The Trump administration is rolling out a new model that aims to bring most-favored nation pricing to the Medicaid space.
The Centers for Medicare & Medicaid Services announced late Thursday the launch of the GENErating cost Reductions fOr U.S. Medicaid (GENEROUS) model, under which participating state Medicaid programs will be able to purchase certain drugs at prices that align with what is paid in other countries.
The agency said the model, which launches in 2026, is designed around "allowing Americans to benefit from fairer, more competitive pricing."
CMS said that total gross spending in Medicaid on drugs in 2024 was $100 billion, up by $10 billion from 2022. Through the model, CMS will negotiate with participating pharmaceutical companies to bring down prices, while states that sign on will be able to implement coverage criteria that is uniform and transparent.
This will create consistency across states for both patients and providers, CMS said.
"The GENEROUS Model will help ensure state Medicaid programs are paying a fair and reasonable price for prescription drugs—furthering our efforts to preserve funds for our most vulnerable," CMS Administrator Mehmet Oz, M.D., said in the announcement.
As part of the unveiling, CMS said it has released a request for applications from drugmakers that are interested in participating in the model as well as letters of intent from states. Medicaid agencies that express interest will be invited to formally apply down the line and can potentially opt in to terms and prices that are negotiated.
The model launch follows several deals inked between the Trump administration and key drugmakers like AstraZeneca and Pfizer to advance most-favored nation pricing. Novo Nordisk and Eli Lilly also agreed earlier on Thursday to bring down the price of their blockbuster weight loss drugs in the U.S.