Forty states and Puerto Rico have joined a federal program to lower prescription drug costs for Medicaid beneficiaries by tying prices to rates paid in other countries, the Centers for Medicare & Medicaid Services said.
The GENErating cost Reductions fOr U.S. Medicaid (GENEROUS) Model launched in January 2026 and will operate for five years. All 50 states, the District of Columbia, and Puerto Rico have applied. Remaining states have until Sept. 30, 2026, to sign agreements with CMS.
Participating drug manufacturers would be invoiced by states for supplemental rebates to align prices with international levels. CMS will oversee pricing accuracy and share rebates with states through a reduction in the federal share of Medicaid payments.
According to CMS, the 40 participating states and Puerto Rico are projected to save an estimated $64.3 billion in taxpayer dollars over the next ten years. The program is designed to lower drug spending while preserving or improving beneficiaries' access to medications.