Executive Summary

• The Centers for Medicare & Medicaid Services (CMS) has finalized its Global Benchmark for Efficient Drug Pricing (GLOBE) Model, aligning what Medicare Part B pays for certain medicines to prices available in other developed countries.
• The finalized GLOBE Model is significantly economically narrower than the proposed model, producing just $298 million in Original Medicare Part B benefit savings, down from $8.4 billion in the proposed rule – a decline of more than 96 percent.
• GLOBE now presents two distinct questions: 1) What can such a narrowly targeted model realistically accomplish when CMS expects only modest fiscal savings? and 2) Does Section 1115A of the Social Security Act give CMS authority not only to waive existing Medicare requirements for an experiment, but to substitute an international pricing mechanism for a rebate formula Congress enacted?

Introduction

The Centers for Medicare & Medicaid Services (CMS) has finalized its Global Benchmark for Efficient Drug Pricing (GLOBE) Model, a mandatory Center for Medicare and Medicaid Innovation (CMMI) experiment that will tie rebates for certain Medicare Part B drugs to prices in 19 other developed countries beginning in 2027. The model will operate in geographic areas containing roughly a quarter of Original Medicare beneficiaries and, under CMS’ current assumptions, could ultimately apply to just four manufacturers. Most striking, CMS now expects GLOBE to produce just $298 million in Original Medicare Part B benefit savings, down from $8.4 billion in the proposed rule – a decline of more than 96 percent.

Most-favored-nation (MFN) pricing has been a central feature of the Trump Administration’s pharmaceutical pricing agenda, but GLOBE has evolved considerably between conception, proposal, and finalization. During that period, the administration has pursued MFN pricing through negotiated manufacturer agreements, Medicaid arrangements, and prospective commitments for newly launched drugs. Those parallel efforts have not displaced GLOBE; they have helped shape the much narrower model CMS ultimately finalized, including through waivers for manufacturers participating in the separate GENErating cost Reductions fOr U.S. Medicaid (GENEROUS) Model.

GLOBE was initially designed as a larger experiment. The final version is substantially smaller, in part because CMS incorporates (rightly so) numerous exemption pathways. From a policy perspective, this evolution makes the final rule more interesting, not less. GLOBE presents two different questions that are larger than the misguided policy that MFN pricing already is: 1) What can such a narrowly targeted model realistically accomplish when CMS expects only modest fiscal savings? and 2) Does Section 1115A of the Social Security Act give CMS authority not only to waive existing Medicare requirements for an experiment, but to substitute an international pricing mechanism for a rebate formula Congress enacted.

A Much Smaller Economic Case

The economic impact analysis in both the proposed rule and final rule presents the largest shift. The proposed rule estimated $11.9 billion in overall Medicare Part B net-spending savings during the model’s 7-year payment period, including $8.4 billion in Original Medicare Part B benefit savings. The final rule reduces those estimates to $440 million and $298 million, respectively. Both measures fell nearly 96 percent between proposal and finalization. On an annualized basis, CMS’ estimate of Part B net-spending savings fell from approximately $2.3 billion under the proposal to roughly $80 million under the final model. The result: a fiscal case that has largely disappeared.

Much of the contraction reflects what the final model no longer covers. CMS added exclusions for orphan-only drugs, certain cell and gene therapies, and plasma-derived products. More consequentially, its regulatory analysis assumes that manufacturers that had signed GENEROUS participation agreements as of August 17 will receive waivers from mandatory GLOBE participation. CMS estimates that under that assumption, just four manufacturers would remain subject to the model.

The administration estimates that its broader MFN framework could generate hundreds of billions of dollars in savings over the next decade, although those estimates cover different markets, time periods, and pricing arrangements and therefore are not directly comparable with GLOBE. The contrast is nevertheless useful for understanding GLOBE’s place in the larger strategy: The final Part B model has become a relatively small component of an MFN campaign increasingly being implemented through manufacturer agreements, Medicaid, and prospective pricing commitments.

The remaining GLOBE market is correspondingly small. CMS estimates that drugs qualifying for the model would have represented roughly 3 percent of non-dual, non-340B Original Medicare Part B drug spending in 2024. As more products become subject to Maximum Fair Prices under the Inflation Reduction Act’s Medicare Drug Price Negotiation Program, that share falls to about 2 percent. Factor in GLOBE’s 25-percent geographic footprint, and the model reaches only a small fraction of overall Part B drug spending.

The beneficiary numbers have shrunk in much the same way. The proposed model was projected to reduce Original Medicare beneficiary cost sharing by $1.4 billion. The final estimate is $50 million, plus $61 million in Part B premium savings. CMS also notes that many Original Medicare beneficiaries have supplemental coverage, meaning a lower coinsurance amount will not necessarily translate into a direct reduction in what patients pay themselves.

Nor are the projected savings entirely free of offsets. CMS expects lower Medicare Advantage payments to reduce funding available for MA supplemental benefits by roughly $23 million over the model period. The agency also acknowledges a broader possibility: Manufacturers could respond to GLOBE by increasing prices elsewhere in the U.S. market to make up for lost revenue, with potential consequences for Medicaid, commercial insurance, and Marketplace plans. CMS does not quantify those spillovers because it says it lacks sufficient information to do so. That produces an odd asymmetry in the economic impact analysis. The savings are revised down to the millions; many of the additional unquantified costs could be shifted elsewhere.

A Benchmark That Moves When Medicare Uses It

There is another complication embedded in the savings estimate. CMS does not expect the foreign prices used by GLOBE to remain unchanged once Medicare begins using them. The international prices CMS examined were, on average, 68 percent below 2024 average sales prices for potentially eligible drugs. That sounds like an enormous potential source of savings. CMS, however, treats the figure as an upper bound. Its actuarial analysis assumes manufacturers will respond by changing their international pricing behavior, eventually reducing GLOBE rebate amounts by 60 percent relative to the amount that would otherwise be calculated. CMS phases that assumed response in from 10 percent in 2027 to 60 percent beginning in 2030.

This is one of the recurring complications of international reference pricing. A foreign price may an independent market observation before Medicare relies upon it – but it is not. It is the result of a country-specific health care need and economic picture. Thus, beyond considering a specific country’s market price, companies must assemble a multi-national pricing strategy. Take, for example, a manufacturer negotiating with a relatively small European market. Accepting a lower price may make economic sense if the concession applies only to sales in that country. The calculation changes if the same concession subsequently determines rebate liability in Medicare. At that point, launch timing, confidential discounts, and willingness to accept a lower official price abroad all become more consequential.

Recent research points in the same direction. A July 2026 JAMA Health Forum study examined 79 therapies potentially eligible for GLOBE or its Part D counterpart. The median therapy did not launch in its first reference countrymonths after its U.S. launch. One year after U.S. launch, just 1.3 percent of therapies had entered foreign markets whose combined drug spending equaled Medicare’s. Even after 5 years, only 24.1 percent had done so.

CMS’ 60-percent behavioral adjustment recognizes the basic problem. GLOBE is not merely finding a lower foreign “market price” and importing it into Medicare. The model changes the value of foreign pricing decisions and then attempts to estimate how manufacturers will react. The benchmark is therefore partly endogenous to the policy itself. That also makes the headline difference between U.S. and foreign prices considerably less useful as a measure of what Medicare can realistically save.

A Broader Legal Issue

The comparatively small economic payoff sits alongside a considerably larger legal question, and here the administration’s other MFN efforts provide another useful comparison.

The 26 manufacturer agreements announced to date form what the administration describes as a voluntary MFN framework. The White House has simultaneously urged Congress to codify that framework so its provisions will persist beyond negotiated agreements. GLOBE does not depend upon manufacturer assent or new legislation. Instead, CMS relies on Section 1115A of the Social Security Act, which created CMMI and authorizes it to test innovative “payment and service delivery models.” The statute also permits the secretary to waive certain Medicare requirements when necessary to conduct those tests.

GLOBE uses those powers not simply to vary what Medicare pays a provider but to alter a manufacturer-to-government rebate Congress created in the Inflation Reduction Act. Commenters on the proposed rule challenged that reading on two fronts. First, they argued that a mandatory manufacturer rebate based on foreign prices is not obviously the sort of “payment and service delivery model” contemplated by Section 1115A. Second, the authority to waive statutory requirements does not necessarily amount to authority to replace Congress’ formula with a materially different obligation.

CMS rejected both arguments. In the agency’s reading, “payment and service delivery” describes the broader category of experiments Congress authorized rather than requiring every model to change both provider payment and the delivery of care. CMS also argues that its testing and waiver authorities work together. Without the ability to waive the existing inflation-rebate formula and substitute GLOBE’s methodology, the agency claims innovative payment tests of this sort could not operate. Nevertheless, CMS describes GLOBE as a “novel application” of CMMI authority.

The distinction is not merely semantic. Congress gave CMMI room to experiment within Medicare. But ordinarily, a waiver sets aside a discrete legal requirement. GLOBE does more than that. CMS suspends elements of the statutory inflation-rebate formula and supplies another liability based on a pricing methodology that Congress did not enact.

The administration’s parallel MFN approaches make the distinction particularly visible. Manufacturer agreements rest on negotiated commitments, while the administration is seeking legislation to make portions of that framework permanent. GLOBE, by contrast, asserts that existing CMMI authority already permits CMS to impose a mandatory international pricing mechanism within Part B. The existence of those different approaches does not resolve the statutory question but underscores that the legal foundation is far from settled. The relevant question, then, is not simply whether CMS may waive Medicare requirements. It is whether broad model-testing authority, combined with waiver authority, allows the agency to build a substitute statutory mechanism for the duration of an experiment.

A Small Model With a Potentially Large Precedent

That statutory question may ultimately be more important than the major-questions argument that also appears throughout the rule. CMS has several answers to a major-questions challenge. GLOBE is temporary. It is geographically limited. And, particularly after the changes made in the final rule, its financial footprint is quite small. Those characteristics support CMS’ argument that the model differs from the sorts of economically and politically transformative agency actions at issue in cases such as West Virginia v. EPA or Biden v. Nebraska. In that respect, shrinking GLOBE may make the model easier to defend.

Shrinking the model does not, however, shrink the underlying interpretation of CMMI authority. CMS still maintains that Section 1115A allows it to suspend elements of a rebate formula enacted by Congress and impose an alternative international benchmark in their place. That question now arrives after Loper Bright. A reviewing court would determine the best reading of Section 1115A rather than uphold CMS’ interpretation simply because it claims to be reasonable.

The institutional stakes should not be disregarded here. If CMS’ interpretation is sustained, the significance would not necessarily stop at economically illiterate international reference pricing. It would help define how far the CMMI may go when a demonstration requires it not merely to adjust Medicare payment policy around the edges, but to alter the operation of a payment or rebate structure Congress created.

That leaves the final GLOBE Model in a peculiar position. When CMS proposed it, the agency anticipated $11.9 billion in Medicare Part B net-spending savings. The final estimate is $440 million. At the same time, much of the administration’s broader MFN agenda has moved ahead through negotiated agreements with manufacturers and a Medicaid model from which participating manufacturers may receive waivers from GLOBE. CMS is therefore asserting what it acknowledges is a novel application of CMMI authority for an experiment that has become dramatically smaller even as the administration pursues international reference pricing through other channels.

The central question raised by the final rule is therefore larger than whether drug prices in Europe are lower than those in the United States. It is what additional evidence this much narrower version of GLOBE can provide about international reference pricing—and what the model may establish about the reach of CMMI authority long after its relatively modest projected savings have been realized.

Conclusion

CMS is ultimately using GLOBE to claim a broad new use of CMMI authority for a model that has become economically quite small. The final rule projects a paltry $298 million in Original Medicare Part B benefit savings while relying on a foreign benchmark that CMS expects manufacturers to reshape in response. The result is a model with minimal fiscal upside, uncertain spillovers, and potentially significant legal implications. If GLOBE endures, its most lasting consequence may not be the limited Medicare savings for taxpayers, but the precedent for how far CMS can go in rewriting statutory payment rules through demonstration authority.