CMS Announces GENEROUS Model to Lower Medicaid Drug Prices

CMS today announced the GENErating cost Reductions fOr U.S. Medicaid (GENEROUS) Model, a new drug payment model that will aim to lower prescription drug spending in Medicaid and strengthen the program overall.¹

The GENEROUS model, launching in 2026, will allow participating states to purchase drugs included in the pilot at prices in line with those in other nations, with a goal of increasing access to medications and improving health outcomes among Medicaid beneficiaries. The announcement adds to a recent flurry of Trump administration initiatives aimed at addressing high drug prices in the US, including the Most Favored Nation (MFN) executive order and subsequent drug pricing deals with Pfizer, AstraZeneca, Novo Nordisk, and Eli Lilly and Company.^2-4

“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, MD, said.¹ “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.”

Upon launching in January 2026, the voluntary model will run for 5 years. The model builds upon the Medicaid Drug Rebate Program (MDRP), which sees states receive manufacturer rebates in exchange for covering manufacturers’ outpatient drugs, and the Cell and Gene Therapy Access Model, which facilitates CMS-led negotiations with manufacturers to increase cell and gene therapy access for Medicaid beneficiaries.⁵

Under the GENEROUS model, participating manufacturers will adjust prices to align with what other countries pay—known as MFN drug pricing—via supplemental rebates to participating states. States will invoice manufacturers for supplemental rebates, and CMS will monitor payment accuracy. Rebates with states will be shared with CMS through reduction in the federal share of Medicaid payments.

In 2024, total gross Medicaid spending on prescription drugs was north of $100 billion—a $10 billion increase from 2022, according to CMS.¹ After manufacturer rebates, Medicaid spending was $60 billion. The new model will let CMS negotiate prices with participating manufacturers, and the participating states will implement standardized, transparent coverage criteria, per CMS’ press release.¹ CMS and the manufacturers will negotiate standardized coverage criteria.⁵

“Drug prices in the US remain far too high,” CMS Innovation Center Director Abe Sutton said in a statement.¹ “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.”

CMS will release a Request for Applications later this fall for drug manufacturers interested in participating, concurrent with seeking letters of intent to participate from state Medicaid agencies. Those that state interest will later be able to formally apply and potentially opt in to the terms and prices negotiated with participating drug manufacturers.

“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,” HHS Secretary Robert F. Kennedy, Jr, said.¹ “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.”

References

1. CMS Announces New Drug Payment Model to Strengthen Medicaid and Better Serve Vulnerable Americans. News release. CMS. November 6, 2025. Accessed November 6, 2025. https://www.cms.gov/newsroom/press-releases/cms-announces-new-drug-payment-model-strengthen-medicaid-better-serve-vulnerable-americans

2. Mattina C. White House to announce second drug pricing deal as AstraZeneca joins TrumpRx. AJMC^®. October 10, 2025. Accessed November 6, 2025. https://www.ajmc.com/view/white-house-to-announce-second-drug-pricing-deal-as-astrazeneca-joins-trumprx

3. Joszt L. White House, Pfizer reach agreement on drug discounts; Trump announces TrumpRx. AJMC. September 30, 2025. Accessed November 6, 2025. https://www.ajmc.com/view/white-house-pfizer-reach-agreement-on-drug-discounts-trump-announces-trumprx

4. McNulty R. Trump announces deals with Lilly, Novo to cut weight loss drug prices. AJMC. November 6, 2025. Accessed November 6, 2025. https://www.ajmc.com/view/trump-announces-deals-with-eli-lilly-novo-nordisk-for-lower-weight-loss-drug-prices

5. GENEROUS (GENErating cost Reductions fOr U.S. Medicaid) Model. CMS.gov. November 6, 2025. Accessed November 6, 2025. https://www.cms.gov/priorities/innovation/innovation-models/generous