The Global Commission on Drug Policy report calls for the legalisation of some drugs and an end to the criminalisation of drug users.
The panel includes former UN Secretary General Kofi Annan, the former leaders of Mexico, Colombia and Brazil, and the entrepreneur Sir Richard Branson.
The US and Mexican governments have rejected the findings as misguided.
The Global Commission's 24-page report argues that anti-drug policy has failed by fuelling organised crime, costing taxpayers millions of dollars and causing thousands of deaths.
It cites UN estimates that opiate use increased 35% worldwide from 1998 to 2008, cocaine by 27%, and cannabis by 8.5%.