U.S. launches pilot payment model to bring MFN pricing to Medicaid

[Medicaid newspaper headline on hundred dollar bills with US Capitol in Washington DC]

The U.S. has introduced a new pilot program to allow State and federally backed Medicaid healthcare programs to buy medicines at prices paid in other developed countries in line with President Donald Trump’s most-favored-nation (MFN) pricing policy.

Late Thursday, the Centers for Medicare & Medicaid Services (CMS) announced the GENErating cost Reductions fOr U.S. Medicaid (GENEROUS) Model, which is set to launch next year with the participation of drug manufacturers and states opting for the model.

“The GENEROUS Model will help ensure state Medicaid programs are paying a fair and reasonable price for prescription drugs—furthering our efforts to preserve funds for our most vulnerable,” said CMS Administrator Mehmet Oz.

The administration is calling for Requests for Applications from drug manufacturers and letters of intent from state Medicaid agencies interested in joining the GENEROUS Model.

In May, Trump signed an executive order directing the Department of Health and Human Services to implement the MFN policy, which seeks to lower the prices of brand-name drugs in the U.S. to levels in other developed nations.

In late July, he sent letters to 17 leading U.S. and overseas drugmakers, demanding that they take steps to lower drug prices within 60 days in accordance with the policy. [https://seekingalpha.com/news/4475851-trump-issues-60-day-ultimatum-for-big-pharma]

The CEOs of major U.S. pharmaceutical companies Gilead (GILD [https://seekingalpha.com/symbol/GILD]), Bristol Myers (BMY [https://seekingalpha.com/symbol/BMY]), J&J (JNJ [https://seekingalpha.com/symbol/JNJ]), Regeneron (REGN [https://seekingalpha.com/symbol/REGN]), Amgen (AMGN [https://seekingalpha.com/symbol/AMGN]), and AbbVie (ABBV [https://seekingalpha.com/symbol/ABBV]) received Trump’s letters along with Lilly (LLY [https://seekingalpha.com/symbol/LLY]), Pfizer (PFE [https://seekingalpha.com/symbol/PFE]), and Merck (MRK [https://seekingalpha.com/symbol/MRK]).

The letters also targeted European drugmakers, including Sanofi (SNY [https://seekingalpha.com/symbol/SNY]), GSK (GSK [https://seekingalpha.com/symbol/GSK]), AstraZeneca (AZN [https://seekingalpha.com/symbol/AZN]), Novo Nordisk (NVO [https://seekingalpha.com/symbol/NVO]), Roche (OTCQX:RHHBY [https://seekingalpha.com/symbol/RHHBY]), and Novartis (NVS [https://seekingalpha.com/symbol/NVS]).

“Thanks to President Trump’s leadership and Dr. Oz’s [https://www.cms.gov/newsroom/press-releases/cms-announces-new-drug-payment-model-strengthen-medicaid-better-serve-vulnerable-americans] bold direction at CMS, we’re expanding access to affordable medicines for millions of Americans,” said HHS Secretary Robert F. Kennedy, Jr.

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