Basing Medicaid drug prices on what other wealthy countries pay could save 47 states and the District of Columbia a combined $8.6 billion — about 35% of net spending on the drugs studied — according to research published July 15 in JAMA.
The analysis, led by Thomas Hwang, MD, of Boston-based Brigham and Women’s Hospital, modeled the CMS Generating Cost Reductions for US Medicaid, or GENEROUS, model. Under most-favored-nation pricing, drugmakers give participating state Medicaid programs added rebates whenever Medicaid’s net price surpasses the price paid abroad.
CMS announced the voluntary model in November 2025 and launched it in January. It will run five years, and 17 pharmaceutical companies had agreed to participate, as of May, in exchange for protection from pharmaceutical tariffs.
Researchers examined 82 brand-name drugs with at least $100 million in annual Medicaid spending and no generic or biosimilar competition — together $43 billion in gross Medicaid spending and $25.2 billion net after existing rebates.
More than 90% cost less in the reference countries than their net Medicaid prices. The projected savings would equal raising the statutory minimum Medicaid rebate from 23.1% to 49.2%.
The savings are concentrated among drugmakers that have already signed on: participating companies accounted for 87.8% of Medicaid spending and 93.9% of estimated savings, the authors said.
The authors cautioned that most-favored-nation schemes are vulnerable to gaming — manufacturers can delay launches abroad, create country-specific formulations or obscure true prices — and urged policymakers to watch for spillover effects on drug prices in other countries and for other payers.
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