A number of Key Questions about Trump Administration’s Drug Pricing Offers and Their Influence on Medicaid Stay Unaddressed

On November 6, 2025, the Centers for Medicare & Medicaid Services (CMS) introduced a brand new Center for Medicare and Medicaid Innovation (CMMI) mannequin to implement pricing agreements with two drug producers — Pfizer and AstraZeneca — which the White House has not too long ago introduced.  The Trump Administration has claimed these agreements will lead to important prescription drug price financial savings for state Medicaid applications however till the announcement of the CMMI mannequin, it had offered nearly no element and left many unanswered questions.  That made it unimaginable to evaluate whether or not these agreements may decrease Medicaid drug prices and even doubtlessly improve prices, as I beforehand wrote.

A brand new Request for Applications (RFA) directed to drug producers for a brand new “GENEROUS” CMMI Model lastly supplies some element about how these pricing agreements can be applied, together with how they’d work together with the present Medicaid Drug Rebate Program (MDRP).  The MDRP at the moment ensures that Medicaid obtains the bottom costs, internet of rebates, of any federal program or company.  Some key questions, nevertheless, stay unaddressed.

The GENEROUS Model.  Under this CMMI mannequin, taking part drug producers would offer supplemental rebates, on high of the rebates now required to be paid by drug producers below the MDRP, to make sure that state Medicaid applications obtain a internet worth equal to a Most Favored Nation (MFN) worth primarily based on common internet worldwide costs within the United Kingdom, France, Germany, Italy, Canada, Japan, Denmark, and Switzerland (adjusted for every nation’s Gross Domestic Product).  In change, state Medicaid applications must comply with institute “uniform coverage terms” negotiated between CMS and taking part producers, corresponding to aligned Preferred Drug Lists (PDLs), prior authorization guidelines, and different utilization administration necessities throughout each fee-for-service and managed care.  States would even be barred from pursuing different supplemental rebates.  Participating states, nevertheless, would have the ability to select which of a producer’s drug merchandise can be topic to those supplemental rebates. 

Participation can be voluntary for each drug producers and Medicaid applications in all states and in territories like Puerto Rico which are at the moment taking part within the MDRP.  States and producers would comply with take part for no less than one yr, with potential annual renewals thereafter.  State Medicaid applications would have till August 31, 2026 to finish three steps required by CMS: responding to a State Request for Applications, executing a participation settlement with CMS, and executing supplemental rebate agreements with taking part producers.  Additional states might be allowed to take part after this deadline at CMS discretion.  The mannequin would start on a rolling foundation beginning on January 1, 2026 and be in place for 5 years (by way of December 31, 2030).

Key Question Addressed.  The largest query about these pricing agreements was whether or not they would substitute for the present rebates that producers are actually required to pay below the MDRP.  Because these rebates are so substantial, as I’ve defined, changing them with a MFN-based rebate may lead to larger internet costs, particularly since MFN-based rebates wouldn’t incorporate inflation-related rebates below the MDRP.  Moreover, as a situation of the MDRP, state Medicaid applications are topic to an open formulary safety below which almost all FDA-approved medication have to be coated aside from a really restricted variety of drug courses.  The GENEROUS mannequin, nevertheless, would solely contain producers paying extra supplemental rebates on high of the federally required rebates.  As a consequence, the mannequin wouldn’t undermine the MDRP and decrease the present, substantial rebates required below the MDRP.  It additionally wouldn’t weaken the present open formulary safety and scale back current beneficiary entry.  To the extent that the mannequin reduces protection obstacles like prior authorization and restrictive medical protection standards, it may improve entry for people coated by Medicaid.

Key Questions Remaining Unanswered.  The most vital, unanswered query is whether or not this GENEROUS mannequin would really lead to important prescription drug price financial savings.  CMMI solely acknowledges that “there may be the potential for significant savings on some [covered outpatient drugs] if states’ net costs for [drugs] could be set at MFN pricing.”  But there is no such thing as a express assure to states that any supplemental rebates utilizing MFN costs can be bigger than what are at the moment being negotiated by states and would thereby lead to decrease internet costs for a producer’s medication than what are actually obtained by state Medicaid applications.  Moreover, for medication which have competitor medication with related or higher medical effectiveness in the identical drug class, the online price for medication in that class could find yourself larger if current supplemental rebates for these competitor medication are larger and internet costs of such competitor medication are decrease.  As famous, whereas states can proceed to barter separate supplemental rebates for medication not a part of the GENEROUS mannequin, they need to institute uniform PDLs and fewer restrictive prior authorization, and utilization administration necessities for medication which are a part of the mannequin in each fee-for-service and managed care.  That would doubtless lead to non-participating producers of competitor medication considerably decreasing their supplemental rebates in response, as these rebates are sometimes offered in change for placement on PDLs and no or minimal prior authorization.

Moreover, because the GENEROUS RFA signifies, state participation is voluntary.  As a consequence, one other key query is whether or not there shall be widespread participation amongst state Medicaid applications.  It is unclear whether or not states will have the ability to obtain detailed pricing info together with the estimated MFN-based supplemental rebate for relevant medication they’d obtain earlier than agreeing to take part within the GENEROUS mannequin.  While a CMMI Frequently Asked Questions doc signifies states “may factor in their decision whether the drug price is cheaper after other manufacturer rebates, how it compares with prices of other drugs they cover, and the length of the agreement they have with manufacturers for supplemental rebates on another drug,” there doesn’t appear to be any express requirement that CMMI and producers should share all related pricing and rebate info with states with a purpose to totally inform state decisionmaking on whether or not to take part.  The RFA argues that states shall be inspired to take part as a result of it’ll make it simpler to acquire supplemental rebates from producers of high-cost brand-name medication who’re at the moment unwilling to supply giant supplemental rebates or any supplemental rebates in any respect.  But that’s normally the case for very excessive price, breakthrough “first-in-class” medication for which states have little leverage.  The lack of leverage would doubtless nonetheless be a difficulty below the GENEROUS mannequin even with CMS negotiating on behalf of all taking part states.

Another key unanswered query is whether or not there shall be important participation by drug producers past these already introduced by the Trump Administration.  As with states, participation by producers is fully voluntary.  The RFA notes that producers can be inspired to take part as a result of they’d not must individually negotiate supplemental rebates and negotiate separate PDL placement, prior authorization guidelines, and different utilization administration necessities with particular person states (or multi-state buying swimming pools).  But that will be weighed towards having to supply MFN-based rebates.  If such MFN-based rebates find yourself being far bigger than the supplemental rebates now being negotiated (because the Trump Administration is claiming), most producers would doubtless be unwilling to take part.  Manufacturers would doubtless take part in giant numbers provided that the will increase in rebate quantities are modest sufficient and thereby greater than offset by features in drug utilization ensuing from uniform PDLs and no or much less prior authorization (although Trump Administration guarantees to individually regulate tariff charges for particular person producers may play a big position).

One different query is whether or not taking part producers must provide MFN-based rebates for all of their drug merchandise or whether or not, like states, they may apply MFN-based rebates solely to pick out medication.  If producers can decide and select amongst their medication —for instance, solely making use of MFN-based rebates to medication for which they already provide very giant rebates and exempting their newer, very high-cost medication — any price financial savings for state Medicaid applications can be extra restricted than they in any other case can be if the GENEROUS mannequin utilized to all of a producer’s medication.

Finally, there may be an unanswered query about how MFN-based costs can be particularly calculated by producers and the way the accuracy of such information can be verified.  According to the RFA, CMS will use a contractor to judge the mannequin and likewise “audit the data reported by the manufacturer to CMS to assure they are appropriately determining the international prices” however the RFA supplies no additional element.  Historically, there have been critical points the place some producers have been decided to be out-of-compliance with MDRP necessities and to have reported inaccurate pricing information with a purpose to scale back their rebate legal responsibility.  If the MFN-based costs find yourself not as little as promised as CMS supplies extra element how producers would particularly calculate MFN-based costs, or if producers inappropriately inflate their MFN-based costs (and thereby decrease the supplemental rebates they owe), that will additional scale back any Medicaid prescription drug price financial savings accruing to taking part states.