CMS Announces Participants in Landmark Medicaid Drug Payment Model to Bring Down Drug Costs for Most Vulnerable Americans
The Centers for Medicare & Medicaid Services (CMS) is working to end skyrocketing drug costs as the agency announces today that all 50 states, plus the District of Columbia and Puerto Rico, have applied to participate in an initiative which provides most-favored-nation pricing for certain prescription drugs to people with Medicaid. Forty states and Puerto Rico have already signed agreements to participate in this historic program that will lower Medicaid drug costs to what other countries pay, saving an estimated $64.3 billion in taxpayer dollars over the next ten years, while preserving or enhancing beneficiaries’ quality of care.
“Americans should pay the same low prices for prescription drugs that other countries pay,” said HHS Secretary Robert F. Kennedy, Jr. “President Trump challenged us to end the system that makes Americans pay more, and we are delivering. The GENEROUS Model will drive down Medicaid drug costs, save taxpayers billions, and expand access to lifesaving medicines for the Americans who need them most.”
“Thanks to President Trump’s bold leadership, CMS is bringing down drug costs and ensuring that millions of Americans have access to affordable lifesaving medications,” said CMS Administrator Dr. Mehmet Oz. “Medicaid programs will get the best possible price for drugs, delivering better value for taxpayers and freeing up funds to give vulnerable Americans the high-quality care they deserve.”
The GENErating cost Reductions fOr U.S. Medicaid (GENEROUS) Model is a landmark CMS Innovation Center initiative designed to not only lower drug spending in Medicaid but also improve quality of care and health outcomes by increasing access to critical medications and strengthening the Medicaid program overall. Under the GENEROUS Model:
- Participating manufacturers will make covered outpatient drugs available at most-favored nation pricing to participating state Medicaid programs.
- Under agreements with states, participating manufacturers will be invoiced by states for supplemental rebates to effectuate international prices. CMS will monitor pricing accuracy. CMS will share in rebates with states via a reduction in the federal share of Medicaid payments.
“GENEROUS represents a significant milestone,” said CMS Innovation Center Director Abe Sutton. “By reducing even a fraction of drug spending in Medicaid, GENEROUS allows states to invest more in education, infrastructure, and other ways to support Americans with Medicaid.”
Remaining states have until Sept. 30, 2026, to sign agreements with CMS to participate in the model. The GENEROUS Model launched in January 2026 and runs for five years.
For information on states participating the GENEROUS Model, visit: https://www.cms.gov/priorities/innovation/innovation-models/generous.
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