Trump touts drug deal savings

President Trump and federal officials claim pharmaceutical agreements will save Medicaid tens of billions of dollars on prescription drugs over a decade, rescuing state budgets.

The sixty four billion dollar claim

At a September eighteenth White House event, Trump said the Council of Economic Advisers estimates most favored nation deals will save Medicaid over sixty four billion dollars over a relatively short period of time.

“The Council of Economic Advisers estimates that the most favored nations deals that we're extending to states today will save Medicaid over $64 billion, and that's over a relatively short period of time.”

Trump predicts even higher savings

Trump suggested the actual savings could exceed the sixty four billion dollar estimate, saying others project much higher figures and he thinks they could reach one hundred billion dollars.

“Could be $100 billion.”

Officials claim budget rescue

Dr. Mehmet Oz, administrator of the Centers for Medicare and Medicaid Services, said the program is rescuing state budgets. Health Secretary Robert F. Kennedy Jr. said it will save state budgets.

“We are rescuing state budgets with this program.”

Experts question the estimates

Researchers say it is unclear how realistic the sixty four billion dollar estimate is. Key questions remain unanswered, including which drugs will be offered at most favored nation prices and how long arrangements will last.

Details remain confidential

The details of Trump's agreements with drugmakers are largely confidential. Robin Rudowitz of KFF said it is unclear what assumptions were made to develop the administration's estimates.

“It is unclear what assumptions were made to develop the administration's estimates, and there are a number of factors that make it difficult to assess the overall impact the new model will have on Medicaid drug costs.”

Which drugs are included matters

Edwin Park of Georgetown University said the amount of savings depends heavily on which drugs are included and whether prices give states a better deal than existing Medicaid discounts.

Companies backsliding on coverage

The administration initially suggested participating companies would offer all their drugs at most favored nation prices. But multiple companies have since indicated agreements cover only some products.

“There's just sort of a cone of silence around all these agreements.”

The GENEROUS program details

The Medicaid program called GENEROUS includes hundreds of drugs used to treat cancer, asthma, Parkinson's and other costly chronic diseases. CMS estimated total most favored nation rebates could reach five point two billion dollars annually.

Medicaid already gets steep discounts

Medicaid already pays some of the lowest prices in the U.S. for prescription drugs. In fiscal year twenty twenty four, Medicaid's gross spending topped one hundred six billion dollars but net spending was only forty…

Independent estimates are lower

An analysis published in JAMA in July estimated potential one year savings at eight point six billion dollars.Dr.Thomas Hwang said the Council of Economic Advisers estimates are basically a back of the envelope calculation.

“The CEA estimates are basically sort of a back-of-the-envelope calculation.”

Johns Hopkins study finds wide variation

Jeromie Ballreich of Johns Hopkins looked at eighty six branded drugs accounting for more than half of Medicaid gross drug spending in twenty twenty four.For more than a third, there would be no savings.

State participation is voluntary

The five year pilot program launched in January.Participation for states and drug manufacturers is voluntary.

States still evaluating participation

Some states signed participation agreements to access pricing information but are still evaluating whether to accept most favored nation offers. California said signing an agreement does not commit the state to actually participate.

“Applying and signing a participation agreement does not commit the state to actually participate in the GENEROUS model in terms of entering into rebate agreements with manufacturers.”

South Dakota identifies limited savings

South Dakota announced it has identified three drugs that would benefit from lower prices, saving the state approximately seven hundred fifty thousand dollars a year.

Savings are small share of state budgets

The projected sixty four billion dollars in savings would be split between states and the federal government.

Savings diminish over time

The Council of Economic Advisers report said savings would likely diminish over time as existing products lose patent exclusivity. Savings would fall to less than one percent of state Medicaid spending in later years.

Larger Medicaid cuts loom

Edwin Park noted that the One Big Beautiful Bill Act Trump signed last year includes cuts to Medicaid funding that could outweigh savings from lower prescription drug prices.

Medicare deals may have trade offs

Jeromie Ballreich noted that by agreeing to offer discounts to Medicaid, drug companies appear to have negotiated exemptions from mandatory most favored nation pricing in Medicare. The GLOBE program will apply to just four manufacturers.

“For pharmaceutical companies, Medicare is where they make their money. Medicaid is often kind of this afterthought.”