I can give you a partial answer at least.
It's estimated that about 80% of new drugs that arrive on the market have no therapeutic benefit over existing drugs. Yet if our system agrees to cover everything at any price, companies would end up engaging in major promotional campaigns to convince doctors to always prescribe the newest, more expensive, patent-protected drug. So we end up with marketing-based medicine, not evidence-based medicine.
Ultimately, it's the newest drug on the market that is prescribed, and it's more expensive but there are often generic drugs that are much less expensive with side effects that have become well known over time. We haven't developed this culture.
With regard to the hierarchy, there are what we call reference prices. Take the case of proton pump inhibitors for gastric reflux: there are 13 different ones on the market. For one of them, each pill costs $2.50, while all the others cost 40¢ or less. Under this system, the ceiling is set at 40¢ or less per pill, and the one that costs $2.50 can only be prescribed to individuals who can show that they need it for specific therapeutic reasons.