GLOBE Model Final Rule Drops — But Will It Work on a Smaller Scale?

On October 2, 2026, the Centers for Medicare & Medicaid Services (CMS) issued its Final Rule (“Final Rule”) implementing the “Global Benchmark for Efficient Drug Pricing Model” (“GLOBE Model”)—a new mandatory Medicare payment model under section 1115A of the Social Security Act.

As EBG wrote in February, the GLOBE Model would require manufacturer rebates for certain drugs payable under Medicare Part B when the drug exceeds an international pricing benchmark. Due to certain revisions in the inclusions and exclusions under the Final Rule that will limit its applicability to four manufacturers, the Medicare Part B savings are expected to drop significantly under the revised model, from $11.9 billion in the Proposed Rule of December 23, 2025 (“Proposed Rule”) to $440 million.

The benchmark for GLOBE would be based on data for countries with a real gross domestic product per capita that is at least 60 percent of that of the United States and a minimum real economy size of $400 billion. Reference countries, which remain the same as those in the Proposed Rule, include Australia, Austria, Belgium, Canada, Czech Republic, Denmark, France, Germany, Ireland, Israel, Italy, Japan, the Netherlands, Norway, South Korea, Spain, Sweden, Switzerland, and the United Kingdom.

The GLOBE Model should exclude manufacturers that have signed voluntary most favored nation (MFN) agreements with the White House. It contains a number of other exclusions and also waives manufacturers participating in the “Generating Cost Reductions for U.S. Medicaid” (“GENEROUS Model”), meaning that there will be just four affected manufacturers.[1] We discuss the Final Rule below.

Background

The Inflation Reduction Act of 2022 (Pub. L. 117-169) established the Medicare Part B Drug Inflation Rebate Program, which requires drug manufacturers to pay a rebate when they raise prices for certain drugs faster than the rate of inflation. CMS calculates and invoices these rebates.

The GLOBE Model will thus test changes to the Medicare Part B Drug Inflation Rebate Program, specifically testing whether an alternative calculation for the Medicare Part B drug inflation rebate for certain drugs and biological products will reduce program spending for Medicare and taxpayers while preserving or enhancing the quality of care furnished to Medicare beneficiaries. The Final Rule explicitly states that quality is “co-equal, not secondary” to cost reduction—a change from the Proposed Rule .

The Final Rule states that the GLOBE Model would work “alongside and in addition to” the Part B Drug Inflation Rebate Program. The Final Rule proposes testing two different approaches for establishing benchmarks: using existing, commercially available international pricing data (Method I) or voluntary manufacturer-submitted net pricing data (Method II). Details on determining the per unit GLOBE Benchmark Amount, the GLOBE Model Rebate Amount for GLOBE Model Drugs, and manufacturer-submitted pricing data are included in the Final Rule at subparts E, F, and G.

GLOBE Model Drugs

What’s Included

The GLOBE Model will require mandatory participation for all manufacturers of Part B rebatable drugs that are GLOBE Model drugs.[2] GLOBE Model drugs would be a subset of Part B rebatable drugs that:

• have the following listed U.S. Pharmacopeia (USP) Drug Classification (DC) categories: Antigout Agents, Antineoplastics, Blood Products and Modifiers, Central Nervous System Agents, Immunological Agents, Metabolic Bone Disease Agents, Ophthalmic Agents;
• are single source drugs and sole source biological products, furnished to a cohort of beneficiaries in the Original Medicare (OM) program;
• have a Healthcare Common Procedure Coding System (HCPCS) Level II code with Medicare Part B spending greater than $100 million over a 12-month period ending six months prior to the start of the applicable calendar quarter; and
• are not excluded from the GLOBE Model due to having a maximum fair price in effect or meeting other exclusion criteria specified in § 513.130 (c) of the Final Rule.

The GLOBE Model will be implemented in randomly selected geographic areas representing 25 percent of people who have a Medicare Part B plan; who have Part B as their primary payer (as defined by a beneficiary being enrolled in OM); and who are not enrolled in a Medicare Advantage (MA) plan, section 1876 cost plan, or section 1833 healthcare prepayment plan. Beneficiaries must not have other group health coverage that is a primary payer (such as employer-sponsored health insurance).

Exclusions

The GLOBE Model explicitly excludes:

• Biosimilars—generic-like versions of biologic drugs—and the reference biologicals they compete against, once a biosimilar enters the market in the United States.
• Orphan-only drugs, gene/cell therapies, and plasma-derived products.

Penalties

Manufacturers will face civil monetary penalties for nonpayment.

Projected Savings

With the GLOBE Model, beneficiary coinsurance is estimated to drop to 2 to 12 percent for eligible drugs, well below the standard 20 percent. Beneficiaries are estimated to save approximately $177 million in out-of-pocket costs over seven years. The model is expected to save Medicare Part B $440 million—a figure down from $11.9 billion estimated in the Proposed Rule.

Interaction with 340B Program

The Final Rule excludes 340B Program drugs from GLOBE Model calculations. Claims submitted with 340B modifiers are not counted as GLOBE Model billing units or subject to GLOBE Model rebates.

CMS acknowledges in the Final Rule that a manufacturer reducing drug pricing may result in the lowering of a drug’s best price. However, a manufacturer's reduction of a drug price may also result in the lowering of that drug's Average Manufacturer Price (AMP).

Covered entities that enroll in the 340B Program can purchase covered outpatient drugs at no more than a “ceiling price,” which is calculated as AMP minus the Medicaid unit rebate amount. The Final Rule notes that some 340B hospitals can obtain covered outpatient drugs at less than the ceiling price. Since the Medicaid unit rebate amount is based partly on AMP minus best price, to the extent the proposed GLOBE Model may indirectly affect a drug’s AMP and best price, the 340B prices would be affected. In the Final Rule, CMS commits to monitoring potential impacts on the 340B Program through GLOBE model monitoring and evaluation activities.

Potential Challenges

In response to potential legal challenges, the Final Rule includes a section defending the GLOBE Model against arguments relating to CMS authority under 1115A and numerous constitutional provisions. Commenters expressed concerns about importing foreign pricing into the United States and spillover effects in Medicare as well as Medicaid and dual eligible beneficiaries. Yet the Final Rule will almost certainly face pushback from pharmaceutical manufacturers, drug and health care industry groups, and health plans.

Takeaways

The Final Rule is effective November 30, 2026. The GLOBE Model will begin on January 1, 2027, one calendar quarter later than originally proposed, with the collection of voluntary manufacturer-submitted international drug net pricing data.

GLOBE’s performance period will run for five years, from April 1, 2027, to March 31, 203F2. The associated seven-year payment period will run from April 1, 2027, through March 31, 2034.

The GLOBE Model is a significant test of using international drug pricing benchmarks to control Medicare Part B drug costs. If successful during the 5-year test period, it could fundamentally reshape how Medicare pays for expensive biologics and specialty drugs, potentially reducing beneficiary out-of-pocket costs and overall program spending while maintaining treatment access. If the test is successful, there is the potential it will be expanded to include additional beneficiaries, products and manufacturers.

In the meantime, we await the Final Rule regarding another mandatory drug pricing model “Guarding U.S. Medicare Against Rising Drug Costs Model” (“GUARD Model”), which would require manufacturer rebates for certain drugs payable under Medicare Part D when the price of the drug exceeds an international benchmark, also based on prices paid in economically comparable countries. We will keep you posted.

Epstein Becker Green Staff Attorney Ann W. Parks contributed to the preparation of this post.

Endnotes

[1] See Final Rule, Footnote 227.

[2] As noted above, assuming manufacturers participating in the GENEROUS Model receive waivers for GLOBE, there would be four affected manufacturers. See Final Rule, Footnote 227.