The Centers for Medicare & Medicaid Services (CMS) today announced a landmark initiative, the GENErating cost Reductions fOr U.S. (GENEROUS) Medicaid Model, aimed at significantly lowering prescription drug spending, improving patient access to critical medications, and strengthening the overall Medicaid program.
The voluntary pilot program, set to launch in 2026, will allow participating state Medicaid programs to purchase select drugs at prices aligned with those paid in certain other developed countries—a concept referred to as most-favored-nation pricing. This mechanism is designed to secure fairer, more competitive pricing for the American taxpayer.
The announcement comes as prescription drug spending in Medicaid continues to climb, exceeding $100 billion ($60 billion after existing rebates) in 2024, a notable $10 billion increase from 2022 figures.
“Thanks to President Trump’s leadership and Dr. Oz’s bold direction at CMS, we’re expanding access to affordable medicines for millions of Americans,” said Health and Human Services Secretary Robert F. Kennedy, Jr. “By bringing most-favored-nation pricing to Medicaid, we’re driving down drug costs and protecting the future of care for our most vulnerable citizens.”
CMS Administrator Dr. Mehmet Oz echoed the sentiment, stating, “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.”
Under the model, CMS will negotiate lower prices with interested drug manufacturers. In turn, states that adopt the GENEROUS model will implement uniform, transparent coverage criteria. CMS officials say these consistent standards will give patients and providers predictable access across all participating states.
“GENEROUS aims to ensure that Medicaid pricing will be on par with those in other developed nations,” said CMS Innovation Center Director Abe Sutton, expressing hope that all eligible Medicaid programs will participate in the pilot.
The announcement follows previous agreements between the White House and pharmaceutical companies to lower drug prices. CMS plans to release a Request for Applications (RFA) for drug manufacturers later this fall, and will also begin soliciting letters of intent from state Medicaid agencies interested in the program.
The model represents a major step in the administration’s efforts to control healthcare costs and ensure drug prices in the U.S. are commensurate with global standards.
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