The Centers for Medicare & Medicaid Services (CMS) has introduced a new initiative aimed at reducing prescription drug costs within the Medicaid program. The initiative, known as the GENErating cost Reductions fOr U.S. Medicaid (GENEROUS) Model, seeks to align drug prices with those in other countries to offer more competitive pricing for Americans.
Health and Human Services Secretary Robert F. Kennedy, Jr. said, "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." He emphasized that this model aims to reduce drug costs while ensuring future care for vulnerable citizens.
In 2024, gross Medicaid spending on prescription drugs surpassed $100 billion, marking a $10 billion increase from 2022. Even after accounting for manufacturer rebates, net spending remained at $60 billion, highlighting the need for reform.
Set to launch in 2026, the GENEROUS Model will enable CMS to negotiate lower prices with participating manufacturers. States adopting this model will apply uniform coverage criteria to ensure consistent access across states. CMS Administrator Dr. Mehmet Oz remarked that the model ensures state programs pay fair prices for drugs, preserving funds for vulnerable populations.
CMS Innovation Center Director Abe Sutton added that U.S. drug prices remain excessively high and expressed hope that all eligible Medicaid programs will participate in the pilot to maximize their resources.
This announcement follows agreements between the White House and pharmaceutical companies aimed at lowering drug prices in line with international standards. CMS is now seeking applications from drug manufacturers interested in joining the GENEROUS Model and letters of intent from state Medicaid agencies considering participation.
For further details on the GENEROUS Model, visit: https://www.cms.gov/priorities/innovation/innovation-models/generous.
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