CMS Confirms Part B Drug Pricing Alignment with Global Rates
TL/DR –
The Centers for Medicare & Medicaid Services (CMS) has finalized a new drug payment model, the Global Benchmark for Efficient Drug Pricing (GLOBE) Model, focused on lowering prescription drug prices under Medicare Part B. The model, which is narrower than the proposed model, requires rebates from drug manufacturers for certain single-source drugs and biologics that exceed the prices in economically comparable countries, but excludes several types of drugs including orphan-only drugs and biosimilars. Manufacturers participating in the Generating Cost Reductions for U.S. Medicaid (GENEROUS) Model are eligible for a waiver from the GLOBE model, with only four drug manufacturers required to participate, and the model will test an alternative rebate amount calculation, with the expectation of reducing costs for beneficiaries.
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CMS Finalizes GLOBE Drug Payment Model to Lower Prescription Drug Prices
Following a 2025 executive order aimed at reducing prescription drug prices, the Centers for Medicare & Medicaid Services (CMS) has finalized a new drug payment model. Known as the Global Benchmark for Efficient Drug Pricing (GLOBE) Model, this plan focuses on drugs covered by Medicare Part B, particularly those that are priced higher in the United States compared to economically similar countries. The GLOBE model is set to begin on January 1, 2027, and will be effective for a five-year period.
GLOBE Model Targets Costs of Specific Drugs
The GLOBE model obliges drug manufacturers to offer rebates to Medicare Part B on certain single-source drugs and biologics given to Medicare beneficiaries in 25% of ZIP code tabulation areas. This range is narrower than the initial proposal as the final rule expands exclusions. These exclusions comprise orphan-only drugs, biosimilars and their reference biologics once a biosimilar enters the U.S. market, Inflation Reduction Act drug price negotiation-eligible drugs, plasma-derived products, and certain cell and gene therapies. Consequently, the expected savings by CMS have decreased from the proposed $11.9 billion to $440 million in the final rule.
Rebates Based on International Benchmark Pricing
Under the GLOBE model, manufacturers are required to give rebates for drugs priced beyond a benchmark based on international drug pricing information. However, manufacturers that are part of the Generating Cost Reductions for U.S. Medicaid (GENEROUS) Model can apply for a waiver from participating in the GLOBE model. This provision implies that only four drug manufacturers will be mandated to be part of the GLOBE model. The model aims to test an alternative rebate amount calculation vis-a-vis the calculation of the Medicare Part B drug inflation rebate amount.
All rebates will be forwarded to the Medicare Trust Fund. The rebate amount will be based on an international benchmark established either through existing international drug pricing information or drug pricing data voluntarily submitted by manufacturers. Depending on the drug and the alternative calculation for manufacturer rebates, coinsurance amounts for Medicare beneficiaries involved in the model will be adjusted with the goal of reducing costs for beneficiaries.
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