MFN model for Medicaid revealed by CMS

The Trump administration has released details of a most-favoured nation (MFN) drug pricing programme for medicines provided by Medicaid, the federal health insurance programme for people with low incomes and the disabled.

The Centers for Medicare & Medicaid Services (CMS) is calling its pilot scheme the GENErating cost Reductions fOr US Medicaid or GENEROUS model, and is now seeking companies that wish to take part.

The premise is similar to the MFN system Trump is trying to implement for Medicare – with deals already announced with Pfizer, AstraZeneca, and Merck KGaA – and will tie the prices of medicines provided by Medicaid in the US to the lowest prices charged for them in eight other countries, specifically the UK, France, Germany, Italy, Canada, Japan, Denmark, and Switzerland.

It is due to launch in 2026, assuming state Medicaid programmes and companies agree to participate in the voluntary programme.

CMS said the GENEROUS Model is aimed at "allowing Americans to benefit from fairer, more competitive pricing," adding that the cost of Medicaid spending on prescriptions in 2024 – at $100 billion, or $60 billion after manufacturer rebates – was a $10 billion increase on the prior year and underscores the "urgency for reform."

There has already been a shake-up of Medicaid under Trump's One Big, Beautiful Bill Act (OBBBA), however, including additional restrictions and requirements to qualify for Medicaid.

The scheme would allow CMS to negotiate with participating manufacturers for lower prices, while states adopting the model will implement "uniform, transparent coverage criteria" – in other words, they will not seek further discounts. The manufacturers would also not have to negotiate access deals in every state separately.

Pharma manufacturers that wish to participate in the GENEROUS model programme will need to apply by the end of March next year, with a process for state Medicaid programmes to express their interest starting next month and ending on 31st August, 2026. It is due to run for five years, concluding at the end of 2030, and could be subject to changes by CMS.

"Drug prices in the US remain far too high," said CMS Innovation Center Director Abe Sutton.

"GENEROUS aims to ensure that Medicaid pricing will be on par with those in other developed nations," he added. "My hope is that all eligible Medicaid programmes choose to participate in the pilot to help ensure that their Medicaid dollars can go further to support those in need."

There have been concerns that manufacturers may exit some countries in order to strip out those with low costs so they can maintain higher prices in the larger and more profitable US market.

Some manufacturers have already suggested they will raise prices in the UK, which has been successful in keeping the cost of medicines low, to match the US and will simply not launch those products that do not get reimbursement coverage at that pricing level.

Photo by Çağlar Oskay on Unsplash