It concludes that the higher USA prices means Medicare pays almost twice as much as the program would pay for the same or similar drugs in other countries.
"We're taking aim at the global freeloading that forces American consumers to subsidize lower prices in foreign countries through higher prices in our country", Trump said in a speech at the Department of Health and Human Services.
Under the new proposal unveiled at an event at the Department of Health and Human Services on Thursday, President Donald Trump and health secretary Alex Azar said that the administration would create a reference price for high-cost medicines paid for by Medicare, based on comparable prices from other countries. "The proposal more aggressively moves to have the government intervene to lower drug prices than proposals often favored by Republicans", The Hill's Peter Sullivan says.
In advance of Trump's speech, HHS released a report that found USA prices for the top drugs administered in doctors' offices are almost twice as high as in foreign countries.
HHS based its IPI model on an analysis comparing Medicare spending for Part B physician-administered drugs to the prices of those drugs in 16 other developed economies-Austria, Belgium, Canada, Czech Republic, Finland, France, Germany, Greece, Ireland, Italy, Japan, Portugal, Slovakia, Spain, Sweden, and the U.K. According to HHS, the us spent 1.8 times more for the drugs than the 16 countries studied.
"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. Drug spending within Medicare Part B reached $22 billion in 2015, and drug costs have increased by an average of 8.6 percent annually since 2007.
"Americans pay more so that other countries can pay less", he added.
Drug industry lobby the Pharmaceutical Research and Manufacturers of America, or PhRMA, quickly criticized the proposal in a statement that appeared to be meant as a dig at universal healthcare - something that a growing number of political leaders have proposed for the U.S. - in addition to defending the U.S. pricing system.
Administration actions have yet to show major impact on the cost of prescription drugs. But the drug industry is unlikely to embrace the proposal, and a similar effort to address Medicare Part B prices in the Obama administration went nowhere, says Politico.
Trump, too, promised more to come and said he will soon announce "some things that will really be tremendous".More news: Knife attacker wounds 14 children in Chinese kindergarten
In addition to trying to cut the base price of the drugs, the administration, through HHS, is proposing changing how doctors who deliver these drugs are paid.
Having companies known as pharmacy-benefit managers negotiate for lower drug prices in the way they now do in Part D plans, which cover the prescription drugs you pick up at a pharmacy. The United States is the biggest funder of research and development in the pharmaceutical sector, yet now lacks the bargaining power to bring prices down - unlike in countries with public health-care programs. Under the Trump administration proposal, private-sector vendors would negotiate down drug prices and supply the medicines to doctors and hospitals.
Trump also appeared to call out Part B spending on Amgen's bone drug Prolia (denosumab). The proposal would also allow HHS officials to charge a flat incentive fee for doctors who prescribe certain medications; now, doctors can receive higher fees for more expensive drugs. In contrast, Part D spending on drugs has risen much more slowly.
Azar said Medicare spent about $8 billion more for drugs in the study than it would have if the prices were scaled to global prices. The report notes Part B is not subject to restrictions on the drugs that are covered, meaning there is little incentive to tamp down costs. In a March Kaiser Family Foundation poll, eight in 10 respondents said drug costs are unreasonable and 92 percent said passing legislation to bring down the cost of prescription drugs should be a top or important priority.
Trump has made lowering drug prices a central promise of his presidency.
The president in May also claimed drug companies would be announcing "massive" voluntary price cuts.
While negotiations between England's government and pharmaceutical companies may take months, the drugs that make it through are available to the entire population, she said.
High drug prices have also been a source of anxiety for many Americans.