President Donald Trump has said his administration’s new drug pricing models will save tens of billions of dollars in Medicaid and Medicare spending. The states that have to implement these models are not as ready to make such claims.
In 2025, the Trump administration announced two models for Medicaid and Medicare aimed at aligning the United States’ notoriously high drug prices with what other countries pay. In September of this year, the administration announced that “all 50 states, the District of Columbia, and Puerto Rico are in,” for the Generating Cost Reductions for U.S., or GENEROUS, pricing model for Medicaid, “unlocking nearly $65 billion in Medicaid drug savings over the next decade.”
As details roll out, state health agencies told The Washington Sun they still lack information on how much they can actually cut down on drug spending, and drug pricing analysts say the administration’s savings projections for these models are misleading.
Jen Amundson, a spokesperson for the Minnesota Department of Human Services, told The Sun that Minnesota has submitted a participation agreement, “but that doesn’t necessarily mean Minnesota, or any other state, will execute any agreement with the GENEROUS model.”
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Amundson said that participating allows a state to access offers, but deals will “depend on the additional information provided.”
Marcus Barlow, a representative from the Indiana Family and Social Services Administration, said that Indiana would not have projections until late November.
Washington, D.C., said that it would assess potential cost savings when more information becomes available, according to Dorinda White, a spokesperson from the Department of Health Care Finance.
At least one state is already projecting some savings: South Dakota. It has announced that the state identified three drugs “that would benefit from these lower prices” under the administration’s new pricing models. The state said it will save $750,000 a year, less than half a percent of the state’s annual estimated Medicaid prescription drug spending.
Thomas Hwang, a researcher at Brigham and Women’s Hospital, estimated in a July 2026 study that the GENEROUS model could save Medicaid $8.2 billion a year if applied to all brand name drugs for which Medicaid prices were more expensive than the most-favored-nation, or MFN, price.
However, things have changed since then, Hwang said.
“I think there’s still too much uncertainty around products that will be included,” he said. “But savings will be nowhere near the order of magnitude being cited by the administration.”
The administration has not made the terms of the 26 MFN agreements that drug companies made with the Department of Health and Human services public, and there is evidence that drug companies will not offer all drugs in their portfolios at those prices.
Public Citizen, a progressive consumer advocacy group, published agreements in Sept. 2026 with Pfizer and Eli Lilly that they received through Freedom of Information Act requests. The documents were heavily redacted, but Pfizer’s agreement included a provision that it would share a portion of its increased profits from price increases abroad with HHS. Eli Lilly’s agreement revealed that its GLP-1s are excluded from MFN pricing.
Another drug company, Incyte, told its investors that it is only offering one drug at MFN pricing, according to a Securities and Exchange Commission filing. The document says that the company does not expect the agreement to “have a material impact on its future financial outlook.”
CMS did not respond to The Sun’s requests for comment.
Medicaid already pays among the lowest prices for prescription drugs of any payer in the US. Because of a rebate structure that protects the program from drug prices outpacing inflation, sometimes drug companies actually end up paying Medicaid.
This means that for some drugs, the MFN price might be higher than what Medicaid currently pays. But because Medicaid prices and MFN agreements are opaque, it’s difficult to properly assess savings, said Mariana Socal, a professor of health policy and management at Johns Hopkins University.
“Medicaid rebates are as confidential as everything else in our market, so it becomes really difficult to ascertain if a manufacturer is really going to provide a savings or if the manufacturer is actually going to be better off by providing an MFN price,” Socal said.
Drug companies entered into MFN agreements to avoid tariffs. Outside of that incentive, the agreements are essentially voluntary, states aren’t sure which products are going to be offered, and companies seem to be able to either raise their prices or delay launches abroad to manipulate the MFN price.
“For us, it’s like pharma is up to its usual behavior,” said Merith Basey, the CEO of Patients for Affordable Drugs, a patient advocacy group that does not accept funding from the pharmaceutical industry. “I think they have an opportunity to exempt high cost drugs and they will take advantage of that. And that’s what we believe has happened here, based on what we can see.”
The administration also introduced the Global Benchmark for Efficient Drug Pricing, or GLOBE, model, which brings MFN pricing to Medicare Part B drugs. CMS initially predicted the model would save $11.9 billion over seven years.
When CMS published its final rule in October 2026, though, it revealed that the model exempted every drug company that opted into GENEROUS. The model also excluded drugs used to treat rare diseases, cell and gene therapies, plasma-derived products, any biologic with biosimilar competition and drugs already being negotiated through Medicare’s drug price negotiation program.
CMS published in a footnote that only four manufacturers were still subject to GLOBE. Some eligible drugs were also co-developed with manufacturers participating in GENEROUS, meaning they might be exempted, too.
The administration reduced its projected savings by 96% to $441 million.
Medicaid patients pay nominal out-of-pocket costs for drugs. But Medicare patients are subject to a 20% coinsurance for Part B drugs, which means a loss of savings in Medicare is much more consequential for patients. The administration has not yet finalized a rule for a Part D model, GUARD.
“All of the estimates from the administration about savings with GLOBE and GUARD are complete nonsense,” said Stacie Dusetzina, a health services researcher who specializes in prescription drug pricing at Vanderbilt University School of Medicine. “You can get a lot of good press by saying that you’re going to get international prices for Medicare, and then you have a tiny little asterisk on that statement that basically says for only a couple of companies that don’t really matter.”
In a Sept. 18 press release announcing state participation in GENEROUS, the White House stated that “President Trump is the first President to actually lower prescription drug prices.”
“There are zero savings so far. I don’t care that they’ve estimated some enormous number for savings,” Dusetzina said. “None of these models are actually in progress, and then the details of them, as they keep being released, basically make it clear that there is no intention of lowering spending on drugs. There is a lot of intention on getting credit for lowering spending on drugs, but not actually doing it.”
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