Should the federal government have greater authority to regulate prescription drug prices?

Background

The question of whether the federal government should have greater authority to regulate prescription drug prices is at the center of an intensifying national debate. According to KFF polling, 82 percent of Americans say the cost of prescription drugs is unreasonable, and majorities across party lines believe there is not enough regulation over drug pricing. The federal government has already taken significant steps in this direction. Under the Inflation Reduction Act of 2022, Medicare gained the power to directly negotiate prices for certain high-cost drugs for the first time. The Centers for Medicare and Medicaid Services negotiated prices for an initial ten Part D drugs that took effect in January 2026, with negotiated discounts ranging from 38 to 79 percent off list prices. CMS estimates those negotiated prices will save Medicare beneficiaries approximately 1.5 billion dollars in out-of-pocket costs and the program roughly 6 billion dollars overall. The program is expanding: CMS selected 15 additional drugs for a third round of negotiations in early 2026, including, for the first time, drugs covered under Medicare Part B. Meanwhile, the Trump administration has pursued executive action on most-favored-nation pricing, seeking to align U.S. drug prices with those in other wealthy nations, and Congress enacted new reforms targeting pharmacy benefit manager business practices in the Consolidated Appropriations Act of 2026.

Supporters of expanded federal authority argue that market dynamics alone have failed to keep drug prices affordable. A study by the Office of the Assistant Secretary for Planning and Evaluation found that U.S. brand drug prices, net of rebates, are roughly 322 percent of prices paid in comparable countries. Advocates say government negotiation and price regulation can deliver direct savings to patients and taxpayers while still allowing companies to profit. Opponents counter that greater regulation risks undermining pharmaceutical innovation. The Academy of Managed Care Pharmacy opposes government regulation of drug pricing, citing the potential for unintended consequences such as cost-shifting and reduced incentives for research. A peer-reviewed study published in Research in Social and Administrative Pharmacy found that more widespread price regulation would likely result in decreased research and development spending and fewer new products. RAND Corporation research has also cautioned that regulatory approaches reducing pharmaceutical revenues may generate modest consumer savings but risk larger long-term costs as decreased innovation leads to fewer breakthrough treatments.

What is at stake affects virtually every American. Prescription drugs account for about 10 percent of national health expenditures, and millions of patients, particularly seniors on Medicare and those with chronic conditions, face difficult choices when medications are unaffordable. Expanded regulation could lower costs for consumers and reduce government spending, but critics warn it could also slow the pipeline of new treatments at a time of rapid biomedical advancement. As the Medicare negotiation program scales up and executive actions on international reference pricing move forward, the policy choices made in the coming years will shape both the affordability of medications and the future of drug development in the United States.