40 States Join CMS Medicaid International Drug Pricing Model

Forty states and Puerto Rico have signed agreements to join a new Medicaid drug payment initiative that ties prices for certain prescription drugs to what other developed nations pay, CMS announced Sept. 18, according to Becker's Hospital Review.

The program, called the Generous Model, drew wide interest. All 50 states, the District of Columbia, and Puerto Rico applied to participate. That means the vast majority of states are willing to test international reference pricing, an approach that benchmarks U.S. drug costs against prices in comparable countries where governments negotiate lower rates.

In practice, the model aims to lower what state Medicaid programs pay for high-cost drugs by anchoring reimbursement to foreign prices rather than U.S. list prices. Medicaid covers roughly one in five Americans, so changes to how the program pays for drugs carry significant budget and access implications. Readers should watch how the model is implemented, which drugs it targets, and how the pharmaceutical industry responds, since drugmakers have historically opposed international pricing benchmarks.