President Donald Trump announced that Medicaid programs in all 50 states, Washington, D.C., and Puerto Rico are moving into a federal model designed to cap participating prescription-drug costs at most-favored-nation prices through manufacturer rebates.
By yourNEWS Media Newsroom.
President Donald Trump announced Friday that Medicaid programs nationwide are moving into his administration’s most-favored-nation prescription-drug pricing initiative, expanding agreements reached with major pharmaceutical manufacturers to state programs across the country.
Speaking from the Oval Office, Trump announced the nationwide expansion of the pricing agreements to Medicaid programs in all 50 states, Washington, D.C., and Puerto Rico.
“Thank you all for being here today as we take historic action to officially extend the benefits of our most-favored-nation agreements on prescription drug prices to state Medicaid programs all across the nation,” Trump said.
“This will save states billions and billions of dollars per year on drugs and allow them to invest those savings in providing better health care and higher quality service for the American people,” he added.
The administration is implementing the arrangement through the GENEROUS Medicaid Payment Model, under which participating drug manufacturers provide supplemental rebates on covered prescription drugs so the final net price paid by Medicaid aligns with prices paid in selected other developed countries.
The White House said the rebates will “ensure the final price to Medicaid does not exceed the MFN price” for participating expensive brand-name medications.
The Centers for Medicare and Medicaid Services said all 50 states, Washington, D.C., and Puerto Rico have applied to participate in the model. As of Friday, 40 states and Puerto Rico had completed participation agreements, with the remaining state applicants given until Sept. 30 to finalize them. The five-year GENEROUS model began in January 2026.
Most-favored-nation pricing is designed to link U.S. prices for participating medicines to lower prices available in certain other developed countries rather than allowing manufacturers to charge Medicaid substantially higher amounts for the same covered products.
Under the program, manufacturers continue supplying covered outpatient drugs through Medicaid, while states invoice participating companies for supplemental rebates necessary to reach the applicable international benchmark. CMS is responsible for monitoring the pricing calculations.
Trump said the financial impact could reach tens of billions of dollars.
“The Council Economic Advisers estimate that the most favored nations deals that we’re extending to states today will save Medicaid over $64 billion, and that’s over a relatively short period of time,” Trump said during his remarks on the projected savings, adding that he believes savings “could be $100 billion.”
The White House places the Council of Economic Advisers’ estimate at $64.3 billion in combined Medicaid savings over the next decade. Because Medicaid is jointly financed by federal and state governments, the administration estimates $36.6 billion would accrue to the federal government and $27.6 billion to states.
“Every state will now have the ability to use those extra billions of dollars to invest in other healthcare improvements or something else,” Trump continued.
The model covers hundreds of drugs across major therapeutic categories, according to the administration, including medicines used in oncology, diabetes treatment and asthma care.
Centers for Medicare and Medicaid Services Administrator Dr. Mehmet Oz said participation across the states reflects the financial incentive the administration believes the model creates for Medicaid programs.
“We are rescuing state budgets with this program, Mr. President,” Oz said during the Oval Office announcement.
Oz also stressed that states led by both political parties had sought participation.
“It is such a good deal that every state realized they need to take it,” he said.
The Medicaid announcement builds on a series of agreements the administration has negotiated with pharmaceutical manufacturers since September 2025.
The White House says it now has most-favored-nation agreements with 26 pharmaceutical manufacturers covering 89% of the branded U.S. prescription-drug market. The companies are Pfizer, Alcon, Astellas Pharma, AstraZeneca, EMD Serono, Eli Lilly, Novo Nordisk, Amgen, Bristol Myers Squibb, Boehringer Ingelheim, Genentech, Gilead Sciences, GSK, Merck, Novartis, Regeneron, Sanofi, Johnson & Johnson, AbbVie, BeOne Medicines, BridgeBio, CSL, Kyowa Kirin, Sun Pharma, Teva Pharmaceuticals and UCB.
The first agreement was announced Sept. 30, 2025, with Pfizer, according to the White House. Additional agreements were subsequently reached in several rounds, expanding the number of manufacturers participating in the administration’s effort to bring U.S. drug prices closer to prices paid elsewhere.
The administration’s broader most-favored-nation policy dates to a May 12, 2025, executive order directing federal agencies to pursue measures aimed at aligning certain American prescription-drug prices with lower prices available in comparable developed countries. Trump followed that action in July 2025 with letters to leading pharmaceutical manufacturers outlining steps his administration wanted companies to take.
Friday’s announcement moves one part of those negotiated pricing arrangements into Medicaid through the GENEROUS model, extending the administration’s drug-pricing initiative from individual manufacturer agreements to participating state Medicaid programs nationwide.
While the White House characterized the program as providing most-favored-nation prices across every state, participation remains structured through agreements among CMS, state Medicaid programs and drug manufacturers, with rebates used to bring the ultimate Medicaid price for participating drugs down to the applicable benchmark.
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