What began as “Most Favored Nation” (MFN) concepts has now materialized into concrete policy mechanisms. From binding bilateral MFN agreements with major manufacturers, tariff-linked pricing incentives, to the most significant development to date: the CMS GENEROUS Model, published on November 6, 2025.
The U.S. Formally Embraces MFN-Based Pricing
Until mid-2025, MFN-style pricing remained an idea discussed more often in political speeches than in operational frameworks. That changed decisively with the White House’s announcement of a first wave of bilateral MFN agreements with Pfizer (Sept 30), AstraZeneca (Oct 10), Eli Lilly, and Novo Nordisk (Nov 6). These agreements share several transformative features:
- MFN pricing guarantees for Medicaid for future launches
- Direct-to-patient channels such as TrumpRx.gov offering 50%+ discounts on selected products
- Large-scale U.S. investment pledges, including from Pfizer, AstraZeneca, Lilly, and Novo Nordisk
- Grace periods for companies committing to substantial U.S. investments in R&D and manufacturing
These deals mark the first time the U.S. government has negotiated portfolio-level pricing behavior with individual manufacturers.
What is the GENEROUS model? And how does it work?
The GENEROUS model is a voluntary CMS pilot (2026–2030) that links Medicaid drug net prices to a “Most Favored Nation” benchmark. Manufacturers that join agree to give supplemental rebates so states end up paying a Guaranteed Net Unit Price (GNUP) based on the net prices across different countries.
GENEROUS ties Medicaid net prices to the PPP-adjusted second-lowest net price across eight MFN reference countries (UK, France, Germany, Italy, Canada, Japan, Denmark, Switzerland). Manufacturers must report confidential ex-US net prices to CMS, a major shift for markets like Germany and France where rebates are traditionally confidential.
CMS then converts this benchmark into a Guaranteed Net Unit Price (GNUP). States recover the gap between GNUP and the Medicaid statutory rebate via a standardized supplemental rebate formula
Wholesaler Acquisition Cost – (Unit Rebates Amount + GNUP) = Supp. Rebate
GENEROUS is not merely another rebate program. It is the first federal mechanism that:
- Links U.S. net prices directly to confidential international net prices
- Creates a repeatable MFN formula that can be scaled to Medicare
- Establishes global net price transparency requirements
- Incentivizes states to adopt unified coverage criteria in exchange for MFN-level pricing
For manufacturers, the implication is clear: international pricing decisions will increasingly influence U.S. Medicaid pricing, potentially reshaping global launch sequencing and contracting strategies.
What Pharmaceutical Companies Must Do in 2026 for Successful US Market Access
Across MFN agreements, the GENEROUS model, tariff policies, and emerging European confidentiality frameworks, manufacturers face a radically more interconnected pricing environment. To navigate this new era, companies should prioritize:
- Global List Price Alignment: The days of steep U.S.–EU list price divergence are numbered. Some manufacturers, such as Lilly, have already begun increasing EU list prices to mitigate MFN exposure.
- Rethinking Launch Sequencing: Lower-priced early launches, particularly in Europe, now impose direct U.S. Medicaid price risk.
- Evaluating Manufacturing Footprint: Tariff exemptions and MFN negotiation advantages now make U.S. production a strategic imperative rather than a cost-center decision.
- Managing Parallel Pricing Channels: Direct-to-patient platforms such as TrumpRx.gov introduce a second pricing architecture that will coexist with payer contracting for the foreseeable future.
Stay Informed with Justin Stindt Consultants
With the GENEROUS model now published, bilateral MFN agreements in motion, and tariff policies intertwined with price reform, the U.S. is constructing a multi-layered MFN pricing regime that will reshape global pharmaceutical strategy.
Justin Stindt Consultants will continue monitoring the evolving U.S. pricing environment and supporting clients in navigating the strategic, operational, and international implications of this new era.
