Last week, CMS announced the GENEROUS (GENErating cost Reductions fOr U.S. Medicaid) Model. The program basically is a ‘most favored nation’ style reference pricing based on net prices from developed countries. The program builds on the Medicaid Drug Rebate Program (MDRP). Specific details specified on the CMS website include:
- Participating manufacturers whose applications are accepted will enter negotiated agreements with CMS to provide set pricing on their portfolio of covered outpatient drugs. Pricing to participating state Medicaid programs will be calculated based upon select international pricing data.
- Under agreements with states, participating manufacturers will be invoiced by states for supplemental rebates to effectuate international prices. CMS will monitor accuracy of the payments. CMS will share in rebates with states via a reduction in the federal share of Medicaid payments.
- By participating in GENEROUS, drug manufacturers whose applications are accepted will have standardized coverage criteria for their drugs in state Medicaid programs as negotiated between CMS and the manufacturer.
- CMS also will seek letters of intent from state Medicaid agencies interested in being part of the model. Interested state programs will be able to review pricing information and key terms before they commit to joining the model.
- Beyond the Letter of Intent, states also will have to submit a “request for application” to CMS and be able to enroll on a rolling basis in the model through August 31, 2026.
The program appears voluntary. Manufacturers would have to lower prices based on net prices in developed countries. What they would gain would be negotiating with CMS directly (one-time) rather than on a state-by-state basis. Given the large price differences between the US and non-US countries, it is not clear that many manufacturers would choose to participate. Will President Trump make a number of “deals” that persuade drug manufacturers to participate?
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