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Drug control governance involves the oversight and regulation of pharmaceuticals to ensure their safety and efficacy while preventing illegal drug use and trafficking. Regulatory bodies, including the US Food and Drug Administration (FDA) and the European Union's European Medicines Agency (EMA), play a central role in this process. These agencies evaluate the safety and efficacy of drugs before they can be marketed. They fund clinical trials and assess the benefits and risks associated with...
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Reforming Drug Price Regulation: Using Tools That Work.

Deborah Williams1, Steven C Zima2, Brian J Miller3,4

  • 1Health Policy Insights LLC, Greer, SC, USA.

Inquiry : a Journal of Medical Care Organization, Provision and Financing
|May 14, 2025
PubMed
Summary
This summary is machine-generated.

Government regulation on drug pricing fails to improve affordability and creates hidden costs. A shift towards market-based reforms and reduced regulatory burden is proposed to lower drug costs for all stakeholders.

Keywords:
MedicaidMedicaredrug pricingexternalitiesincentivesmarketout of pocketrebatespillover effectsvalue-based

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Area of Science:

  • Health Economics
  • Pharmaceutical Policy
  • Regulatory Analysis

Background:

  • Historical drug pricing reform has prioritized regulation and administrative pricing for public programs.
  • These regulatory approaches have not effectively driven affordability and have introduced unintended system costs.

Purpose of the Study:

  • To examine the consequences of regulatory-driven drug pricing strategies.
  • To propose a new paradigm for drug pricing reform focused on market-based interventions.

Main Methods:

  • Analysis of existing regulations impacting government drug payments, including the Medicaid Drug Rebate, Inflation Reduction Act Maximum Fair Price, and Medicare Part B Average Sales Price.
  • Evaluation of private market policies such as co-insurance reform, private formularies, specialty pharmacies, and value-based contracting.

Main Results:

  • Regulated prices do not ensure affordability and generate hidden costs within the drug market.
  • Existing government programs create systemic inefficiencies when viewed from a total market perspective.

Conclusions:

  • A shift from programmatic affordability views to understanding the total regulatory impact on drug costs is essential.
  • Reducing regulatory burden and fostering competition through market-based reforms will ultimately improve drug affordability for payers, employers, and consumers.