CMS Finalises Medicare GLOBE to Rewrite Drug Pricing

The Medicare GLOBE drug payment model will test whether international drug prices can reshape Medicare Part B rebates without compromising patient access or care quality.

But the final rule is far narrower than the proposal, turning a projected $11.9 billion intervention into a much smaller test that could still influence how pharmaceutical companies approach U.S. drug pricing.

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GLOBE Moves From Pricing Ambition To A Smaller Test

The Centers for Medicare and Medicaid Services (CMS) has finalised the Global Benchmark for Efficient Drug Pricing, or GLOBE, under Section 1115A of the Social Security Act.

The pricing model will test an alternative way to calculate Medicare Part B drug inflation rebates for selected medicines. 

GLOBE is not a national drug price cap and it does not reset every Medicare medicine to the lowest international price. Instead, it changes the rebate calculation for selected separately payable Part B drugs and biological products when their pricing sits above an international benchmark.

This is important because the pricing model creates a new link between U.S. Medicare economics and pricing information from other healthcare markets.

The model begins on 1 January 2027. Its five-year performance period starts on 1 April 2027 and runs through 31 March 2032. Rebate invoicing and reconciliation will continue until March 2034.

The beneficiary population is also deliberately limited. CMS will randomly select geographic areas covering approximately 25% of Original Medicare Part B beneficiaries. Medicare Advantage beneficiaries are outside the direct model cohort.

This makes GLOBE a controlled payment experiment rather than an immediate restructuring of US pharmaceutical pricing.

Why Part B matters

Part B covers many medicines administered in clinical settings rather than dispensed through a pharmacy.

That includes treatments used in oncology, immunology, endocrinology, neurology, ophthalmology and other specialist areas.

For pharma manufacturers, for example, the commercial implications therefore extend beyond the headline rebate.

GLOBE could affect the economics surrounding physician-administered medicines, patient cost sharing, contracting decisions and international price strategy.

CMS will also evaluate whether the model changes utilisation, access, total healthcare spending and manufacturer behaviour.

The final rule explicitly identifies market impact and unintended consequences as evaluation questions.

That makes the model relevant to more than government pricing teams. Market access, pricing, commercial, and finance and portfolio leaders will all have reasons to monitor its development.

Dramatic Changes to the Savings Forecast 

The biggest change between the proposed and final models is financial and covers savings.

CMS originally estimated that the proposed GLOBE model could generate approximately $11.9 billion in additional rebates and savings over seven years.

However, the final model is expected to generate around $440 million in overall Medicare savings over the same broad payment horizon. 

The reduction is a huge modelling adjustment that reflects a substantially different intervention.

Several exclusions now remove categories of medicines from the model. These include:

• Orphan-only medicines approved solely for rare diseases or conditions
• Certain cell and gene therapies
• Plasma-derived products
• Biosimilars and their reference biological products once a biosimilar enters the US market
• Medicines subject to other specified Medicare pricing arrangements

The final rule also introduces an important interaction with CMS’s separate GENEROUS Medicaid model.

CMS assumes that manufacturers participating in GENEROUS will receive a waiver from mandatory GLOBE participation. That assumption has major consequences.

Based on its illustrative 2024 GLOBE drug list and final exclusion criteria, CMS estimates that 19 manufacturers would initially be associated with the model.

CMS now estimates that this could fall to four if manufacturers participating in the GENEROUS model receive a waiver from mandatory GLOBE participation.

For pharma, this is arguably more significant than the headline savings figure.

GLOBE is no longer simply a question of how companies will respond to an international reference price.

It is also a question of how companies navigate several overlapping U.S. government pricing initiatives.

The interaction between Medicare Part B, Medicaid, negotiated Medicare prices, and manufacturer agreements is becoming part of the same strategic landscape.

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International Prices Are a Medicare Input

GLOBE uses a basket of 19 economically comparable countries. The group includes Australia, Canada, France, Germany, Italy, Japan, South Korea, Spain, Switzerland and the United Kingdom, alongside other OECD members.

CMS selected the countries using economic criteria intended to identify markets with broadly comparable purchasing power and substantial economies.

The model then tests two approaches to establishing an international benchmark.

Method I uses commercially available international pricing information to estimate the lowest country-level price within the reference basket.

Method II allows manufacturers to voluntarily provide international net pricing data. This approach can account for concessions such as rebates, discounts and chargebacks that may not be visible in publicly available pricing information.

The distinction is important. A list price is not necessarily the price a manufacturer ultimately receives. International markets often use confidential rebates and negotiated arrangements.

Comparing visible prices can therefore produce a different picture from comparing net realised prices.

GLOBE effectively turns that uncertainty into part of the policy experiment.

For manufacturers, international pricing data is therefore more than a market access dataset. It can be used as an input into a U.S. government payment calculation.

That could increase the strategic importance of global price architecture, data governance, and consistency between country-level commercial arrangements.

The final rule also shows why CMS wants manufacturers to submit net pricing information voluntarily.

The agency acknowledges that commercially available international data may overstate prices actually realised when confidential rebates are not captured.

The result is an unusual regulatory mechanism. CMS is not simply telling manufacturers what price to charge. Rather, it is creating a financial consequence when the relationship between a U.S. Medicare price and an international benchmark crosses the model’s defined threshold.

For global pharmaceutical companies, that makes U.S. and international pricing decisions harder to view as separate markets.

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GLOBE Changes Patient Payment

The new model also changes how some beneficiaries experience the price of a GLOBE medicine.

CMS will calculate a GLOBE-specific coinsurance amount for eligible beneficiaries in the selected geographic areas.

The reduction can lower the standard Medicare Part B coinsurance burden for qualifying treatments.

Using i2024 data, CMS estimated that 94% of GLOBE drugs would have a beneficiary coinsurance percentage between 2% and 12%, compared with the standard 20% Part B coinsurance.

CMS estimates total beneficiary out-of-pocket savings of $177 million.

The provider payment mechanism is designed to preserve the allowed amount while shifting part of the financial burden away from the beneficiary.

That means GLOBE is not simply about reducing the amount paid for a medicine, but also tests whether changing the distribution of that payment can improve affordability and access.

But, there’s an important unanswered policy question of what happens when a foreign benchmark is lower.

The larger test is whether international reference pricing, manufacturer rebates, and lower patient cost sharing can operate together without producing unintended effects elsewhere in the pharmaceutical market.

GLOBE Creates a New Global Pricing Signal

The most consequential feature of GLOBE may be its data architecture.

The model brings international pricing information into a Medicare rebate calculation. That creates a new connection between global pricing strategy and U.S. government reimbursement.

Manufacturers already manage different prices across markets because healthcare systems vary in purchasing power, reimbursement, regulation, and access.

Now, GLOBE adds another consideration. A price agreed in one country can become relevant to the calculation of a U.S. Medicare obligation.

That does not mean companies will automatically change prices worldwide. The final rule does not establish a universal international price, and Method II relies on voluntary manufacturer submissions.

However, it increases the importance of understanding how international net prices are established and documented.

For commercialisation, this elevates global price governance to a more visible regulatory consideration.

The implications could extend into launch sequencing, contracting, discount structures, and the treatment of confidential pricing data.

The exact commercial response will depend on the medicines affected and the international data available.

This is one reason GLOBE should be viewed as more than a Medicare issue. It’s a test of how global pharmaceutical economics interact with domestic public payment policy.

The Legal Test Matters Beyond GLOBE

GLOBE also places renewed attention on the authority of the CMS Innovation Center.

CMS is using Section 1115A of the Social Security Act to test the alternative rebate methodology.

The agency argues that GLOBE qualifies as a payment model because it changes how Medicare calculates payments and rebates within a defined, time-limited ‘experiment’.

Pharmaceutical industry groups have challenged that notion.

PhRMA has argued that international reference pricing actually operates as government price setting and has raised concerns about CMS’s authority, the question of patient access, and the potential effects on pharmaceutical innovation.

There are industry positions about all of these and that’s important.

GLOBE does not establish a permanent national price for every Part B medicine. CMS has limited the beneficiary population, specified eligible therapeutic areas, excluded several categories of products, and created a defined performance period.

At the same time, the model tests a mechanism that could influence the economics of selected medicines through an international benchmark.

That combination is likely to keep the legal question open.

If GLOBE survives implementation and evaluation, the precedent may become more important than its initial financial scale.

Pharma Strategy Beyond the Headline Rebate

The final GLOBE model does not require providers to become GLOBE participants.

Pharmaceutical manufacturers are the participants, while providers continue to submit Medicare claims through the existing system. CMS says no special GLOBE billing modifier is required.

That should limit operational disruption for healthcare providers.

For manufacturers, however, the work is more complex.

Companies with affected products will need to understand:

• Which products enter the model and when
• How international benchmark information is constructed
• Whether voluntary Method II reporting is commercially appropriate
• How manufacturer rebates will be calculated and reconciled
• How GLOBE interacts with other federal pricing programmes
• How global pricing agreements could affect U.S. exposure

The GENEROUS (GENErating cost Reductions fOr U.S. Medicaid) interaction is particularly important.

CMS has designed the two models so that certain manufacturers participating in GENEROUS can receive a GLOBE waiver, avoiding simultaneous exposure that could complicate evaluation. 

This means pricing strategy increasingly requires a portfolio-level view of government programmes rather than analysing each programme in isolation.

A medicine may have different commercial considerations under Medicare Part B, Medicare drug negotiation, Medicaid, commercial insurance and international reimbursement systems. GLOBE adds another connection between those markets.

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Get Ready for 2027 Now

The final GLOBE rule is narrower, but its first results could carry significance well beyond the projected $440 million in Medicare savings.

CMS will be testing several questions simultaneously.

Does lowering beneficiary cost sharing improve affordability and access? Does an international benchmark produce meaningful additional rebates? Do manufacturers change pricing behaviour? Does utilisation change? And do any effects appear elsewhere in the healthcare system?

The five-year performance period gives CMS time to examine those questions rather than relying on an immediate price reduction.

The geographic design also matters. Approximately 25% of Original Medicare Part B beneficiaries will be included through randomly selected areas, creating a comparison population for evaluation. 

That structure gives GLOBE a potentially useful evidence base.

It also means the first years will be closely watched by companies beyond the initial manufacturer cohort.

A successful model could provide support for expanding international benchmarking into other payment arrangements. But, a model that produces limited savings, administrative complexity, or unintended access effects could constrain that argument.

Therefore, the outcome matters independently of GLOBE’s relatively more modest final savings forecast.

GLOBE Could Redefine Pricing Conversations

The original GLOBE proposal suggested a much broader financial intervention. The final rule is materially smaller. Yet the policy experiment still crosses an important line.

U.S. Medicare reimbursement will now be tested against international drug pricing information.

That makes the model relevant even when a company’s products are not initially included.

Pricing teams will need to watch international reference points more closely.

Market access teams will need to understand the interaction between rebates and patient affordability and regulatory teams will need to track implementation and potential legal developments.

Finance teams will also need to model manufacturer exposure where products qualify.

The central question is no longer simply whether American patients pay more for some medicines than patients in other countries.

The more consequential question is whether governments can use international pricing information to change domestic pharmaceutical economics without transferring unintended effects into innovation, access, supply, contracting, or other markets.

GLOBE will provide one of the first major U.S. tests of that proposition.

Its financial footprint may be smaller than CMS originally proposed, but its strategic relevance certainly is not.

How Pharma Should Monitor What Happens Next

Three developments deserve particular attention as GLOBE implementation approaches.

Product selection. CMS will identify the medicines meeting the final eligibility requirements, including the U.S. $100 million annual Original Medicare spending threshold and specified therapeutic areas.

International price reporting. Manufacturers will need to assess the implications of voluntary Method II net-price submissions and the quality of the underlying international data.

Early model evidence. Changes in beneficiary costs, manufacturer rebates, utilisation, and access will determine whether GLOBE can become a broader template for government drug payment policy.

The significance of GLOBE will therefore not be measured only by the dollars it saves.

It will truly be measured by whether an international benchmark can become a workable component of U.S. pharmaceutical reimbursement without creating new problems elsewhere in the medicines ecosystem.

For an industry built around global products and fragmented healthcare markets, that is a regulatory experiment worth watching closely.

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GLOBE Puts Global Pricing Under the Microscope for U.S. Benefit

GLOBE has turned out much narrower than its original proposal suggested. While many international observers may take a sigh of relief, the implications of the final rule extend beyond the estimated savings for the U.S market.

By linking Medicare Part B rebates to international drug pricing, reducing beneficiary coinsurance in selected regions, and testing manufacturer pricing data, CMS is creating a new framework for examining how U.S. drug costs compare with other high-income markets.

The model’s smaller scope, uncertain manufacturer participation, and legal scrutiny mean its ultimate impact remains unclear. What matters now is how the five-year test influences pricing strategy, market access, international benchmarking, and future Medicare policy.

GLOBE illustrates how regulatory policy, international pricing, market access, and commercial strategy are all interconnected. Pharmatica tracks these shifts to help life sciences decision-makers understand not only what changes, but how those changes could shape the wider industry.

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