States are seeking strategies to make health care more affordable by lowering health care spending in Medicaid and state employee health plans as well as for consumers in the commercial market. Prescription drug costs, though a smaller percentage of overall health care spending, increased by 10.2 percent in 2024, and, once calculated, are projected to be higher in 2025. As a result, state policymakers continue to develop and implement strategies aimed at lowering prescription drugs costs for their state residents.
The Trump Administration has long prioritized lowering prescription drug costs and recently announced new and proposed approaches that primarily focus on Medicare and Medicaid. States will have the option to participate in the Medicaid programs. And interested states may want to comment on the Medicare proposed rebate changes — both because of their potential impact on state retiree health plan costs but also for states interested in leveraging federal price negotiations and expanding their application within their state.
Below is a summary of the recently announced federal prescription drug programs. Although more details will be shared in the months to come, state officials have begun considering which of these programs may be relevant for their states. NASHP will continue to work with state officials as they navigate these considerations. This work will range from following federal efforts and analyzing impact on states to developing specific strategies with states (e.g., updating an existing state model law that allows states to benchmark drug prices to Medicare’s negotiated fair price or to an international price).
Goal: Realize Most-Favored-Nation Rx Pricing
Most-favored-nation (MFN) drug pricing aims to lower prescription drug prices in the U.S. to that of the lowest prices paid for the same drugs in other developed countries (adjusting for economic factors such as gross domestic product or GDP). President Trump has signed two Executive Orders (most recently in 2025) directing the Centers for Medicare and Medicaid Services (CMS) and others to establish and pursue MFN drug pricing. As a result, the Center for Medicare and Medicaid Innovation (CMMI) has announced and proposed the following models:
- GENEROUS (GENErating cost Reductions fOr U. S. Medicaid): A 5-year voluntary Medicaid model through which drug manufacturers will agree to provide additional supplemental rebates (beyond those already established with states) on their portfolio of covered out-patient drugs to achieve a price equivalent to the MFN price. CMMI has issued Requests for Applications (RFAs) from interested manufacturers and state Medicaid agencies. It is expected that CMMI will secure manufacturer participation, share pricing details, and then state agencies can decide on their participation. CMS will allow states to enroll in the model on a rolling basis through August 31, 2026.
- GLOBE (Global Benchmark for Efficient Drug Pricing): A 5-year proposed (via a notice of proposed rulemaking with comments due February 23, 2026) mandatory model that would assess a rebate for certain drugs reimbursed by Medicare Part B if the prices exceed the MFN prices. These are drugs administered in a clinical setting, such as cancer therapies or drugs used to treat autoimmune conditions and arthritis. Planned launch is October 1, 2026, running through December 2031, with rebate invoicing and reconciliation into 2033.
- GUARD (Guarding U. S. Medicare Against Rising Drug Costs): A 5-year proposed (via notice of proposed rulemaking with comments through February 23, 2026) mandatory model that would assess rebates for certain drugs payable under Medicare Part D if the prices exceed the MFN prices. Through the model, CMS would test an alternative calculation for manufacturer rebates under the Medicare Part D Inflation Rebate Program using an international benchmark. Anticipated launch is January 1, 2027, running through December 2031 with rebate invoicing and reconciliation into 2033.
Separate from CMMI models, TrumpRx is a forthcoming online platform that would allow individuals to buy directly from manufacturers at the MFN prices. This direct-to-consumer option is designed to “cut out the middlemen.” However, it’s not clear if or how this option could benefit individuals with employer-sponsored coverage or other commercial insurance, as they would likely want such out-of-pocket expenses to count toward deductibles or other cost-sharing responsibilities.
Goal: Increased Access and Lower Prices for GLP-1s
Although manufacturers are offering higher rebates on their products (typically priced $1,000-$1,500 per month), their utilization is driving up overall prescription costs for health plans. Medicaid, state employee health plans, and plans on the commercial market all cite GLP-1s as cost drivers. Many health plans do not cover GLP-1s for weight loss indications due to cost, but they want to do so.
- BALANCE (Better Approaches to Lifestyle and Nutrition for Comprehensive hEalth) is a voluntary model through which CMS will negotiate pricing and coverage terms with GLP-1 manufacturers on behalf of Medicaid and Medicare Part D plans. The model seeks to ensure coverage of GLP-1s under all participating state Medicaid and Medicare Part D plans by ensuring lower prices and manufacturer-provided lifestyle support programs to eligible individuals. Details on prices are not available yet. State Medicaid agencies can join the model beginning in May 2026, and Part D plans to launch in January 2027.
BALANCE will be structured like the CGT model (Cell and Gene Therapy Access) in which 33 states, plus the District of Columbia and Puerto Rico, are participating. The CGT model facilitates agreements between manufacturers and CMMI, and state Medicaid agencies to lower costs through rebates.
