Oct. 25 (UPI) -- President Donald Trump introduced a plan to allow Medicare to pay lower drug prices for Part B coverage.
Trump said the plan, known as the International Pricing Index, would end "global freeloading" by having the Department of Health and Human Services permit Medicare to set payments for drugs at a target price based on the discounts drug companies give other countries.
"For decades, other countries have rigged the system so that American patients are charged much more ... for the exact same drug," Trump said at HHS headquarters Thursday.
The HHS said Medicare currently pays 180 percent of what other wealthy countries pay for the highest cost physician-administered drugs.
"We compared the high prices Medicare pays to prices paid by countries with similar economic conditions, to better understand the discounts drug companies voluntarily offer them," HHS Secretary Alex Azar said in a series of tweets.
"Overall, the prices for Part B drugs in America exceed the prices paid in countries with similar economic conditions. These higher prices mean that Medicare pays nearly TWICE as much as it would for the same or similar drugs in other countries. We can and must do better."
Under the plan Medicare would set prices at 126 percent of the average price other countries pay for the same drugs.
The HHS said the plan would save American taxpayers and patients $17.2 billion and would cause total payment for the affected drugs to drop by 30 percent.
"The United States will finally begin to confront one of the most unfair practices ... that drives up the cost of medicine in the United States," Trump said.
"Americans pay more so that other countries can pay less," he added. "This happens because the government pays whatever price the drug companies set without any negotiation whatsoever. Not anymore."
The model is set to begin in 50 percent of the country and then scale up over time. The HHS also said Medicare beneficiaries not covered by the model could see a decrease in drug costs as the average price used to calculate traditional Medicare reimbursement will also go down.