CMS Finalizes GLOBE Model Linking Medicare Part B Drug Rebates to International Prices

Key Takeaways

• The Centers for Medicare & Medicaid Services (CMS) has finalized the mandatory Global Benchmark for Efficient Drug Pricing (GLOBE) Model to test international pricing benchmarks for rebates on certain Medicare Part B drugs beginning January 1, 2027.
• The model will cover selected geographic areas representing approximately 25% of original Medicare beneficiaries, with reduced cost sharing beginning April 1, 2027.
• CMS narrowed GLOBE substantially, reducing projected savings to approximately $440 million and exempting several drug categories and manufacturers.

CMS has finalized the GLOBE Model, a mandatory Medicare payment model that will test whether using international drug prices to calculate certain manufacturer rebates can lower Medicare Part B spending and beneficiaries’ out-of-pocket costs while preserving quality of care.¹

The model is scheduled to begin January 1, 2027, and will apply to beneficiaries living in randomly selected geographic areas representing approximately 25% of people who have original Medicare as their primary coverage. Beneficiaries affected by the model could begin seeing reduced out-of-pocket costs for eligible drugs beginning April 1, 2027.¹

The final version is considerably narrower than the model CMS initially proposed. Several categories of drugs are excluded, and manufacturers participating in CMS’s Generating Cost Reductions for US Medicaid (GENEROUS) Medicaid model will also be exempt. The American Hospital Association (AHA) reported that CMS anticipates only four manufacturers will ultimately be required to participate.²

For payers, providers, pharmaceutical manufacturers, and other managed care stakeholders, GLOBE represents another federal attempt to connect US drug spending with prices in other countries while raising questions about implementation, provider reimbursement, beneficiary cost sharing, and the limits of CMS’s demonstration authority.

What is the GLOBE Medicare Drug Pricing Model?

GLOBE changes how CMS calculates inflation rebates for certain separately payable Medicare Part B drugs and biological products, which are generally administered by clinicians in physician offices or other health care settings. Rather than relying solely on the existing domestic methodology, CMS will use international pricing information to establish a benchmark for selected products.¹

Under the model, manufacturers would owe rebates when applicable drug prices exceed the international benchmark. According to the American Journal of Managed Care, the benchmark may draw on manufacturer-submitted international net pricing data or commercial data sources and will incorporate pricing from 19 reference countries, including Canada, Germany, Japan, and the United Kingdom. Manufacturer rebates will continue to be paid to the Medicare Supplementary Medical Insurance Trust Fund.³

CMS said the model is intended to test whether the alternative rebate calculation can reduce spending for Medicare and beneficiaries without compromising quality of care. The agency cited data showing that original Medicare Part B drug spending grew nearly 4 times as quickly as drug spending across Medicare, Medicaid, and commercial payers between 2008 and 2021.¹

Which Medicare Part B Drugs Are Included?

Eligible GLOBE products include certain single-source drugs and sole-source biological products in therapeutic areas such as oncology, rheumatology, immunology, ophthalmology, and endocrinology when annual Original Medicare spending exceeds $100 million.³

However, CMS narrowed the model after receiving public comments. The final rule excludes biosimilars and their reference biological products once a biosimilar enters the US market, as well as orphan-only drugs, plasma-derived products, and certain cell and gene therapies.¹

Axios also reported that drugs selected for the Medicare Drug Price Negotiation Program are excluded.⁴ In addition, manufacturers participating in CMS’s GENEROUS model will not be subject to GLOBE, according to the AHA. Those exemptions leave CMS expecting only 4 manufacturers to be required to participate.²

How Much Could the GLOBE Model Save?

The scope and projected financial impact of GLOBE are substantially smaller than under CMS’s original proposal.

The AHA reported that CMS now estimates approximately $440 million in savings, compared with roughly $12 billion projected under the earlier version of the model.² Axios similarly reported projected savings of $440 million compared with $11.9 billion under the previous proposal and attributed the reduction in part to the expanded list of manufacturer and product exemptions.⁴

The smaller projected savings reflect a model that will apply to a more limited set of manufacturers and drugs than originally envisioned.^2,4

What Does GLOBE Mean for Medicare Beneficiaries and Providers?

GLOBE will apply only in randomly selected geographic areas covering approximately one-quarter of beneficiaries who have original Medicare as their primary coverage. The model itself will run from January 1, 2027, through March 31, 2032, with manufacturer rebate invoicing and reconciliation continuing through March 31, 2034.¹

Beginning April 1, 2027, beneficiaries in participating areas could receive reduced coinsurance for GLOBE drugs, with their out-of-pocket costs tied to the international benchmark. CMS will also adjust payments to providers and suppliers when the reduced coinsurance amount applies.³

For managed care and health care organizations, the model will provide a federal test of whether an international reference-based rebate methodology can affect Part B drug spending while maintaining beneficiary access and quality of care.

Could the GLOBE Model Face Legal Challenges?

Although no lawsuit challenging the final rule is identified in the sources reviewed, Axios reported that industry analysts anticipate the model could face litigation over CMS’s authority to link manufacturer rebates to foreign drug prices.⁴

The broader legal question could extend beyond GLOBE itself. According to Axios, analysts have suggested that litigation could test how far CMS may use demonstration projects to alter Medicare payment policy. A court decision upholding or limiting the model could therefore have implications for other Medicare drug-pricing demonstrations.⁴

Absent a legal challenge that delays implementation, the model is scheduled to take effect January 1, 2027.¹

A New Test of International Drug Pricing

The finalized GLOBE Model represents a more limited version of CMS’s original international drug-pricing proposal but retains its central policy mechanism: using prices in other countries as a benchmark for certain Medicare Part B manufacturer rebates.

As implementation approaches, managed care stakeholders will be watching how CMS identifies participating geographic areas and eligible drugs, how reduced beneficiary coinsurance interacts with provider reimbursement, whether the model achieves its projected savings, and whether legal challenges affect its scheduled January 2027 launch.

First Report Managed Care will continue tracking developments related to the GLOBE Model, Medicare Part B drug spending, beneficiary cost sharing, and federal drug-pricing policy.

References

1. Centers for Medicare & Medicaid Services. CMS finalizes new mandatory drug payment model to deliver lower drug prices for beneficiaries in Original Medicare Part B. Published September 30, 2026. Accessed October 2, 2026. https://www.cms.gov/newsroom/press-releases/cms-finalizes-new-mandatory-drug-payment-model-deliver-lower-drug-prices-beneficiaries-original
2. American Hospital Association. CMS finalizes GLOBE drug pricing model. Published October 1, 2026. Accessed October 2, 2026. https://www.aha.org/news/headline/2026-10-01-cms-finalizes-globe-drug-pricing-model
3. Grossi G. CMS finalizes mandatory GLOBE Model to test lower Part B drug costs. The American Journal of Managed Care. Published October 1, 2026. Accessed October 2, 2026. https://www.ajmc.com/view/cms-finalizes-mandatory-globe-model-to-test-lower-part-b-drug-costs
4. Bettelheim A. The Trump administration's shrinking Medicare drug price experiment. Axios. Published October 2, 2026. Accessed October 2, 2026. https://www.axios.com/2026/10/02/medicare-drug-price-experiment-shrinks