Last week, CMS announced the GENERAS (cost-cutting for US Medicaid) model. The program is basically ‘most favored nation’ style reference pricing based on the net prices of developed countries. This program is based on the Medicaid Drug Rebate Program (MDRP). Specific details specified on the CMS website include:
- Participating manufacturers whose applications are accepted will enter into negotiated agreements with CMS to provide fixed prices on their portfolio of covered outpatient drugs. Pricing for participating state Medicaid programs will be calculated based on selected international pricing data.
- Under agreements with states, participating manufacturers will be invoiced by the states for supplemental rebates to influence international prices. CMS will monitor the accuracy of payments. CMS will share the rebate with states through a reduction in the federal share of Medicaid payments.
- By participating in GENERA, drug manufacturers whose applications are accepted will have standardized coverage criteria for their drugs in state Medicaid programs as negotiated between CMS and the manufacturer.
- CMS will also seek letters of intent from state Medicaid agencies interested in becoming part of the model. Interested states will be able to review pricing information and key terms before committing to join the program model.
- In addition to the letter of intent, states must also submit a “Request for Application” to CMS and be able to enroll in the model on a rolling basis by August 31, 2026.
The program appears to be voluntary. Manufacturers will have to reduce prices based on net prices in developed countries. They would benefit from interacting directly (one time) with CMS rather than on a state-by-state basis. Given the large price gap between the US and non-US countries, it is not clear that many manufacturers will choose to participate. Will President Trump make a number of “deals” that will encourage drugmakers to participate?
