The U.S. government announced on Thursday, November 6, that it will launch a new five-year program starting in January 2026. This program will link the prices of Medicaid drugs with those in other developed countries in an effort to reduce prescription drug costs for Medicaid patients.
Medicaid is a joint federal and state healthcare insurance program that provides medical coverage to low-income individuals and families, including children, pregnant women, the elderly, and people with disabilities.
Currently, Americans often pay much higher prices for the same medications compared to patients in other developed countries.
The White House has already reached agreements with various pharmaceutical companies in the U.S. to develop a plan to lower drug prices for Americans.
The Centers for Medicare and Medicaid Services (CMS) announced that the new program, called the “Generous Model” – Generating cost Reductions for U.S. Medicaid – will begin in 2026. States participating in the program will be allowed to purchase drugs at internationally standardized prices.
Both states and pharmaceutical manufacturers can voluntarily join this program.
Under the Generous Model, drug manufacturers will provide additional rebates to states to ensure drug prices align with the lowest levels in eight developed countries including the U.K., France, Germany, Italy, Canada, Japan, Denmark, and Switzerland.
CMS will negotiate with each participating drug manufacturer to establish uniform coverage rules, which states will adopt upon joining the program to access lower prices.
In exchange, states agree not to seek additional discounts on these drugs.
In 2024, Medicaid spending on prescription drugs exceeded $100 billion, an increase of $10 billion from 2022. CMS indicates that even after deducting manufacturer rebates, the program’s spending reached $60 billion, highlighting the necessity for reform.
CMS requires pharmaceutical manufacturers interested in joining the Generous Model program to submit applications by March 31, 2026, while states can start applying from December 2025.
The program is set to run for five years, until December 31, 2030. Participating agreements can be renewed annually, and CMS reserves the right to modify or terminate the program if necessary.
Previously, the Trump administration announced on September 30 its plans to launch a government-operated website called “TrumpRx.gov” in early 2026 to provide discounted prescription drugs. Pharmaceutical companies can sell drugs directly to patients in the U.S. through this platform and offer discounts.
Companies like Pfizer, AstraZeneca, Amgen, AstraZeneca, Sanofi, Bristol-Myers Squibb, and Novartis have already started selling drugs directly to Americans on the platform, thereby lowering prices.
The Trump administration also announced on Thursday, November 6, agreements with Eli Lilly and Novo Nordisk to significantly reduce prices for some of their obesity treatment drugs.
In summary, TrumpRx is a consumer-oriented drug pricing reform that immediately makes drugs more affordable for the public.
On the other hand, the “Generous Model” introduced is a healthcare-end reform initiated by CMS. This model does not involve the public directly purchasing drugs on a platform but allows state governments to procure drugs from pharmaceutical companies based on “international minimum prices.” In other words, it aims to control how much the government spends on drugs in the long run, saving more healthcare expenses.
(Adapted from reports by Reuters)