The Centers for Medicare & Medicaid Services (CMS) finalized the Global Benchmark for Efficient Drug Pricing (GLOBE) Model on September 30, 2026. The final rule was published in the Federal Register on October 2 and takes effect on November 30, 2026. GLOBE offers an alternative way to calculate manufacturer rebates under Medicare Part B’s Drug Inflation Rebate Program, using a benchmark derived from international prices. If a qualifying drug’s Medicare price exceeds its international benchmark, the manufacturer must pay a rebate adjustment. The model launches January 1, 2027, and runs through March 31, 2032. It covers about 25 percent of eligible beneficiaries residing in randomly selected geographic areas.
CMS projects approximately $440 million in Medicare Part B net spending savings over seven years. The model targets high-expenditure, single-source drugs and sole-source biological products with more than $100 million in annual Original Medicare spending. It excludes biosimilars, orphan-only drugs, plasma-derived products, and certain gene and cell therapies.
The GLOBE Model addresses a fairness concern known as “global freeloading”: the idea that other countries pay less for drugs than the United States does. CMS Administrator Mehmet Oz reinforces this point, stating that Part B beneficiaries “have paid significantly more for prescription medications than people in comparable countries.” CMS has also explained that it targeted Part B because it is the fastest-growing spending category and has increased nearly four times as quickly as drug spending across other payers. A RAND analysis done for HHS found that U.S. drug prices were 2.78 times higher than those of other countries in 2022, and at least 3.22 times higher for brand-name drugs.
GLOBE would also benefit patients directly; original Medicare patients usually owe 20 percent coinsurance on Part B drugs, but under GLOBE, CMS estimates about 94 percent of covered drugs would carry coinsurance of 2 to 12 percent. Patients for Affordable Drugs, an advocacy group, states the model has the potential to lower costs for Medicare patients through placing financial accountability on manufacturers.
Arguing government overreach and constitutional violations, the Pharmaceutical Research and Manufacturers of America (PhRMA) filed suit on October 7, 2026, in the U.S. District Court for the District of Columbia against Health Secretary Robert F. Kennedy Jr., CMS Administrator Mehmet Oz, and CMS Innovation Center Director Abe Sutton, along with their respective agencies.
The GLOBE Model, authorized under section 1115A of the Social Security Act, was designed to test whether basing Part B inflation rebates on international drug prices can lower costs for Original Medicare and taxpayers without reducing quality of care. Instead, PhRMA argues that CMS has stretched its authority to test new pricing ideas, intending to extend them into future administrations and rewrite Medicare’s pricing structure without congressional action.
PhRMA’s complaint raises two counts under the Administrative Procedure Act. The first count argues that CMS exceeded its statutory authority because GLOBE acts as a price control that cuts manufacturer revenue rather than a genuine test of how a model affects program spending. PhRMA also argues the model rewrites Medicare’s average sales price methodology rather than waiving it, overrides Medicare’s statutory rebate structure, and expands civil monetary penalties. Invoking the major questions doctrine, PhRMA states Congress never clearly authorized a change of this scale and notes that Congress has repeatedly considered and declined to enact a similar policy. One notable argument is that GLOBE imports foreign prices set using quality-adjusted life years, contrary to Section 1182 of the Social Security Act.
The second count argues that using Section 1115A to authorize GLOBE would violate the presentment clause and the nondelegation doctrine. Nondelegation concerns were raised during rulemaking, but CMS declined to withdraw the model. PhRMA president and CEO Stephen J. Ubl claims “GLOBE is unlawful and clearly exceeds CMS authority.”
The group is asking for a holding that the rule is unlawful, a postponement of its November 30 effective date, a temporary restraining order, and preliminary and permanent injunctions.