All 50 States Move to Join Medicaid Drug Pricing Model

Key Takeaways

• All 50 states are moving to participate in the Generating Cost Reductions for US Medicaid (GENEROUS) Model, which uses Most Favored Nation (MFN) pricing to lower net prices for selected Medicaid-covered drugs.
• The Trump administration projects $64.3 billion in Medicaid savings over 10 years, including $27.6 billion for states.
• Limited public details about manufacturer agreements create uncertainty around projected savings, implementation, and the pricing arrangements’ long-term durability.

All 50 states are moving to participate in a federal Medicaid drug payment model designed to align net prices for selected prescription drugs with prices paid in certain other countries, expanding the Trump administration’s use of MFN pricing within Medicaid.

The GENEROUS Model is expected by the administration to generate billions of dollars in prescription drug savings.^1,2 However, outside experts have said the financial impact remains difficult to independently assess because details of agreements between the federal government and pharmaceutical manufacturers have not been made public.³

How the GENEROUS Model Works

The GENEROUS Model, administered through the Centers for Medicare & Medicaid Services (CMS) Innovation Center, applies MFN pricing to certain covered outpatient drugs in Medicaid.²

Under the model, participating pharmaceutical manufacturers provide supplemental rebates to participating state Medicaid programs so that the final net price of selected drugs does not exceed specified international prices. States invoice manufacturers for the supplemental rebates, while CMS monitors pricing accuracy and shares in the rebates through adjustments to the federal share of Medicaid payments.²

The White House said the initiative covers hundreds of drugs across major therapeutic areas, including oncology, diabetes, and asthma.¹

CMS announced September 18 that all 50 states, the District of Columbia, and Puerto Rico had applied to participate. At the time of the announcement, 40 states and Puerto Rico had signed participation agreements, with the remaining states given until September 30, 2026, to complete agreements with CMS.²

The model launched in January 2026 and is scheduled to operate for 5 years.²

Trump Administration Projects Billions in Medicaid Savings

The Trump administration estimates that lower Medicaid drug costs associated with its MFN arrangements could save taxpayers $64.3 billion over the next decade. According to the White House, approximately $36.6 billion of those projected savings would accrue to the federal government and $27.6 billion to state governments.¹

The White House said the initiative builds on agreements reached with 26 pharmaceutical manufacturers representing 89% of the branded drug market.¹

The Medicaid initiative is part of a broader administration strategy to link some US prescription drug prices to those available internationally. In May, the White House estimated that its pharmaceutical pricing agreements could generate $529 billion in savings over 10 years.³

Medicaid beneficiaries generally already pay nominal prescription drug copayments. Consequently, the financial implications of the GENEROUS Model may be more directly reflected in federal and state Medicaid spending than in beneficiaries’ out-of-pocket pharmacy costs.³

Questions Remain About Savings and Long-Term Impact

Despite the Trump administration’s projections, the actual financial impact of the agreements remains uncertain because relatively few details of the arrangements with participating pharmaceutical manufacturers have been made public.³

The White House has defended withholding commercially sensitive information from the agreements. White House spokesperson Kush Desai compared the approach with drug price negotiations conducted under the Inflation Reduction Act, which also did not disclose certain commercially sensitive information.³

What This Means for Managed Care

For state Medicaid agencies, Medicaid managed care organizations, pharmacy benefit managers, and manufacturers, nationwide participation could make international reference pricing a more significant consideration in Medicaid pharmacy financing and drug reimbursement.^1,2

The model could have particular implications for state budgets because Medicaid is jointly financed by states and the federal government. If the Trump administration’s projected savings are realized, states could experience lower net spending on participating drugs, potentially creating additional flexibility within Medicaid or other state spending priorities.^1,3

For managed care stakeholders, however, several variables remain important to monitor. These include the drugs ultimately subject to MFN pricing, manufacturer participation, supplemental rebate amounts, realized state and federal savings, and whether the pricing arrangements continue beyond the model’s 5-year duration.

As the GENEROUS Model moves forward, additional data on actual drug expenditures and rebates will be important for assessing whether international reference pricing produces the level of Medicaid savings projected by the administration while maintaining access to covered medications.

References

1. The White House. Fact Sheet: President Donald J. Trump announces lower drug prices for all 50 state Medicaid programs. Published September 18, 2026. Accessed September 25, 2026. https://www.whitehouse.gov/fact-sheets/2026/09/fact-sheet-president-donald-j-trump-announces-lower-drug-prices-for-all-50-state-medicaid-programs/
2. Centers for Medicare & Medicaid Services. CMS announces participants in landmark Medicaid drug payment model to bring down drug costs for most vulnerable Americans. Published September 18, 2026. Accessed September 25, 2026. https://www.cms.gov/newsroom/press-releases/cms-announces-participants-landmark-medicaid-drug-payment-model-bring-down-drug-costs-most
3. Hussein F. Trump announces all 50 states joining Medicaid drug pricing model. Associated Press. Published September 2026. Accessed September 25, 2026. https://apnews.com/article/trump-pharmaceuticals-mfn-drug-pricing-35c9cdce7c780d0d06af12f1233a7f32