President Donald Trump announced Friday that all 50 states will participate in the administration's Medicaid GENEROUS drug-pricing model, a program that aims to lower what Medicaid pays for certain prescription medicines through an international reference-pricing system. The announcement gives Republicans a new healthcare policy achievement to promote as Democrats seek to make healthcare affordability, Medicare and prescription drug costs key issues in November's midterm elections. "This one thing alone should win us the midterms.
It won’t, because the press doesn’t report it,” Trump told reporters in the Oval Office. The initiative could reduce pharmaceutical spending for state and federal Medicaid programs through new manufacturer rebates, though analysts say the actual level of savings will depend on which drugs and manufacturers ultimately participate. According to the White House, the nationwide rollout marks a major expansion of Trump's "Most Favored Nation" (MFN) drug-pricing agenda, which seeks to reduce the gap between U.S. prescription drug costs and prices paid in other developed countries.
The GENEROUS model, short for "GENErating cost Reductions fOr U.S. Medicaid," operates through the existing Medicaid Drug Rebate Program and allows the Centers for Medicare & Medicaid Services (CMS) to negotiate supplemental rebate agreements with participating pharmaceutical manufacturers. Under the model, CMS calculates an MFN price for participating drugs using manufacturer-reported pricing data from eight countries: the United Kingdom, France, Germany, Italy, Canada, Japan, Denmark and Switzerland.
The benchmark is based on the second-lowest net international price after rebates and discounts and is adjusted using purchasing-power-parity measures. CMS then negotiates supplemental rebates intended to bring Medicaid's net price down to that level. Unlike commercial drug pricing, which is negotiated primarily within the U.S. market among insurers, pharmacy benefit managers and manufacturers, the GENEROUS model explicitly incorporates international price benchmarks to determine a target Medicaid net price.
The program focuses on brand-name drugs, including single-source and innovator multiple-source medicines. States can choose which eligible drugs they want covered under the model but must adopt standardized coverage criteria negotiated by CMS and manufacturers, including utilization-management tools such as prior authorization or step therapy. The five-year model launched in January and was initially voluntary for both states and manufacturers.
Friday's announcement means every state Medicaid program has now agreed to participate. The White House has argued that broader MFN drug-pricing initiatives could save taxpayers billions of dollars over the next decade. A White House analysis previously estimated that a Medicaid MFN framework could save approximately $64.3 billion over 10 years.
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