The U.S. Centers for Medicare and Medicaid Services (CMS) announced a new program to reduce prescription drug costs for Americans.
The Generating Cost Reduction for U.S., known as GENEROUS, aims to lower prescription drug spending in Medicaid, improve health outcomes by increasing access to critical medications and strengthen the Medicaid program overall.
Why It Matters
According to CMS, state Medicaid programs that choose to participate in the GENEROUS Medicaid Model will be able to purchase drugs included in the pilot at prices aligned with those paid in select other countries. This “most-favored-nation” pricing allows Americans to benefit from fairer, more competitive pricing.
“Under the leadership of President Trump and Secretary Kennedy, CMS is making a historic commitment to driving down the cost of drug prices and ensuring Americans have access to life-saving medications, CMS Administrator Mehmet Oz said in a statement. “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.”
What To Know
CMS said total prescription drug spending in Medicaid increased $10 billion in two years to exceed $100 billion, $60 billion after existing rebates, in 2024, “underscoring the urgency for reform.”
The new drug payment model, launching in 2026, will allow CMS to negotiate lower prices with drug manufacturers and create a uniform and transparent coverage criteria for states adopting the new model.
This comes as President Donald Trump signed an executive order in May titled “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients” that directed his administration to align American drug prices with those paid by similar countries.
Last week, the White House announced a new agreement that reduced the costs of drugs from Eli Lilly and Novo Nordisk when purchased through TrumpRX, as well as lower prices to enable Medicare and Medicaid to cover weight-loss drugs, including Ozempic and Wegovy.
What Happens Next
CMS will release a Request for Application (RFA) for drug manufacturers interested in participating in the GENEROUS Model later this fall. Interested state Medicaid agencies can also send letters of intent to CMS.
The agency said states will have the opportunity to formally apply and potentially opt in to the terms and prices CMS negotiates with drug manufacturers.
What People Are Saying
Health and Human Services Secretary Robert F. Kennedy, Jr. said in a statement: “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. 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 Innovation Center Director Abe Sutton said in a statement: “Drug prices in the U.S. remain far too high. GENEROUS aims to ensure that Medicaid pricing will be on par with that in other developed nations. My hope is that all eligible Medicaid programs choose to participate in the pilot to help ensure that their Medicaid dollars can go further to support those in need.”
