A new program to base Medicaid drug prices on the lowest drug prices in other countries -- known as "most favored nation" (MFN) pricing -- could result in substantial savings, researchers found. [MEDPAGE TODAY]

The payment model, known as Generating Cost Reductions for U.S. Medicaid (GENEROUS), was found to result in estimated savings exceeding total existing supplemental Medicaid rebates for 47 states and Washington, D.C., with savings totaling $8.6 billion (34.7% of net spending), reported Thomas Hwang, MD, of Brigham and Women's Hospital in Boston, and colleagues in a research letter published in JAMA.

Currently, state Medicaid programs receive drug rebates from manufacturers as required by law, and states can also negotiate supplemental rebates with manufacturers in exchange for favorable formulary position and fewer coverage restrictions. The researchers found that the estimated savings from the GENEROUS payment model would be equivalent to increasing the statutory minimum Medicaid rebate from 23.1% to 49.2%.

The Centers for Medicare & Medicaid Services (CMS) announced the GENEROUS model in November 2025 and launched it in January; it will run for 5 years. A total of 17 pharmaceutical companies had agreed to participate as of May in exchange for protection from pharmaceutical tariffs. State participation is also voluntary.

More>