Introduction to CMS Drug Pricing Reforms
The Centers for Medicare & Medicaid Services (CMS) has announced two groundbreaking Medicare drug-pricing pilot programs designed to revolutionize how pharmaceutical rebates are calculated for covered medications. These innovative initiatives represent a significant step forward in addressing the persistent disparity between drug costs in the United States and those in other developed nations.
The dual proposals—designated as GLOBE for physician-administered medications under Medicare Part B and GUARD for pharmacy-dispensed drugs under Medicare Part D—constitute the latest comprehensive drug-pricing reforms introduced by the Trump administration. These models aim to establish a more equitable pricing framework that aligns American prescription drug costs with international standards.
“Americans deserve access to low-cost medicines on the same terms as other developed nations,” declared Health and Human Services Secretary Robert F. Kennedy Jr. in an official statement released Sunday, emphasizing the administration’s commitment to pharmaceutical affordability.
Understanding GLOBE and GUARD Models
GLOBE Model for Part B Drugs
The Global List of Benchmark-Eligible (GLOBE) model introduces a transformative approach to calculating inflation rebates for Medicare Part B medications. This pilot program specifically targets single-source drugs and sole-source biologics administered by physicians in clinical settings.
Under the GLOBE framework, CMS will modify the existing inflation rebate calculation methodology by incorporating international price benchmarks derived from economically comparable countries. The agency has proposed two distinct approaches for establishing these benchmarks:
Approach 1: Utilizing existing international drug pricing databases to identify the lowest available rate across participating countries, creating a competitive baseline for rebate calculations.
Approach 2: Accepting voluntary price submissions directly from pharmaceutical manufacturers, allowing companies to provide their own international pricing data for comparison purposes.
Notably, biosimilar medications and their reference products will be excluded from the GLOBE model, as will drugs already subject to Medicare’s negotiated “maximum fair price” under the Inflation Reduction Act, preventing redundant pricing interventions.
GUARD Model for Part D Drugs
The Guiding United States Drug Rebates (GUARD) model applies similar international reference pricing principles to Medicare Part D prescription medications dispensed through retail pharmacies. This comprehensive program encompasses sole-source drugs and biologic products across multiple therapeutic categories, including:
- Oncology medications
- Immunology treatments
- Cardiovascular therapies
- Central nervous system disorder medications
- Additional specialty pharmaceutical categories
GUARD leverages pricing data from 19 peer countries to establish international benchmarks, triggering manufacturer rebates whenever a drug’s Medicare net price exceeds the established international reference point. Pharmaceutical companies retain the option to submit their own international net pricing data for consideration.
International Reference Pricing Strategy
Both pilot programs represent a strategic shift toward international reference pricing (IRP), a methodology widely employed by healthcare systems worldwide to control pharmaceutical expenditures. By benchmarking American drug prices against those in economically comparable nations, CMS aims to create pricing parity and reduce the substantial cost differential that has long characterized the U.S. pharmaceutical market.
These initiatives follow closely on the heels of multiple “most-favored nation” (MFN) agreements announced the previous week, wherein nine additional drugmakers joined a consortium that now includes 14 pharmaceutical companies. These manufacturers have committed to reducing U.S. prices for select products in exchange for relief from sector-specific tariffs repeatedly threatened by President Donald Trump.
Critical distinction: While earlier MFN agreements primarily focused on Medicaid programs and direct-to-consumer offerings, the new CMS proposals establish mandatory manufacturer participation for covered Medicare drugs, significantly expanding the scope and impact of pricing reforms.
Expected Financial Impact and Savings
GLOBE Pilot Financial Projections
CMS projects that the GLOBE model will generate substantial cost reductions, with estimated savings of $11.9 billion over a seven-year implementation period. According to agency claims data from 2024, Medicare expenditures on Part B drugs totaled $70.7 billion annually, with approximately two-thirds—roughly $46.4 billion—allocated toward rebatable physician-administered medications.
These savings will directly benefit Medicare beneficiaries, the federal government, and the overall healthcare system by reducing out-of-pocket costs and slowing the growth of program expenditures.
GUARD Pilot Cost Reductions
The GUARD model demonstrates even more impressive financial projections, with anticipated Medicare spending reductions of $14.1 billion over the six-year period spanning 2028 through 2033. These substantial savings reflect the significant volume of prescription medications dispensed through Medicare Part D pharmacy benefits.
Combined, both pilot programs could potentially save the Medicare program and American taxpayers more than $26 billion, representing one of the most significant drug pricing interventions in recent healthcare policy history.
Implementation Timeline and Coverage
GLOBE Timeline and Geographic Scope
The GLOBE pilot program is scheduled to commence in October 2026, with operations continuing for five years through 2031. Rebate invoicing and reconciliation processes will extend through 2033, allowing sufficient time for complete financial settlement.
Geographic coverage will initially encompass defined areas representing approximately 25% of Medicare enrollees, enabling CMS to assess program effectiveness while minimizing systemic risk during the pilot phase.
GUARD Timeline and Beneficiary Coverage
GUARD implementation will begin at the start of 2027, covering approximately one quarter of Part D enrollees in randomly selected regions across the United States. This geographic randomization will facilitate robust program evaluation and outcome comparison.
The staggered implementation timeline allows CMS to gather data, assess outcomes, and make necessary adjustments before considering broader program expansion.
Key Takeaways
The CMS Medicare drug-pricing pilots represent a bold policy initiative aimed at addressing pharmaceutical affordability through international reference pricing. By establishing GLOBE and GUARD models, federal regulators are creating mechanisms to align American drug costs with global standards while generating substantial savings for the Medicare program and beneficiaries.
These mandatory participation requirements for manufacturers mark a significant departure from voluntary pricing agreements, potentially establishing a new paradigm for pharmaceutical pricing negotiations in the United States.
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