules, payment regulations, and industry practices is complex and often opaque, making it difficult for policymakers to develop proposals to promote lower costs while maintaining incentives for scientific research that leads to new, more effective treatments.

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