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American Focus > Blog > Health and Wellness > Medicaid Savings May Include Lower Drug Prices Via Most Favored Nation
Health and Wellness

Medicaid Savings May Include Lower Drug Prices Via Most Favored Nation

Last updated: May 8, 2025 3:36 am
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Medicaid Savings May Include Lower Drug Prices Via Most Favored Nation
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The ongoing discussions among Republican lawmakers regarding cuts to the Medicaid program have sparked significant debate and controversy. With the aim of achieving substantial cost savings, legislators are exploring various options, including the implementation of work requirements and efforts to combat waste, fraud, and abuse within the system.

One proposed strategy to achieve the targeted $88 billion in annual cuts involves linking the prices paid for prescription drugs in Medicaid to international benchmarks. This approach has generated mixed reactions, with some advocating for its potential effectiveness in reducing expenditures, while others express concerns about its impact on access to essential medications.

Medicaid, a vital health insurance program for low-income individuals established in 1965, currently serves approximately 72 million beneficiaries in the United States. The program plays a crucial role in providing healthcare coverage for a wide range of populations, including pregnant women, children, and elderly individuals in nursing homes. Medicaid expansion under the Affordable Care Act has further extended coverage to millions of Americans, making it a cornerstone of the nation’s healthcare system.

House Speaker Mike Johnson has outlined his stance on certain policy proposals related to Medicaid cuts, ruling out changes to federal funding for expansion states and the implementation of per capita caps on benefits. While work requirements remain a viable option for some lawmakers, concerns persist about the potential impact on vulnerable populations who rely on Medicaid for essential healthcare services.

In the Senate, bipartisan efforts are underway to explore innovative solutions for reducing prescription drug costs within the Medicaid program. A proposed bill introduced by Senators Josh Hawley and Peter Welch aims to align drug prices in the U.S. with international averages, potentially leading to significant cost savings for the government.

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The concept of international price referencing has garnered attention as a means to address rising healthcare expenditures without compromising access to necessary medications. By adopting a model that ties drug prices to global standards, policymakers seek to strike a balance between cost containment and quality care for Medicaid beneficiaries.

As discussions continue and legislative proposals take shape, the future of Medicaid funding and cost-saving measures remains uncertain. The need to balance budgetary constraints with the imperative of ensuring healthcare access for vulnerable populations underscores the complexity of reforming public healthcare programs like Medicaid.

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