NewsMacroTrump Set to Announce Medicaid 'GENEROUS' Drug Pricing Model Covering All 50 States Amid Savings Uncertainty

Trump Set to Announce Medicaid 'GENEROUS' Drug Pricing Model Covering All 50 States Amid Savings Uncertainty

Author: Fortune Crypto·

Key Takeaways

  • All 50 states are expected to join a program that ties the net prices of selected Medicaid drugs to what is paid in certain other countries.
  • The White House estimated in May that deals aligning certain U.S. drug prices with international levels could save $529 billion over ten years, but experts say the claimed savings are difficult to verify because agreement terms remain undisclosed.
  • Because Medicaid enrollees already pay only a nominal co-payment for prescriptions, lower drug prices would primarily benefit the state budgets that help fund the program.
  • Policy experts say the administration faces pressure to release detailed data on the agreements, which is needed for any congressional effort to codify the arrangements and for outside analysts to assess them.
  • Advocates note the initiative's reach is limited to selected drugs within Medicaid, leaving most Americans who receive coverage through employers, the individual market, or Medicare outside its direct scope.
Trump Set to Announce Medicaid 'GENEROUS' Drug Pricing Model Covering All 50 States Amid Savings Uncertainty

President Donald Trump is expected to announce on Friday that all 50 states will join a program bringing most favored nation pricing to selected drugs within Medicaid, tying the net price of those medications—the price after rebates and discounts—in the United States to what is paid in certain other countries.

The initiative, dubbed the Medicaid “GENEROUS” model by the Trump administration, is claimed to save billions of dollars in prescription drug costs. Experts, however, say the scale of the savings remains unclear because the terms of the underlying agreements have not been made public.

Friday's announcement comes as cost-of-living issues sit at the forefront of voters' concerns ahead of the midterm elections in November. As part of his push to address affordability, Trump has cut deals with pharmaceutical companies intended to ensure that some drugs do not cost dramatically more in the U.S. than in other affluent nations.

Last year, Trump signed an executive order instituting a “Most Favored Nations” policy, under which the United States would commit to paying the same price for medications as the country that pays the lowest price anywhere in the world. In May, the White House estimated that the deals with pharmaceutical companies to align certain U.S. prescription drug prices with levels charged in other countries could save $529 billion over the next 10 years.

Medicaid, the state- and federally-funded program for people with low incomes, already shields patients from most costs: enrollees pay only a nominal co-payment of a few dollars to fill their prescriptions. Lower drug prices would therefore primarily benefit the state budgets that help fund the program.

The true value of the claimed savings is difficult to independently verify, since few details of the agreements struck between the Trump administration and participating pharmaceutical companies have been made public.

Kathy Hempstead, a senior policy advisor at the Robert Wood Johnson Foundation, told The Associated Press that the administration faces significant pressure to provide more granular data to justify its cost-savings claims, and that the lack of information creates a barrier to legislative action.

“He is saying Congress should codify all of his MFN arrangements,” Hempstead said. “But it's kind of unreasonable because it's not clear what Congress would actually do. No one knows what is in these deals.”

She added that there is concern about whether the current administration's tenure will affect the longevity of these price cuts, and whether prices will revert once the administration leaves office. The near-term markers to watch are the release of granular data on the agreements and any congressional effort to codify the arrangements—steps that would let outside analysts assess what the deals actually contain.

Some advocates want more people to benefit from lower drug pricing. JD Hayworth, a former Republican congressman and spokesperson for the Pharmaceutical Reform Alliance, said in a statement that Friday's announcement reflects “meaningful progress, but that progress remains incomplete,” noting that millions of Americans who are not enrolled in healthcare programs also want lower drug prices.

Drug prices for patients in the U.S. can depend on a number of factors, including the competition a treatment faces and insurance coverage. Most people have coverage through work, the individual insurance market, or government programs like Medicaid and Medicare, which shield them from much of the cost. The new model's reach, as described, extends only to selected drugs within Medicaid, leaving the broader coverage channels outside its direct scope.

This story was originally featured on Fortune.com.