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US taxpayers are in line to save $160bn over the next decade as the Biden administration announced that dozens of pharmaceutical companies would be penalised for raising drug prices faster than inflation.

In the last quarter of 2023, prices for 48 drugs rose faster than inflation, triggering a provision in the Inflation Reduction Act aiming to reform drug pricing, the White House said Thursday. In the past year, 64 drug prices rose faster than inflation.

Companies whose products breached that threshold would be required to pay rebates to Medicare, the publicly funded health insurance for seniors.

President Joe Biden said on Thursday afternoon the move would save $160bn over 10 years for taxpayers by saving money for Medicare.

The White House also said drugmakers that agree contracts for pandemic preparedness would have to commit to ensure the price in the US would not be higher than in other comparable markets.

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