The U.S. government will begin imposing penalties in 2025 on drug companies that charge its Medicare program prices that rise faster than inflation, the Centers for Medicare & Medicaid Services said Thursday.

The center issued initial guidance on how it will implement a provision in President Joe Biden's signature Inflation Reduction Act that penalizes drugmakers for raising prices faster than inflation.

"The Medicare Prescription Drug Inflation Rebate Program will require drug companies with excessive increases in drug prices to pay rebates to Medicare," center Administrator Chiquita Brooks-LaSure said in a statement.