HERC Seminar: Developing New Policies in Response to Rising Drug Prices in the U.S.

The U.S. prescription drug market has faced dramatic price increases over the past several years, drawing attention to a number of generic and specialty drug price hikes. Existing U.S. policies fail to protect against these price hikes, and in most cases are legal. Several policies in particular, including the Orphan Drug Act (1983), the Hatch-Waxman Act (1984) for generic Pharmaceutical entry, and the Medicare Modernization Act (2003) do more to incentivize price hikes today than protect consumers. These actions have left the chronically comorbid and indigent patients most vulnerable. With data from the U.S. Food and Drug Administration and Truven Marketscan, we explored the impact that these policies have had on pharmaceutical pricing using cost-effectiveness analysis and multilevel regression modeling. We have found that small revisions to the aforementioned policies, if enacted simultaneously, could significantly reduce and control pricing in the pharmaceutical market without deterring pharmaceutical innovation.