- The government announced the "Generous Model" to lower Medicaid drug prices by 2026.
- The program ties U.S. drug prices to those in eight developed countries, including Canada.
- Manufacturers and states can voluntarily join with applications starting in December and March 2026.
WASHINGTON — The government on Thursday unveiled a new program to cut prescription drug costs for Medicaid patients by tying prices to those paid in other countries.
The announcement follows previous agreements between the White House and pharmaceutical companies to reduce drug prices for Americans, who often pay significantly more for the same medications than patients in other developed countries.
The new program, called the Generous Model, will launch in 2026 and allow participating state Medicaid programs to purchase drugs at internationally aligned prices, the Centers for Medicare and Medicaid Services said. It is voluntary for both states and drug manufacturers.
Under the program, manufacturers will provide additional rebates to states to ensure drug prices match the lowest levels in eight other developed countries — the United Kingdom, France, Germany, Italy, Canada, Japan, Denmark and Switzerland.
The centers will negotiate standard coverage rules with each participating manufacturer, which states joining the program will adopt to access lower prices. In return, states agree not to seek additional discounts on those drugs.
Medicaid is a public health insurance program that provides coverage to low-income Americans, including children, pregnant women, elderly adults and people with disabilities.
Total Medicaid spending on prescription drugs topped $100 billion in 2024, up $10 billion from 2022. Even after manufacturer rebates, the program spent $60 billion, according to the Centers for Medicare and Medicaid Services, underscoring the need for reform.
Manufacturers that want to participate in the new program must apply by March 31, 2026, while states can begin applying in December 2025, it said, adding that there is no minimum number of manufacturers or states required for the program to proceed.
The program will run for five years, ending Dec. 31, 2030. Participation agreements can be renewed annually. The Centers for Medicare and Medicaid Services retains the right to modify the program or end it early if needed.
