The Centers for Medicare & Medicaid Services (CMS) has announced a new initiative to address high prescription drug costs within Medicaid. The program, called the GENErating cost Reductions fOr U.S. (GENEROUS) Medicaid Model, will enable participating state Medicaid programs to purchase certain drugs at prices similar to those paid in select other countries.
According to Health and Human Services Secretary Robert F. Kennedy, Jr., “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 data shows that total prescription drug spending in Medicaid exceeded $100 billion in 2024, with net spending after rebates totaling $60 billion—a $10 billion increase since 2022. This rise highlights the need for reform efforts such as the GENEROUS Model.
Launching in 2026, the model allows CMS to negotiate lower prices with participating drug manufacturers. States choosing to participate will use uniform coverage criteria intended to make access more predictable for patients and providers across those states.
CMS Administrator Dr. Mehmet Oz said, “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. 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.”
Abe Sutton, Director of the CMS Innovation Center, added: “Drug prices in the U.S. remain far too high. GENEROUS aims to ensure that Medicaid pricing will be on par with those 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.”
This move follows recent agreements between federal officials and pharmaceutical companies aimed at reducing U.S. drug prices so they match those found internationally.
Later this fall, CMS plans to release a Request for Applications (RFA) inviting interested drug manufacturers and state agencies into the program; states may submit letters of intent before formally applying or opting into negotiated terms.
More information about the GENEROUS Model is available from CMS: https://www.cms.gov/newsroom/press-releases/cms-announces-new-drug-payment-model-strengthen-medicaid-better-serve-vulnerable-americans.
