CMS Releases GLOBE Rule with “Most Favored Nation” Pricing

A new reimbursement model takes steps towards the Trump Administration’s goal of “most favored nation” pricing, although it has a limited scope and is likely to be the immediate target of legal challenges.

The Centers for Medicare & Medicaid Services (CMS) finalized its rule governing the use of a “most favored nation” pricing model for certain drugs and biological products covered under Medicare Part B. The Global Benchmark for Efficient Drug Pricing (GLOBE) Model is a mandatory Section 1115A payment model that seeks to use international drug pricing benchmarks to adjust domestic drug inflation rebate amounts for drugs covered under Part B.

CMS issued the proposed version of this model’s rule in December 2025, along with a companion proposed rule governing a model for drugs covered under Medicare Part D. That rule, known as the Guarding U.S. Medicare Against Rising Drug Costs (GUARD) Model, is still under review by the Office for Management and Budget, and is expected to be finalized very soon. We covered both proposed rules in an earlier blog post.

The final GLOBE Model rule is slightly different from its proposed form in its running dates, exclusions for certain drugs, benchmark data sources, and interaction with a Medicaid-based rebate program known as the Generating Cost Reductions for U.S. Medicaid (GENEROUS) Model.

What does the GLOBE Model do?

The model is mandatory for drug manufacturers whose products are single-source drugs and sole-source biological products within certain therapeutic categories and are covered by Medicare Part B. Products that qualify will be subject to rebates based on the greater of two international pricing benchmarks.

The Benchmarks

The first benchmark uses commercially available international drug pricing data among 19 reference countries. CMS would take the GDP-adjusted lowest country-level price in that data and apply that price. This benchmark is set at the time the product enters the model and remains fixed throughout the performance period. In the proposed rule, this price was set to be adjusted by the real GDP per capita as represented in the CIA World Factbook. However, since publication of that reference material ceased as of February 2026, the final rule relies on GDP data from the World Bank World Development Indicators and data from the International Monetary Fund.

The second benchmark is based on international price data from the same 19 reference countries, but data that is provided voluntarily by the manufacturers. CMS then uses a volume-weighted average of the GDP-adjusted net prices for the applicable quarter. These prices are recalculated every quarter.

The Rebates

Once the appropriate benchmark is determined, CMS applies a threshold percentage and then an add-on percentage amount to adjust for differences in international markets, to incentivize manufacturers to submit their pricing and to adjust for Medicare Part B payment policies. CMS also takes into consideration the differences between the prices and the existing Medicare Part B Inflation Rebate, thus guaranteeing that is the floor for the rebates that CMS will apply.

When and where will the GLOBE Model take effect?

The final rule pushed the model start date back from its originally proposed October 1, 2026 to January 1, 2027. The model performance period will run for 5 years, from April 1, 2027 through March 31, 2032, but the payment period will run for 7 years, from April 1, 2027 through March 31, 2034.

The reason for the gap between the model start date and the commencement of the performance period is that CMS is giving manufacturers one quarter of voluntary initial reporting before rebates kick in.

The model will be tested in randomly selected geographic areas that CMS will choose based on those areas representing a combined 25% of Medicare Part B participants nationwide. CMS will select the impacted areas by January 1, 2027, but is not required to provide a table of the impacted zip codes until January 15, 2027 (75 calendar days before the April 1, 2027 performance period begins).

What products are exempt from the GLOBE Model?

The proposed rule included only three categories of products that would be excluded from the model: (1) drugs that did not have a “specified amount” under the Medicare Part B Inflation Rebate Program, (2) drugs that already have a maximum fair price under the Medicare Drug Price Negotiation Program and (3) drugs that are no longer rebateable under Medicare Part B.

The final rule adds more exclusions from the model: (4) orphan-only drugs that are designated for one or more rare diseases or conditions under Section 526 of the Food Drug & Cosmetics Act, (5) cellular and gene-therapy products and (6) plasma-derived products.

These additional exemptions, along with changes in methodology for calculating benchmarks, have resulted in a substantial reduction in the proposed savings for the model. In the proposed rule, CMS estimated $11.9 billion in savings to Medicare over seven years. In the final rule, the agency reduced that to an estimated savings of $440 million over seven years.

Contributing to the reduction in savings is an expectation by CMS that manufacturers that are participating in the GENEROUS Model would not participate in the GLOBE model. This is because, as part of their participation in GENEROUS, the manufacturers have signed agreements waiving their mandatory participation in the GLOBE model.

What if you fail to pay the rebates?

The final rule includes civil monetary penalties for failure to timely pay GLOBE model rebates. The specific penalties include 125% of the unpaid incremental rebate amount in addition to any additional unpaid rebates still due. CMS has also indicated that it may seek general civil monetary penalties against entities who knowingly violate the rebate payment requirements.

It is noteworthy that, in the final rule, CMS asserts that its rebate amounts are not reviewable or subject to appeal. The only recourse would be to file a “Suggestion of Error” to CMS, indicating a possible computational error in calculating the rebates.

What does this mean for industry?

The model is mandatory for impacted products: that is, products that are single-source drugs and sole-source biological products within certain therapeutic categories and are covered by Medicare Part B, unless qualifying for exemptions, such as participation in the GENEROUS model. Also, all manufacturers linked to a single HCPCS code are required to participate. That means that repackagers and relabelers are included. Products that qualify will be subject to rebates based on the greater of two international pricing benchmarks.

While the submission of international pricing data is voluntary, if all of the participants for a given drug do not provide the requisite data, CMS will default to the benchmark based on commercially available data and that benchmark is likely to be less favorable to manufacturers. However, foreign competition and confidentiality laws may prohibit manufacturers from providing such sensitive pricing data without risking enforcement penalties abroad.

These competing obligations, along with CMS’ note that it will be watching for international price manipulation in efforts to game the model, provide risks for entities with covered Part B products involved in the model.

What’s next?

We expect that the rule will likely draw legal challenges, and as this rule is limited to Part B, the industry will be watching for the Part D rule (GUARD) that, as of publication, is still under review, and is expected to be finalized soon. We will be monitoring for further rulemaking and legal challenges to this rule. 

Reed Smith will continue to follow developments related to Medicare drug pricing. If you have any questions about this rule or any other aspect of Medicare pricing, please don’t hesitate to reach out to the authors or to your health care lawyers at Reed Smith.