MEDICAID DRUG REBATE AND SAVINGS IMPLICATIONS OF MOST FAVORED NATION PRICING UNDER THE GENEROUS MEDICAID MODEL
Author(s)
Joseph F. Levy, PhD, Nathan Jibat, MD, MPH, MBA, Tucker Desmond, MS, Jeromie Ballreich, MS, PhD.
Health Policy, Johns Hopkins University Bloomberg School of Public Health, Baltimore, MD, USA.
Health Policy, Johns Hopkins University Bloomberg School of Public Health, Baltimore, MD, USA.
OBJECTIVES: To estimate the impact of a Most-Favored-Nation (MFN) reference pricing policy proposed under the Medicaid GENEROUS (Guaranteed Exclusive or Negotiated Rebate Outcomes for the U.S.) model. We examine how MFN reference pricing would interact with the existing Medicaid rebates framework to generate additional price reductions and affect total Medicaid drug spending.
METHODS: We conducted a cross-sectional analysis of the 25 highest-spending Medicaid drugs in 2024, representing 22.7% of total Medicaid drug spending. For each drug, a representative product was selected for cross-country price comparisons. Utilization and spending data were obtained from Medicaid State Drug Utilization Data. International prices and launch dates were sourced from the Navlin Database. The MFN benchmark was defined as the second-lowest inflation-adjusted international price among seven countries specified in GENEROUS. Current Medicaid rebates were estimated by separately modeling inflation and Best Price rebates.
RESULTS: Using the second-lowest MFN reference price, 16 of 25 drugs would generate additional MFN rebates, indicating that the MFN reference price is below current Medicaid net prices for these products. Estimated current Medicaid net spending on the 25 study drugs was $7.04 billion. Holding utilization constant, application of the second-lowest international reference price would reduce net Medicaid spending by $2.75 billion, a 39% reduction. At product level, the largest price reductions were observed for Vraylar (79.8%), Ozempic (69.19%), and Entresto (62.44%). The largest contributors to aggregate Medicaid savings were Abilify (910 million), Ozempic (377 million), and Trikafta (292 million). When the average international price was used as the MFN reference price instead, estimated savings declined to 24% below current spending.
CONCLUSIONS: MFN reference pricing under Medicaid GENEROUS model would reduce Medicaid spending for some, but not all, high-cost drugs. Estimated savings are highly sensitive to the choice of reference price benchmark, highlighting the importance of benchmark design in any future implementation of international reference pricing.
METHODS: We conducted a cross-sectional analysis of the 25 highest-spending Medicaid drugs in 2024, representing 22.7% of total Medicaid drug spending. For each drug, a representative product was selected for cross-country price comparisons. Utilization and spending data were obtained from Medicaid State Drug Utilization Data. International prices and launch dates were sourced from the Navlin Database. The MFN benchmark was defined as the second-lowest inflation-adjusted international price among seven countries specified in GENEROUS. Current Medicaid rebates were estimated by separately modeling inflation and Best Price rebates.
RESULTS: Using the second-lowest MFN reference price, 16 of 25 drugs would generate additional MFN rebates, indicating that the MFN reference price is below current Medicaid net prices for these products. Estimated current Medicaid net spending on the 25 study drugs was $7.04 billion. Holding utilization constant, application of the second-lowest international reference price would reduce net Medicaid spending by $2.75 billion, a 39% reduction. At product level, the largest price reductions were observed for Vraylar (79.8%), Ozempic (69.19%), and Entresto (62.44%). The largest contributors to aggregate Medicaid savings were Abilify (910 million), Ozempic (377 million), and Trikafta (292 million). When the average international price was used as the MFN reference price instead, estimated savings declined to 24% below current spending.
CONCLUSIONS: MFN reference pricing under Medicaid GENEROUS model would reduce Medicaid spending for some, but not all, high-cost drugs. Estimated savings are highly sensitive to the choice of reference price benchmark, highlighting the importance of benchmark design in any future implementation of international reference pricing.
Conference/Value in Health Info
2026-05, ISPOR 2026, Philadelphia, PA, USA
Value in Health, Volume 29, Issue S6
Code
HPR28
Topic
Health Policy & Regulatory
Topic Subcategory
Pricing Policy & Schemes, Reimbursement & Access Policy
Disease
No Additional Disease & Conditions/Specialized Treatment Areas