Obama: Deal is 'turning point' in US health reform

The pharmaceutical industry has agreed to spend $US80 billion ($NZ127 billion) over a decade to defray the cost of health care reform and improve coverage for the elderly, causing President Barack Obama to say the nation is at "a turning point" in his effort to bring health insurance to all Americans.

After secretive negotiations involving key lawmakers and the White House, the pharmaceutical industry agreed Saturday to improve drug benefits in the government's Medicare program for the elderly, narrowing a gap in prescription coverage.

While the changes in the prescription drug programme would directly lower government costs, several officials also said the industry agreed to measures that would give the Treasury more money under federal health programmes.

In particular, officials said drug companies would likely pay higher rebates for certain drugs under Medicaid, the government program that provides health care for the poor.

Those funds would be used to help pay for legislation expanding health insurance for millions who now lack it.

Obama campaigned on a promise of offering affordable health care to all Americans. The United States is the only developed nation that does not have a comprehensive national health care plan for all its citizens. The government provides coverage for the poor, elderly and disabled, but most Americans rely on private insurance, usually received through their employers. Nearly 50 million Americans are uninsured.

"We are at a turning point in America's journey toward health care reform," Obama said Saturday of the deal.