The Centers for Medicare & Medicaid Services (CMS) finalized a new drug payment model aimed at addressing the provisions of a 2025 executive order focused on lowering prescription drug prices [refer to Washington Highlights, April 18, 2025]. The Global Benchmark for Efficient Drug Pricing (GLOBE) Model targets certain drugs payable under Medicare Part B, provided that their prices exceed those paid in economically comparable countries. It is significantly narrower in scope than the proposed model. GLOBE will launch Jan. 1, 2027, and run for a five-year period.
The GLOBE model will require drug manufacturers to provide rebates to Medicare Part B for certain single-source drugs and biologics administered to Medicare beneficiaries covering 25% of ZIP code tabulation areas. However, in comparison with the proposed rule, the final rule substantially narrows the scope of the drugs subject to this model by expanding exclusions. Drugs excluded from the model include 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. This reduced CMS’ expected savings from $11.9 billion in the proposed rule to $440 million in the final rule.
Manufacturers will be required to pay rebates for drugs priced above a benchmark derived from international drug pricing information under the GLOBE model. However, manufacturers participating in the Generating Cost Reductions for U.S. Medicaid (GENEROUS) Model are eligible for a waiver from participation in the GLOBE model, meaning only four drug manufacturers would be required to participate in the GLOBE model. The model will test an alternative rebate amount calculation against the calculation of the Medicare Part B drug inflation rebate amount. These rebates will go to the Medicare Trust Fund. The rebate amount will be based on an international benchmark established using either existing international drug pricing information or drug pricing data voluntarily submitted by manufacturers. Coinsurance amounts for Medicare beneficiaries participating in the model will be adjusted depending on the drug and the alternative calculation for manufacturer rebates, established with the expectation that this will reduce costs for beneficiaries.