MFN Drug Pricing Update: After GENEROUS, GUARD and GLOBE Issue From CMS’s Innovation Center – Part II

Yesterday, we posted Part I of our update on CMS’s proposed regulations to establish two most favored nation (MFN) demonstration models under Medicare Parts B and D, focusing on the Part D model, called Guarding U.S. Medicare Against Rising Drug Costs (GUARD).  In this post, we cover the main features of the Part B model, Global Benchmark for Efficient Drug Pricing (GLOBE).  Comments on both proposed models may be submitted here (for GLOBE) and here (for GUARD) until February 23, 2026.

Duration:  GLOBE would have a seven-year test period consisting of five performance years beginning on October 1, 2026 and ending on September 30, 2031, for which GLOBE rebates would be due, and during which beneficiary coinsurance and adjusted payments to providers and suppliers would apply, followed by two additional years beginning on October 1, 2031 and ending September 30, 2033, during which CMS would calculate, invoice and reconcile GLOBE rebates owed for previous performance years.

Drugs Covered:  Drugs covered under GLOBE would be a subset of Part B rebatable drugs which (1) are single source drugs and sole source biological products, (2) are classified as antigout agents, antineoplastics, blood products and modifiers, central nervous system agents, immunological agents, metabolic bone disease agents, or ophthalmic agents as specified in the USP Drug Classification (DC) criteria, and (3) have a HCPCS Level II code with Medicare Part B fee-for-service spending greater than $100 million over a 12-month period.  “Single source drugs” are defined as drugs approved under a new drug application (NDA), including authorized generics, that have no therapeutic equivalents listed in FDA’s Orange Book; CMS proposes to define “sole source biological” as biologics approved under a biologic license application (BLA), including unbranded biologics, and that are not a reference biologic for a biosimilar application.  GLOBE drugs that became multi-source during a performance year would no longer be subject to GLOBE after that point.

Regarding the drug classification criteria, once CMS has identified the USP DC category for a GLOBE drug or biological product, it would remain in that category for the duration of the GLOBE model.  Similarly, CMS proposes that Part B rebatable drugs that meet this criterion one time during the duration of the GLOBE Model will be considered to have met this criterion for all subsequent GLOBE Model ASP calendar quarters.

GLOBE would exclude (1) drugs or biological products without a calculable “specified amount” under the Part B inflation rebate program, (2) drugs for which a maximum fair price (MFP) under the Medicare Drug Price Negotiation Program is in effect, and (3) drugs or biological products that are no longer Part B rebatable drugs during the duration of the GLOBE Model.

Geographical area and Medicare population covered:  No later than 60 days before each performance year, CMS proposes to randomly select 25% of the Zip Code Tabulation Areas (ZCTAs) in the U.S.  ZCTAs are geographical areas roughly equivalent to zip codes.  Part B enrollees who reside in the selected ZCTAs (which would also represent approximately 25% of all Part B beneficiaries) would be added to CMS’s GLOBE Model Eligible Beneficiary List, and remain on this list until the model concludes or the beneficiary is no longer eligible for inclusion.  Part B enrollees who do not reside in the selected ZCTAs would be assigned as being eligible for inclusion in the comparison group.

Manufacturer participants:  Participation in GLOBE is mandatory for all manufacturers of GLOBE drugs that are furnished to a GLOBE beneficiary during the performance period.  No enrollment activities are necessary.

Basis for rebates – the International Pricing Benchmark:  Broadly, the proposed GLOBE Model modifies the existing Part B inflation rebate amount calculation by comparing a GLOBE Model drug’s “specified amount” for a quarter as determined for the standard Part B inflation rebate (i.e., the Part B payment limit) to an international benchmark.  If the specified amount is greater, the excess would be rebated to CMS, after subtracting any inflation rebate due.  The starting point for determining GLOBE rebates is therefore the international benchmark.

The international benchmark would look at prices in 19 reference countries: 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.  These are the same reference countries listed in the proposed GUARD Model, which are members of the Organisation for Economic Co-operation and Development (OECD) that have a purchasing power parity-adjusted per-capita gross domestic product (GDP) of at least 60% that of the U.S., and that have an annual GDP of at least $400 billion.

CMS proposes to allow manufacturers to choose between relying on a CMS-calculated international pricing benchmark (the Method I GLOBE benchmark) or submitting their own international drug net pricing information (the Method II GLOBE benchmark).  CMS would determine the applicable GLOBE benchmark as the greater of the Method I and Method II benchmark, if available.

Under the default method, the Method I GLOBE benchmark would be the lowest country-level average price among the set of average prices for each reference country, adjusted by the country-specific gross domestic product (GDP) based on purchasing power parity (PPP).  To calculate the Method I GLOBE benchmark, CMS would rely on existing data sources with available drug pricing information in the reference countries, using data from two calendar quarters prior to the first applicable calendar quarter to which the total GLOBE rebate would apply (or, if unavailable, drug pricing information from the most recent ASP calendar quarter for which data are available).  The preamble identifies three such sources:  IQVIA’s MIDAS, Eversana’s NAVLIN, and GlobalData Pharmaceutical Prices (POLI).

Under the optional method (the Method II GLOBE benchmark), manufacturers may voluntarily submit their own international net drug pricing information to CMS that, if accepted, would serve as an alternative GLOBE benchmark.  The Method II GLOBE benchmark would reflect the volume-weighted average of the GDP (PPP) adjusted manufacturer’s international drug net pricing for sales among reference countries for the applicable ASP calendar quarter based on data calculated and voluntarily reported by the manufacturer to CMS on a quarterly basis.

Prior to the first submission of voluntary international drug net pricing data, the manufacturer would be required to execute a data agreement.  For each submission, CMS proposes that the required basic data elements would include, for example, the GLOBE Model drug brand name, nonproprietary name, HCPCS Level II code, dosage form and route of administration (if applicable), volume per item, package type, etc., and that the manufacturer must provide a list of every “applicable international analog,” defined as a non-U.S. analog whose nonproprietary name, dosage form, and route of administration (if applicable) align with a GLOBE Model drug and that are sold in one or more reference countries during the applicable ASP calendar quarter.

CMS also proposes that manufacturers would have two data submission options—streamlined and limited—for these submissions.  For both options, CMS proposes manufacturers would provide the required volume-weighted average GDP (PPP)-adjusted net pricing per HCPCS billing unit for the applicable international analogs for all reference countries for the applicable ASP calendar quarter (across country volume-weighted average GDP (PPP) adjusted net price per HCPCS billing unit).  The difference between the two options is the level of aggregation CMS would allow. Under the streamlined option, CMS proposes reporting prices for each applicable international analog in each reference country, while in the limited option, CMS proposes reporting prices aggregated at the reference country level.  CMS proposes that both streamlined or limited submissions must occur within 30 days after the end of the applicable ASP calendar quarter.  CMS would then conduct a verification review to determine if the submission is an “applicable submission” to identify a per-unit Method II GLOBE benchmark.

Under either Method I or Method II, CMS would apply an adjustment to the identified per-unit GLOBE benchmark to calculate the per-unit GLOBE Model benchmark amount, which includes an “applicable threshold percentage” and an “add-on percentage amount.”  CMS proposes to apply an applicable threshold percentage of 102 percent to the per-unit Method I GLOBE Model benchmark, and 105 percent to the per-unit Method II GLOBE Model benchmark.  For the add-on percentage amount, CMS proposes to increase the per-unit GLOBE Model benchmark by an add-on percentage amount that would, in general, equal the dollar amount of any add-on percentage included in the Part B payment limit (which generally would be the same as the “specified amount” as determined for the standard Part B inflation rebate under 42 CFR 427.302(b)).

The per-unit GLOBE rebate amount for a quarter would be equal to the greater of (1) the specified amount minus the per-unit GLOBE benchmark amount, or (2) the specified amount minus the inflation adjusted payment amount (i.e., the standard Part B inflation rebate).

Per-Unit and Total Incremental GLOBE Model Rebate:  CMS proposes to calculate a per-unit incremental GLOBE Model rebate amount, which would represent the amount of the GLOBE Model rebate that is in excess of any Part B inflation rebate due.  CMS would then calculate the total incremental GLOBE Model rebate amount as the per-unit incremental GLOBE Model rebate multiplied by the total number of GLOBE Model billing units.  Manufacturers would owe CMS the total incremental GLOBE Model rebate amount in addition to any amount invoiced under the Part B inflation rebate program.

The total incremental GLOBE Model rebate would be reduced for a drug currently in shortage, or when CMS determines that there is a severe supply chain disruption, using formulas similar to the corresponding reductions under the Part B inflation rebate program.

Invoicing and payment process:  CMS proposes two alternative approaches, a combined approach and an incremental approach, for how it would provide rebate reports and reconciliation rebate reports to GLOBE participants, and a process for suggestion of error when GLOBE rebates are owed.  CMS is seeking comment on these alternative approaches for reporting, invoicing, and reconciliation, and intends to adopt only one approach.

Under the combined approach, CMS would delay Part B inflation rebate invoicing for all manufacturers (not just GLOBE Model participants) by up to two months and would provide a combined report (invoice) that would include the total GLOBE rebate amount and incremental GLOBE rebate amount in both the Preliminary Rebate Report and Rebate Report provided to the manufacturer pursuant to the Part B inflation rebate program.  Under this approach, CMS would provide each manufacturer of a Part B rebatable drug a Rebate Report that is the invoice for the total rebate amount due under both the Part B inflation rebate program and the GLOBE Model (if applicable), if any, no later than eight months, instead of the current six months, after the end of each applicable calendar quarter, after sending a Preliminary Rebate Report one month earlier. Payment of rebates would be due no later than 30 calendar days after the date of receipt of the rebate reports/invoices.  In addition, because there would be a single combined report and rebate amount due under this approach, CMS proposes that the suggestion of error process described in the Part B inflation rebate program would be used for both the inflation rebate and the GLOBE rebate, if both are payable.

Under the incremental approach, CMS would use a separate invoicing process that would run approximately two months after issuing Part B inflation rebate reports.  Under this approach, CMS would provide a GLOBE Model Preliminary Rebate Report to each manufacturer of a GLOBE drug at least one month prior to the issuance of the GLOBE Model Rebate Report, which would be provided no later than eight months after the end of each applicable calendar quarter.  CMS would invoice manufacturers of GLOBE drugs for the total GLOBE rebate amount using the incremental GLOBE rebate amount and reconcile the portion of the total GLOBE rebate amount invoiced through the Part B inflation rebate program processes.  Under this incremental approach, CMS proposes a separate suggestion of error process such that a manufacturer would submit its suggestion of error within 10 calendar days from the date or receipt of a GLOBE Model Preliminary Rebate Report (or a report detailing the preliminary reconciliation of a GLOBE Model rebate amount) for the applicable calendar quarter.  CMS proposes that the manufacturer of GLOBE drug would be required to pay the incremental GLOBE rebate amount within 30 calendar days of receiving the GLOBE rebate report.

Enforcement:  Penalties for noncompliance would be the same as those under the Part B inflation rebate program.  Failure to pay an Incremental GLOBE Model rebate within the 30-day deadline would subject a manufacturer to a civil monetary penalty (CMP) of 125% of the rebate (or reconciled amount) that the manufacturer failed to pay.  The penalty would be in addition to the underlying rebate owed.  The CMP notice, hearing, and appeal procedures would be the same as under the Part B inflation rebate program.  CMS notes that it could also refer non-compliance cases to the HHS Office of the Inspector General, the Department of Justice, or the Treasury Department.

Coinsurance adjustment:  The ordinary Part B coinsurance obligation is 20% of the Medicare payment amount.  If a GLOBE rebate is applicable (i.e., if the payment amount exceeds the GLOBE Model benchmark amount), the beneficiary’s coinsurance would be adjusted to 20% of the per-unit GLOBE Model benchmark amount.  Where a beneficiary’s coinsurance is reduced, Medicare would increase the payment to the provider to extent of the reduction in the coinsurance.

Outside of Medicare Part B, CMS expects the proposed GLOBE Model to have only indirect impacts on other government price reporting programs.  For example, drugs selected for Medicare MFP negotiation would be excluded from GLOBE while the MFP is in effect.  In addition, GLOBE Model rebates themselves would not be included in a manufacturer’s determination of Medicaid rebate best price or average manufacturer price (AMP), , because CMS considers GLOBE rebates to be paid under the Part B inflation rebate program, and the latter are excluded by statute from AMP and best price.  Similarly, GLOBE rebates are excluded from ASP and from the calculation of 340B ceiling prices.  Nevertheless, CMS explains in the preamble that the GLOBE Model may indirectly impact these prices if the Model influences a manufacturer to reduce its prices to avoid GLOBE rebates.