The timing, just two weeks before the midterm elections, also bolsters the administration's argument that it is acting aggressively to curb soaring drug prices, even as Democrats around the country have made health care costs and perceived greed within the pharmaceutical industry central to their campaigns. The so-called "target price" of these drugs, which include treatments for cancer, would be 126% of the average of what other countries pay.
"For decades, other countries have rigged the system so that American patients are charged much more", President Trump said Thursday in a speech at the U.S. Department of Health and Human Services, which administers Medicare. And the Department of Health and Human Services is already out with a report that names the specific drug companies that charge more for their medicines in the US than in other countries.
"Same company. Same box".
By tying the price Medicare is willing to pay to the price in other countries, Trump is effectively piggybacking on the efforts by governments in those countries to lower drug costs.
The speech was a a continuation of an effort set in motion in May, when the Trump administration laid out a 44-page drug-pricing blueprint, calling out middlemen in the pharmaceutical industry and "freeloading" by other countries that pay less than the United States for prescription drugs.
Under a demonstration project in half the country, Medicare would create and use and "international pricing index" to decide how much to pay for drugs covered by Part B of Medicare. That's the law also known as "Obamacare", which Trump is committed to repealing.
Trump also signed sweeping legislation at the White House on Wednesday tackling the opioid crisis, although some experts say it is only a first step.
Both protecting people with preexisting conditions and bringing down prescription drug prices rank high among voters concerns headed into the election.
Medicare Part B, which covers drugs administered in a doctor's office, now pays 106 percent of the "average sales price" for drugs, based on data submitted by drugmakers.
In some cases, European patients have to pay the difference between the government's reference price and what the company charges for a drug, said University of York's Moreno-Serra.
Drugmakers are sure to push back, arguing it would be tantamount to adopting price controls. Instead, the payment would be a set amount per encounter or per month for an administered drug.
USA exit from nuclear arms pact increases risks of war: Mikhail Gorbachev
Washington has cited Russia's alleged violation of the treaty as its reason for leaving it, a charge Moscow denies. Stationing of US land-based nuclear missiles in western Europe provoked mass protests in the 1980s.
"Americans pay more so that other countries can pay less, very simple, that's exactly what it is", Trump said on Thursday. But basing Medicare reimbursement on what other countries pay would be a huge departure from how the program now works - and run counter to Republicans' allegiance to the free market system. But that's "quite literally the opposite of what is being proposed".
"Medicare could achieve significant savings if prices in the United States were similar to those of other large market based economies, " the report concludes.
Democratic leaders on Capitol Hill were dismissive. Medicare pays directly for them under its "Part B" coverage for outpatient care.
"The world reaps the benefits of American genius and innovation, while American citizens, and especially our great seniors who are hit the hardest pick up the tab", Trump said.
The main health insurance industry trade group, at odds with drugmakers over prices, applauded the administration's action.
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.
Shortly after Trump's speech, pharmaceutical industry lobby group PhRMA said it opposed the changes, which it said would limit access to drugs for cancer and chronic conditions like rheumatoid arthritis.
"Something has to change in how Medicare pays for physician-administered drugs", Azar said at the Brookings Institution think tank in Washington.
HHS says overall savings to Medicare would total $17.2 billion over five years. Beneficiaries would save an estimated $3.4 billion through lower cost-sharing. It could pay them a flat fee, instead of the current system of providing a percentage of the medication's cost. However, HHS officials said the plan is designed so it would not cut into doctors' reimbursements. Azar said politics would have nothing to do with it. Matt Brow, president of industry consulting firm Avalere Health, said he expects the administration to publish the rule for comment by year's end.