The Centers for Medicare & Medicaid Services (CMS) has finalized its Global Benchmark for Efficient Drug Pricing (GLOBE) Model, which aligns what Medicare Part B pays for certain medicines to prices available in other developed countries. In a new insight, Director of Health Care Policy Michael Baker explains how the final model differs from the earlier proposal and discusses notable economic and legal aspects of this rule.

Key points:

• 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?
• The model has 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.

Read the analysis.