Scholarship@WashULaw

Document Type

Article

Language

English (en)

Publication Date

2025

Publication Title

Indiana Law Journal

Abstract

Scholars and policymakers have expressed concern about the impact of high prescription drug costs on patients and healthcare budgets. This Article presents a new theoretical framework for evaluating both the problem to be addressed by drug pricing reforms as well as the efficacy of potential solutions. In seeking to solve “the drug pricing problem,” our legal system has given primacy to competition rather than regulation to drive down drug prices. This Article disaggregates the broader concept of “the drug pricing problem” into four steps, each of which must be addressed and each of which elevates different institutional actors to key roles. In the first step, approval, both new drugs and their competitors must receive approval from relevant regulators. In the second step, coverage, new drugs and their competitors must be covered by insurers. In the third step, prescription, physicians must prescribe a particular drug or its competitor. And in the fourth step, substitution, pharmacists must be able to substitute a lower-cost product for its branded version.

Different areas of law — including health law, food and drug law, and patent law — and different institutional actors — including federal agencies, private insurers, physicians, pharmacies, and pharmaceutical companies — have distinct roles to play at each step of the framework. Identifying and describing each of these steps in terms of both the functions to be performed and the institutional actors performing them helps explain the existing structure of drug pricing law and policy. Some potential reforms might be incomplete in their scope, while other doctrines and institutional actors may have the ability to cut across steps, achieving greater impact. This Article categorizes drug pricing reforms according to the above-described steps, emphasizing policymakers’ focus on approval and substitution and more limited interest in coverage and prescription. Ultimately, this Article presents a series of legal and policy proposals to redirect reform efforts toward coverage and prescription, which may both more fully resolve existing legal bottlenecks and improve the efficacy of already-enacted reforms.

Keywords

Health Law, FDA Law, Patent Law, Drug Pricing, Healthcare Competition

Publication Citation

Rachel Sachs, A New Framework for Drug Pricing Law and Policy, __ Ind. L.J. __ (forthcoming 2025)

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