On November 6, 2025, the Trump Administration announced the GENEROUS (GENErating cost Reductions fOr U.S. Medicaid) Model—a voluntary Center for Medicare and Medicaid Innovation (CMMI) model through which participating manufacturers can offer “most favored nation” (MFN) pricing in Medicaid. Information regarding the model is available on the CMS website here, and the related CMS press release is available here. Additional details can be found in the Request for Applications from Applicable Manufacturers (Manufacturer RFA) available here.
This Model represents a continuation of the Administration’s efforts to pursue MFN pricing in the U.S.—its release comes on the heels of several MFN agreement announcements and ahead of potential release of mandatory MFN policies. Our team continues to closely monitor MFN pricing and related activity, and potential implications for life sciences companies in the U.S. and abroad.
The GENEROUS Model is being implemented under Section 1115A of the Social Security Act with a stated goal of testing whether a CMS-led approach, in which participating manufacturers agree to provide supplemental rebates to state Medicaid programs that result in MFN pricing for the manufacturers’ Covered Outpatient Drugs (CODs), reduces costs for the Medicaid program, while preserving or enhancing beneficiaries’ quality of care. In CMS’s announcement of the model, CMMI Director Abe Sutton stated: “GENEROUS aims to ensure that Medicaid pricing will be on par with those in other developed nations. My hope is that all eligible Medicaid programs choose to participate in the pilot to help ensure that their Medicaid dollars can go further to support those in need.”
The model is being made available to manufacturers of single source and innovator multiple source CODs that have a signed Medicaid rebate agreement. The model is described as voluntary for manufacturers. The accompanying FAQs state that manufacturers that have entered into MFN agreements with the Administration “will participate in the GENEROUS model after certain terms are finalized, and state Medicaid programs will pay lower prices on drugs made by those manufacturers.” CMS also states that the supplemental rebates provided by manufacturers to states under the model do “not change Medicaid Best Price and therefore do[] not affect ceiling prices offered under the 340B Drug Discount Program.”
All states and U.S. territories that participate in the Medicaid Drug Rebate Program (MDRP) and that have secured CMS authorization to enter the necessary Supplemental Rebate Agreements (via the State Plan Amendment process) will be eligible to participate in the model. States may apply to participate in the model after the key terms have been negotiated and at least one manufacturer has become a model participant by responding to a state Request for Applications (State RFA), which is expected to be released in December 2025. The model testing period runs from January 1, 2026 to December 31, 2030.
The Manufacturer RFA sets forth a list of Key Terms as the “central parameters of the agreement negotiated between manufacturers and CMS.” These key terms include the following:
- Drugs Included in Model: Manufacturers’ CODs will be included in the model, which include “single source and innovator multiple source drugs of all associated labeler codes of the manufacturer.”
- MFN Pricing: The MFN price will be based on the “average price for the NDC-9 in each country over the 12-month period reported to CMS” by participating manufacturers “net of all rebates, discounts, and price concessions,” adjusted by the selected country’s gross domestic product (GDP), based on purchasing power parity.
- MFN Countries: The model documents identify a reference-country basket of the United Kingdom, France, Germany, Italy, Canada, Japan, Denmark, and Switzerland, and this basket will not change over the model period.
- Drug Coverage Access Policy*: For participating manufacturers, CMMI states that negotiations will involve a coverage policy for each drug, “including utilization management policies, such as prior authorization criteria and Preferred Drug List (PDL) placement.” CMMI provides that “[s]tates will use these policies in determining final coverage access policies for the manufacturer’s drugs subject to an MFN price as part of their SRAs. States may create their own criteria and policies as long as they are no more restrictive than the standardized access policy.” The model also appears to contemplate that states may choose to participate in the model and accept MFN-based rebates for some drugs while declining those rebates for other drugs.
*CMS indicates that of these Key Terms, only the Drug Coverage Access Policy is “negotiable with the manufacturer.” Separately, the model also indicates that Key Terms to be negotiated with CMS will address, but are not limited to: a) Definition of MFN price and guaranteed net unit price (GNUP) and associated manufacturer reporting requirements; b) CODs included in the model; c) Countries for which MFN pricing would have to be reported; d) COD Access Policy; e) CMS and Manufacturer Responsibilities; f) Rebate Documentation, Audits and Disputes; and g) Termination, Renegotiation or Alterations.
Model Implementation
The model contemplates the following stages:
- a pre-implementation period, which runs from November 10, 2025 to March 31, 2026, in which CMS and eligible manufacturers that submit a timely and complete application in response to the Manufacturer RFA will begin to negotiate the standard coverage criteria and the Key Terms of supplemental rebate agreements that the manufacturer will offer to states to effectuate MFN pricing;
- execution of an agreement between CMS and the manufacturer regarding the negotiated Key Terms that the manufacturer will offer to states to effectuate MFN pricing, effective no later than June 30, 2026;
- submission of applications by interested states and execution of a state agreement between CMS and participating states, under which states agree to enter into SRAs aligned with the CMS-negotiated Key Terms from January 2026 through August 31, 2026; and
- execution of a CMS-authorized supplemental rebate agreement between the state and a participating manufacturer, reflecting the CMS-negotiated Key Terms, no later than August 31, 2026.
The GENEROUS Model is being issued in the broader context of MFN and drug pricing policies under the Trump Administration. For example, drug pricing reform in Medicaid was previewed in President Trump’s April 15, 2025 Executive Order “Lowering Drug Prices By Once Again Putting Americans First” and accompanying fact sheet. In that Executive Order, President Trump directed the Office of Management and Budget Director, the Assistant to the President for Domestic Policy, and the Assistant to the President for Economic Policy, in coordination with the Department of Health and Human Services (HHS) Secretary, to “jointly provide recommendations to the President on how best to… promote innovation in Medicaid drug payment methodologies, link payments for drugs to the value obtained, and support States in managing drug spending.” Covington explored other directives addressed in the Executive Order in greater detail in this client alert.
On May 12, 2025, President Trump released an Executive Order titled “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients” (along with an accompanying fact sheet) that aimed to “end global freeloading” and “inflated prices in the United States [that] fuel global innovation” by implementing MFN pricing for prescription drugs in the United States. As summarized in our accompanying client alert, the May 12 Executive Order demanded that manufacturers make “significant progress” towards MFN pricing for American patients or face enumerated regulatory and enforcement consequences. HHS communicated MFN “targets” in a May 20, 2025, press release calling for U.S. prices for brand products with no generic or biosimilar competition to align with “the lowest price in an OECD country with a GDP per capita of at least 60 percent of the U.S. GDP per capita.”
The Administration’s desire to pursue MFN pricing in Medicaid was further amplified in letters the President sent to 17 pharmaceutical manufacturers on July 31, 2025, and the related fact sheet. In these letters, President Trump identified “extend[ing] most-favored-nation (MFN) pricing to Medicaid” as one of four key actions the Administration expected manufacturers to take within 60 days of receiving the letter. President Trump threatened to “deploy every tool in [the federal government’s] arsenal” if manufacturers did not make binding commitments to meeting these demands by the deadline. Starting on September 30, 2025, the Administration began announcing deals with specific manufacturers to address the goals outlined in these letters (White House fact sheets available here, here, here, and here).
The Trump Administration’s interest in imposing MFN pricing dates back to President Trump’s first term, when the Administration sought to tie domestic drug prices in Medicare to international reference prices through two pieces of rulemaking: (1) the 2018 advanced notice of proposed rulemaking proposing and seeking comment on an International Price Index Model (IPI Model), and (2) the 2020 interim final rule establishing a Most Favored Nation Model (MFN Model). Covington summarized the prior Trump Administration’s initiatives in a 2020 client alert.
Ultimately, neither model pursued during President Trump’s first term went into effect. The Trump Administration elected not to pursue the IPI Model, and the MFN Model was enjoined by courts and later rescinded by the Biden Administration. However, the current Administration has moved forward with models that could establish MFN in the Medicare program, as several models are currently under regulatory review (see the proposed Global Benchmark for Efficient Drug Pricing (GLOBE) model, the proposed Guarding U.S. Medicare Against Rising Drug Costs (GUARD) model, and a third unnamed proposed CMMI payment model). The Administration has also indicated that an anti-obesity model may be forthcoming.
Our team continues to closely monitor MFN pricing and related activity. Eligible manufacturers will be able to submit applications from November 2025 to March 31, 2026, and CMS will negotiate and execute participation agreements with manufacturers from December 2025 through June 30, 2026. The State RFA will be released in December 2025, and interested states will have from January 2026 through August 31, 2026 to submit applications and enter into participation agreements with CMS.
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If you have any questions concerning the material discussed in this client alert, please contact a member of our Health Care practice.
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