The need for change is urgent, the panel said, because more than half of all people in the United States routinely use prescription drugs, and 15 percent regularly take five or more drugs.

The report does not endorse price controls, saying they could erode incentives for the development of valuable new drugs. But the panel recommended many other steps to promote competition and make drugs more affordable. The government, it said, should take steps to prevent “common industry practices that delay the entry of lower-cost generic drugs into the market.”

In addition, the panel said that public and private health insurance plans should be modified to reduce the financial burden on patients who need costly prescription drugs. The patient’s share of the cost “should be calculated as a fraction of the net purchase prices of drugs” — after rebates and discounts — “rather than the list prices from manufacturers,” the benchmark now widely used, it said.

The report is significant for several reasons. It gives the imprimatur of a respected national organization to a searing critique of the way drugs are bought and sold. It brings together a huge amount of research on the economics of the industry. And it coincides with a groundswell of public concern about drug costs that is reverberating in Congress.

But some of the proposals are anathema to brand-name drug companies, which can be expected to mobilize a small army of lobbyists to oppose ideas like price negotiations with the government or changes in the tax treatment of drug advertising. Such advertising, they say, often benefits consumers, informing them of treatments that can prolong life or improve its quality.