What's Happening?
The Centers for Medicare & Medicaid Services (CMS) has unveiled a new drug pricing model, known as the GENEROUS model, aimed at providing Most Favored Nation (MFN)-level prices to state Medicaid programs
through manufacturer rebates. Set to launch in 2026, the model is voluntary for manufacturers and states, allowing access to MFN-level prices via CMS-negotiated supplemental rebates. The initiative is part of the Trump Administration's efforts to lower prescription drug prices in the US. The model will run from 2026 to 2030, with CMS relying on section 1115A of the Social Security Act to develop and test innovative payment models.
Why It's Important?
This new pricing model represents a significant shift in how drug prices are negotiated and managed within Medicaid, potentially leading to lower costs for state programs and beneficiaries. By offering MFN-level prices, the model aims to reduce expenditures while maintaining or enhancing the quality of care. The initiative could lead to broader changes in drug pricing policies, influencing manufacturers' strategies and state Medicaid programs' budgeting. The model also reflects ongoing efforts to address high prescription drug costs, a critical issue in US healthcare policy.
What's Next?
CMS will continue to develop and refine the model, with manufacturers and states expected to respond to requests for applications to participate. The model's implementation will require careful coordination between CMS, manufacturers, and state Medicaid programs to ensure effective execution. Stakeholders will need to monitor the model's impact on drug pricing and healthcare expenditures, potentially leading to adjustments in policy and practice. The success of the GENEROUS model could pave the way for similar initiatives in other areas of healthcare pricing and reimbursement.
