CMS Announces Voluntary Most-Favored-Nation Pricing in Medicaid Through the GENEROUS Model

On November 6, 2025, the Centers for Medicare & Medicaid Services (CMS) announced a voluntary initiative called the GENEROUS Model (GENErating cost Reductions fOr U.S. Medicaid Model) to introduce the option of so-called most-favored-nation (MFN) pricing to the Medicaid program. Under the Model, a drug manufacturer may voluntarily offer supplemental rebates to participating state Medicaid programs for a manufacturer’s covered outpatient drugs (CODs). The rebates are intended to provide an MFN price to participating state Medicaid programs for a manufacturer’s CODs. CMS is accepting manufacturer applications to participate in the Model until March 31, 2026.

MFN Pricing Data. Under the Model, “[t]he benchmark used to calculate the MFN price for a COD (at the NDC-9 level) would be the second lowest country-specific manufacturer-reported net price adjusted by gross domestic product per capita using a purchasing power parity method.” CMS goes on to state that “[f]or a given country, the manufacturer-reported net price for a COD would be calculated at the NDC-9 level as the average net price in each country” over the previous 12-month period after deducting “all rebates, discounts, and other price concessions provided by the manufacturer.” The “country basket” for the GENEROUS Model includes the six other G-7 countries excluding the United States (United Kingdom, France, Germany, Italy, Canada, Japan) plus Denmark and Switzerland.

GENEROUS Model Supplemental Rebate Calculations. CMS will calculate the amount of the supplemental rebate owed to participating state Medicaid agencies by taking the wholesale acquisition cost (WAC) minus the sum of the Guaranteed Net Unit Price (GNUP) (which CMS says will be “determined based on the MFN price”) and the standard Unit Rebate Amount (URA). According to CMS, the GNUP approach “is commonly used in the supplemental rebate agreements [(SRAs)] that are currently negotiated between states and manufacturers.” The RFA does not provide further detail as to how GNUP will be calculated for purposes of the GENEROUS Model but does note that “CMS can make allowances in the final GNUP price” to account for “certain unique manufacturer costs relating to the storage, handling, or distribution of the COD.”

CMS states that it plans to engage a contractor to review and audit all manufacturer-reported data, including GNUP values. CMS also retains “the right to modify any [Model] policy” and “may modify the terms of the [Model] or cancel it entirely.”

Government Price Reporting. According to the “Frequently Asked Questions” section of the CMS webpage on the Model, the “supplemental rebates provided to states by manufacturers under [the Model] does [sic] not change Medicaid Best Price and therefore does [sic] not affect ceiling prices offered under the 340B Drug Discount Program.” CMS further emphasizes that “[s]upplemental rebates do not affect the calculation of Medicaid Best Price.”

Broad Participation Requirements. To participate in the Model, a manufacturer must “[p]rovide MFN pricing for their CODs with respect to all their associated labeler codes that are listed in the [Medicaid Drug Rebate Program].” The RFA further stipulates that “Model drugs are limited to all the single source drugs or innovator multiple source drugs of a participating manufacturer, as described in 42 C.F.R. § 447.502.” State Medicaid agencies will then “make an individual determination of whether they want to access the MFN prices of a participation manufacturer’s CODs.” Manufacturers must agree that “states are able to seek supplemental rebates outside the model for CODs for which the state is not accessing the MFN for the COD under the model.”

Cell and Gene Therapy Model Excluded. Importantly, CODs that are included in the CMS Innovation Center’s Cell and Gene Therapy model are not eligible for the GENEROUS Model.

Confidentiality Considerations. CMS will be permitted to disclose any information that a manufacturer “has already made public.” However, manufacturers will be able to use a template to identify specific examples of information the manufacturer considers to be proprietary and confidential, and such information “shall remain the sole property of the manufacturer and, except as authorized by federal law, shall not be released by CMS without the express written consent of the manufacturer.”

Application Process. In connection with its announcement, CMS has published a Request for Applications (RFA) that includes a template application that manufacturers must use to apply for participation in the GENEROUS Model. The application period began on November 10, 2025, and manufacturers must submit their completed application and supporting documents by March 31, 2026.

CMS will also seek letters of intent from state Medicaid agencies that are interested in participating. CMS stated that it anticipates issuing an RFA for interested states in December 2025.

The Model is scheduled to begin in January 2026 and run for five performance years, ending on December 31, 2030, though it is unclear whether the Model can operationalize in time for a January 2026 start. This may suggest CMS intends a lagged invoicing process for supplemental rebates, at least for the initial year of the program.