Trump Touts Medicaid Drug Savings, But Details Remain Murky

President Donald Trump and different national officials are claiming that deals the medication has struck with pharmaceutical companies are “rescuing authorities budgets” oregon helping to “save Medicaid” by redeeming the programme tens of billions of dollars connected medicine drugs implicit a decade.

But experts accidental determination are galore unanswered questions astir the scope of those deals that could bounds the imaginable savings, including however galore drugs they really cover.

It’s besides an exaggeration to suggest this programme volition single-handedly prevention authorities budgets, adjacent nether the rosiest of scenarios. According to the White House’s projections, the savings to states would initially travel to little than 2% of what they spend connected Medicaid annually, and diminish implicit time.

Trump has talked regularly astir his efforts to little medicine cause costs, arguing it’s unfair that the U.S. pays overmuch higher prices for brand-name drugs than different affluent countries. 

Over the past 13 months, his administration has announced agreements with much than 2 twelve cause manufacturers — from ample corporations similar Pfizer and Johnson & Johnson to midsize biotech firms — to bring definite prices successful enactment with those successful different countries. The medication calls this attack “most favored nation” oregon MFN pricing.

Among different things, companies person agreed to merchantability definite drugs to authorities Medicaid programs astatine MFN prices. Trump and different medication officials touted the imaginable savings that could make astatine a Sept. 18 White House event.

“The Council of Economic Advisers estimates that the astir favored nations deals that we’re extending to states contiguous volition prevention Medicaid implicit $64 billion, and that’s implicit a comparatively abbreviated play of time,” Trump said. “And others task the savings are going to beryllium really overmuch much than that. I deliberation they’re going to beryllium overmuch higher than that. Could beryllium $100 billion.”

Those savings, Trump continued, “will assistance america prevention Medicaid and support it for aboriginal generations.” 

“We are rescuing authorities budgets with this program,” Dr. Mehmet Oz, the head of the Centers for Medicare & Medicaid Services, added. Medicaid prescription-drug spending, helium said, “is crowding retired schools and roads and semipermanent attraction and agrarian care.”

“It’s going to prevention the authorities budget,” Health and Human Services Secretary Robert F. Kennedy Jr. said, adding that states antecedently “had to take betwixt medicine and nutrition, lifestyle, prevention.”

The $64 cardinal fig comes from a report released successful May by the White House Council of Economic Advisers, which projected that MFN pricing could prevention Medicaid astir that overmuch implicit 10 years, divided betwixt the national authorities and the states.

But experts told america it’s unclear however realistic that estimation is. The details of Trump’s agreements with drugmakers are mostly confidential and cardinal questions stay unanswered, including which drugs volition beryllium offered to Medicaid astatine MFN prices, the grade to which states volition enactment and however agelong those arrangements volition last.

“It is unclear what assumptions were made to make the administration’s estimates, and determination are a fig of factors that marque it hard to measure the wide interaction the caller exemplary volition person connected Medicaid cause costs,” Robin Rudowitz, a elder vice president and manager of the Program connected Medicaid and the Uninsured astatine the nonprofit wellness argumentation probe enactment KFF, told america successful an email.

Because Medicaid already gets important discounts connected medicine drugs, the magnitude of savings volition beryllium heavy connected which drugs are included and whether the prices really springiness states a amended deal, said Edwin Park, a probe prof astatine Georgetown University’s Center for Children and Families. 

He said the medication initially made it seem similar participating companies would connection each their drugs to Medicaid astatine MFN pricing, which the CEA study describes arsenic the second-lowest prices among a tiny acceptable of countries — the G-7 nations, positive Switzerland and Denmark. But a fig of companies person since indicated that the agreements screen lone immoderate products.

“There’s conscionable benignant of a cone of soundlessness astir each these agreements,” Park said. “So, you know, I deliberation a steadfast dose of skepticism is warranted successful this case.”

A White House authoritative said the CEA investigation “is based connected shaper and authorities participation” and the medication expects the existent savings to beryllium successful enactment with its estimates.

A spokesperson for the Centers for Medicare & Medicaid Services told america the Medicaid program, called GENEROUS, includes “hundreds” of drugs utilized to dainty cancer, asthma, Parkinson’s and assorted different “costly and chronic diseases.”

“CMS estimated full [MFN] rebates flowing done GENEROUS could scope $5.2 cardinal annually, depending connected which drugs, of those included successful GENEROUS, states take to entree done the exemplary each year,” the spokesperson said. “This fig represents a important information of yearly nett cause walk successful Medicaid.”

We’ve antecedently written astir different aspects of Trump’s drug-pricing deals, including his exaggerated claims astir the savings disposable done the government’s direct-to-consumer TrumpRx level and the administration’s questionable projections that his MFN policies volition prevention hundreds of billions of dollars overall. 

Here’s a person look astatine the Medicaid drug-pricing initiative, what we cognize astir it and the administration’s claims astir imaginable savings.

Lack of Details Make It Hard to Assess Savings

Medicaid, which provides wellness sum to more than 65 cardinal people with debased incomes oregon disabilities, already pays immoderate of the lowest prices successful the U.S. for medicine drugs. By law, manufacturers have to agree to definite rebates for their drugs to beryllium covered by Medicaid. On apical of that, astir states negociate “supplemental rebates” that further trim the outgo of branded drugs.

Those discounts trim Medicaid’s cause costs by much than half. In fiscal twelvemonth 2024, Medicaid’s gross spending connected medicine drugs topped $106 billion, but nett spending was lone $48 cardinal aft rebates, according to the Medicaid and CHIP Payment and Access Commission, a governmental assemblage that advises Congress connected Medicaid policy.

Nearly each of those costs are divided betwixt states and the national government. Medicaid beneficiaries pay, astatine most, a nominal copay for their prescriptions, truthful they’re not straight impacted by Medicaid cause prices going up oregon down. 

While medicine drugs relationship for a tiny stock of wide Medicaid spending — around 6% successful 2024 — rising cause costs tin beryllium a concern for authorities budgets. Pharmaceutical companies’ deals with the Trump medication see information successful GENEROUS, done which they’ll connection authorities Medicaid programs entree to definite drugs astatine MFN prices. The five-year aviator programme launched successful January, and information for states and cause manufacturers is voluntary.

The Council of Economic Advisers study estimated that the GENEROUS exemplary would initially trim Medicaid’s cause costs by $18 cardinal per year, though due to the fact that it assumes the changes would besides summation medicine cause utilization, it enactment the nett savings astatine $14.4 billion.

The study said those savings would apt diminish implicit clip arsenic existing products suffer patent exclusivity, though it says Medicaid would proceed to payment from different provisions of the president’s MFN deals that screen caller merchandise launches. (We’ve antecedently written astir the shaky assumptions down the administration’s claims of monolithic savings from those provisions.) Experts person besides pointed out that companies could rise prices successful different countries, truthful that they wouldn’t person to discount their drugs arsenic overmuch successful the U.S.

Taking those diminishing effects into account, the study enactment the full savings implicit 10 years astatine $64.3 billion.

Outside researchers person travel up with somewhat little estimates. An investigation published successful the diary JAMA successful July estimated the imaginable one-year savings astatine $8.6 billion. 

“The CEA estimates are fundamentally benignant of a back-of-the-envelope calculation,” said the study’s pb author, Dr. Thomas Hwang, manager of the Cancer Innovation and Regulation Initiative astatine Harvard Medical School and Brigham and Women’s Hospital. 

The CEA calculated its savings by assuming that existent Medicaid prices are 2.5 times higher connected mean than MFN prices would be, but doesn’t spell into item astir however it arrived astatine that figure. Hwang said it’s besides unclear if CEA accounts for different supplemental rebates, which states would person to forego to entree MFN prices.

Hwang’s study, which is based connected drug- and state-specific data, looked astatine a somewhat smaller cohort of drugs than CEA’s, but helium said that would lone relationship for portion of the quality betwixt estimates.

The bigger issue, helium said, is that it’s not yet wide which drugs volition really beryllium included successful GENEROUS.

The CEA study said its estimation is based connected “implementation of Medicaid MFN crossed each azygous root branded drugs and biologics.” Hwang and colleagues made the aforesaid presumption successful their study. He said that’s however national officials initially described the program, including successful a request for applications directed astatine states.

But “what we’ve seen successful the past period oregon truthful is simply a batch of backsliding connected that commitment,” Hwang said. Multiple companies have said successful Securities and Exchange Commission filings oregon different nationalist statements that MFN pricing for Medicaid applies lone to “certain” oregon “select” products. 

Because Medicaid requires further rebates if a drug’s terms rises faster than inflation, older drugs thin to beryllium discounted much steeply, truthful the savings from MFN pricing could beryllium heavy connected which circumstantial drugs are included, helium said.

“One of the concerns with this is, obviously, companies person each fiscal inventive to cherry-pick which drugs they connection MFN pricing for, successful ways that volition trim their MFN liability,” Hwang said. 

Jeromie Ballreich, an subordinate probe prof astatine Johns Hopkins University who studies pharmaceutical policy, likewise said savings volition alteration wide from cause to drug. 

In a forthcoming study, helium and respective co-authors looked astatine however GENEROUS could impact prices for 86 branded drugs accounting for much than fractional of Medicaid gross cause spending successful 2024. For much than a 3rd of those products, they found, determination wouldn’t beryllium immoderate savings. For the others, savings ranged from 1.3% to 87.5%.

“Some drugs are going to supply a batch of savings,” helium said. But “there’s going to beryllium different branded drugs retired determination that volition supply fundamentally nary savings due to the fact that of the mode the ostentation rebates impact Medicaid pricing. There are branded drugs successful the Medicaid programme that are [already] fundamentally escaped for Medicaid.”

The insubstantial estimated the GENEROUS exemplary could prevention Medicaid $3.1 cardinal implicit a year, but Ballreich said that’s going to beryllium “highly dependent” connected which drugs are really included and however planetary notation prices are calculated.

“So determination are inactive a fig of question marks,” helium said. 

“The GENEROUS exemplary includes hundreds of azygous root and innovator aggregate root covered outpatient drugs from the portfolios of participating manufacturers,” the CMS spokesperson told us.

“The included drugs span astir large cause classes, including those acutely important to Medicaid beneficiaries similar oncology, diabetes care, and asthma. Some of these drugs are utilized to dainty galore costly and chronic diseases, including hemophilia, Parkinson’s disease, macular degeneration, glaucoma, liver disease, tegument conditions, and assorted forms of cancer.”

State Uptake Remains to Be Seen

Another unfastened question is the grade to which states take to participate. Under the GENEROUS model, states tin prime and take which circumstantial drugs they want. Whether the MFN terms offers them a amended woody volition beryllium connected what benignant of rebates they’ve already negotiated with the manufacturer. 

States volition besides person to hold to a modular acceptable of sum criteria for each MFN-priced drug, which could change guidelines for erstwhile definite drugs request anterior authorization. Those changes could offset immoderate of the savings if the criteria effect successful much radical being prescribed those drugs.

“The cardinal question for states is, however does [the MFN rebate] comparison to their existing rebates, and past however expansive are the sum terms,” said Park, the Georgetown professor.

Trump announced connected Sept. 18 that each 50 states had joined the GENEROUS model, though the Centers for Medicare & Medicaid Services clarified aboriginal the aforesaid time that portion each authorities had applied, 40 had really signed agreements to participate. The wellness quality tract STAT reported connected Sept. 24 that immoderate states were inactive connected the obstruction astir doing so.

At slightest immoderate of the remaining states did motion agreements with CMS earlier the Sept. 30 deadline, spokespeople for their wellness departments told us. However, those departments besides told america they’re inactive evaluating whether to judge immoderate MFN offers from manufacturers. Several of them said that signing information agreements was the lone mode to entree pricing accusation and find whether determination would beryllium a benefit.

“Applying and signing a information statement does not perpetrate the authorities to really enactment successful the GENEROUS exemplary successful presumption of entering into rebate agreements with manufacturers,” Anthony Cava, a spokesperson for the California Department of Health Care Services, told america successful an email. 

“Rather, signing a information statement volition alteration DHCS to get cause pricing information, measure whether the MFN prices offered nether the exemplary would meaningfully payment Medi-Cal [California’s Medicaid program], and determine whether entering into supplemental rebate agreements with manufacturers would beryllium advantageous.”

One state, South Dakota, announced past period that it “has presently identified 3 drugs that would payment from these little prices, redeeming the authorities astir $750,000 a year.” South Dakota’s Medicaid programme spent $167.2 cardinal connected medicine drugs successful fiscal twelvemonth 2024, with the costs divided betwixt the authorities and national governments.

Multiple authorities wellness departments person told america oregon other quality outlets that they can’t stock specifics owed to confidentiality agreements. CMS told america that its projections of imaginable savings volition beryllium “on which drugs, of those included successful GENEROUS, states take to entree done the exemplary each year.”

There’s besides uncertainty astir however agelong these agreements volition beryllium successful place. Some companies have indicated their deals with the medication tally for 3 years. Pfizer’s ends connected the past time of Trump’s term, according to a redacted copy released to the wide watchdog radical Public Citizen done a Freedom of Information Act request.

“Participating manufacturers voluntarily chose to motion information agreements to instrumentality portion successful GENEROUS and we bash not presently program to renegotiate the GENEROUS exemplary during its five-year show period,” the CMS spokesperson told us.

The White House authoritative said the CEA projections presume the MFN arrangements volition proceed nether aboriginal administrations. 

“Those who presume it won’t past a decennary would beryllium making an presumption that a aboriginal medication would not privation MFN pricing and the hundreds of billions successful savings associated with it,” the authoritative said. 

Ballreich said trying to marque projections astir the pharmaceutical marketplace 10 years retired is inherently hard due to the fact that of the fig of variables. He said the administration’s estimation of $64 cardinal implicit 10 years is “probably a small high,” though not extracurricular the realm of possibility.

But again, helium said, it’s “hard to exemplary retired without knowing the details.”

Ballreich besides noted that by agreeing to connection immoderate discounts to Medicaid, cause companies look to person negotiated exemptions from the administration’s implementation of mandatory MFN pricing successful Medicare. 

“For pharmaceutical companies, Medicare is wherever they marque their money,” helium said. “Medicaid is often benignant of this afterthought.”

The MFN pricing inaugural successful Medicare has 2 components. One of those programs, called GLOBE, covers drugs administered successful doctors’ offices. CMS precocious released a final rule estimating it volition prevention $440 cardinal implicit 7 years — a 96% alteration from the initial estimate of $11.9 cardinal successful savings. According to the rule, the programme volition use to conscionable 4 manufacturers, arsenic different companies person exemptions due to the fact that they are participating successful the Medicaid pilot. (The different one, GUARD, applies to medicine drugs and is inactive successful the works.)

“The communicative that I’m knowing from industry, oregon astatine slightest however manufacture has been interpreting the attack by the administration, is that ‘We volition enactment successful GENEROUS,’” Ballreich said. “‘In return, we’re going to beryllium a batch much selective connected what drugs are going to beryllium successful GLOBE and GUARD.’”  

Questionable Claims of ‘Rescuing’ State Budgets

Whether oregon not the White House’s projections are realized, experts told america MFN pricing could make existent savings for states and the national government. But claims of “rescuing” authorities budgets are overblown.

We asked CMS what precisely Oz meant by that and didn’t get a nonstop answer. But adjacent taking the White House estimates astatine look value, the savings correspond a fraction of what states walk connected Medicaid — not to notation each services — each year.

While medicine drugs are a tiny portion of full Medicaid spending, a caller argumentation brief from KFF noted that rising cause prices and the “emergence of new, high-cost drugs tin enactment unit connected authorities budgets.” More than a 3rd of states cited rising pharmacy costs arsenic 1 of the factors driving higher Medicaid spending wide successful KFF’s astir caller survey of authorities Medicaid directors.

Because states and the national authorities divided the outgo of Medicaid, not each of the projected $64 cardinal successful savings would spell to states. The CEA study projects that states collectively would prevention $6.2 cardinal per twelvemonth astatine archetypal and $27.6 cardinal implicit a decade, oregon astir $2.8 cardinal per twelvemonth connected average. 

By comparison, successful fiscal twelvemonth 2024, states spent astir $325 cardinal of their ain wealth connected Medicaid, according to KFF. The projected savings successful the archetypal twelvemonth would magnitude to astir 2% of that, falling to little than 1% successful aboriginal years arsenic MFN discounts diminish implicit time. The savings marque up an adjacent smaller stock of full authorities expenditures, which came to around $2 trillion successful fiscal twelvemonth 2024, not counting costs reimbursed by the national government, according to the National Association of State Budget Officers. 

Of course, that’s not to accidental states wouldn’t invited those savings.

Park said states are justifiably acrophobic astir rising medicine costs, particularly arsenic new, costly blockbuster drugs travel out.

“That being said, medicine drugs is lone a precise tiny stock of Medicaid spending, good nether 10%,” helium said. “The large drivers are things 1 would expect, similar infirmary costs.”

Park besides noted that the home argumentation instrumentality Trump signed past year, the One Big Beautiful Bill Act, includes cuts to Medicaid funding that could outweigh the imaginable savings from little medicine cause prices. 

Some of those changes, specified arsenic enactment requirements and much predominant eligibility checks, volition trim some authorities and national Medicaid spending by limiting enrollment. But different provisions chopped national backing to states without reducing the size of the Medicaid program, meaning states volition person to marque cuts oregon usage wide funds to marque up the difference. 

On balance, a caller study from the nonpartisan probe enactment RAND estimated those changes could outgo authorities wide funds much than $80 cardinal done 2034, though the effects alteration by state.

“You tin spot however there’s going to beryllium immoderate savings if these agreements spell into effect,” Park said. “But it’s not a mode for states to offset the historically ample Medicaid cuts that were included successful the fund reconciliation law, and that includes the important outgo shifts to states.”

---

Editor’s note: FactCheck.org does not judge advertising. We trust connected grants and idiosyncratic donations from radical similar you. Please see a donation. Credit paper donations whitethorn beryllium made through our “Donate” page. If you similar to springiness by check, nonstop to: FactCheck.org, Annenberg Public Policy Center, P.O. Box 58100, Philadelphia, PA 19102. 

The station Trump Touts Medicaid Drug Savings, But Details Remain Murky appeared archetypal connected FactCheck.org.