CMS Announces GENEROUS Model for Most Favored Nation Pricing in Medicaid

On November 6, 2025, the Centers for Medicare & Medicaid Services (CMS), through its Center for Medicare and Medicaid Innovation, announced the upcoming launch of the voluntary GENEROUS (GENErating cost Reductions fOr U.S. Medicaid) model, through which participating drug manufacturers can offer “most favored nation” (MFN) pricing on their covered outpatient drugs (CODs) to Medicaid through supplemental rebates to state Medicaid programs.  Set to launch on January 1, 2026 and continue for five years until December 31, 2030, the GENEROUS model will allow CMS to enter into negotiated agreements with manufacturers to set standard coverage criteria and effectuate MFN pricing for their CODs, which participating states may then adopt through a supplemental rebate agreement with the participating manufacturer.  This initiative marks the Trump administration’s latest action regarding MFN pricing, which follows several recent MFN agreement announcements (e.g., here, here, and here) and the May 12, 2025 Executive Order on MFN pricing (see our prior coverage on the Executive Order here and here).

Under the Medicaid Drug Rebate Program (MDRP), state Medicaid agencies obtain rebates from manufacturers in return for coverage of the manufacturer’s covered outpatient drugs (CODs).  The required rebate amount is set by statute, but most states also negotiate voluntary supplemental rebates with manufacturers, typically offering placement on the state’s preferred drug list in exchange for the rebates.  Recognizing the potential for substantial savings on some CODs if states’ net costs for single source or innovator multiple source CODs were set at MFN pricing, CMS stated that the GENEROUS model aims to facilitate a process whereby an interested manufacturer may voluntarily offer states MFN pricing by means of supplemental rebates.  In addition, CMS noted that any supplemental rebates provided by manufacturers under the model will not affect Medicaid Best Price and thus will not affect the ceiling prices required under the 340B drug discount program.

In terms of process, eligible manufacturers (i.e., those with an active Medicaid National Drug Rebate Agreement) that apply for and are accepted to participate in the model will enter into negotiations with CMS to set the key terms of supplemental rebate agreements that the manufacturer will offer to states to effectuate MFN pricing for their single source and innovator multiple source drugs.  These key terms include standard coverage criteria and utilization management policies, such as prior authorization criteria and Preferred Drug List placement.  The MFN price will be based on the average price for the drug’s NDC-9 in each of the selected countries (specifically, the United Kingdom, France, Germany, Italy, Canada, Japan, Denmark, and Switzerland) over the 12-month period reported to CMS by participating manufacturers, net of all rebates, discounts, and price concessions, and adjusted by the selected country’s gross domestic product (GDP), based on purchasing power parity.

After this negotiation phase, the manufacturer will enter into a participation agreement (PA) with CMS and formally become a participant in the GENEROUS model.  CMS will then communicate these agreed upon, standardized key terms to all states, who may choose to execute a state PA with CMS, thereby also becoming participants in the model.  Such participating states will adopt the Key Terms through a supplemental rebate agreement (SRA) with a participating manufacturer, although CMS stated that participating states may create their own criteria and policies as part of their SRAs as long as they are no more restrictive than the standardized access policy negotiated by CMS.  CMS also stated that participating states can determine which CODs they would like to obtain a price similar to what other countries pay with respect to that participating manufacturer.

CMS will share in the supplemental rebates with states via a reduction in the federal share of Medicaid payments, and will conduct monitoring activities to ensure states’ and manufacturers’ compliance with all aspects of the model, such as monitoring the accuracy of payments made under these SRAs.  In addition, CMS will engage an independent contractor to evaluate the model’s impact on drug spending, quality of care, access to medications, and healthcare costs.

Eligible manufacturers may submit applications until March 31, 2026.  CMS has released a Request for Applications (RFA) for drug manufacturers interested in participating in the GENEROUS Model, which outlines eligibility criteria and additional details on the model. CMS will negotiate and enter into PAs with manufacturers from December 2025 through June 30, 2026.  CMS is also seeking letters of intent from state Medicaid agencies interested in participating.  Interested states will have the ability to review pricing information and Key Terms before committing to join the GENEROUS model.  Next month CMS anticipates issuing an RFA for interested states, which will be able to apply for participation in the model on a rolling basis through August 31, 2026.

Donald Trump’s May 12, 2025, Executive Order on MFN pricing threatened that, If significant progress toward most-favored-nation pricing for American patients was not achieved through voluntary measures, “the Secretary [of HHS] shall propose a rulemaking plan to impose most-favored-nation pricing.”   We wonder if the GENEROUS program is a substitute for the rulemaking.  If so, it is a much milder outcome than the threatened rule, since it is not a regulation, does not impose any pricing, is temporary, and is limited to Medicaid.  Whether manufacturers choose to participate will likely depend on what coverage advantages and exceptions from utilization controls they can negotiate in exchange for MFN pricing.

We will continue to follow this and other MFN developments as they arise.