The Centers for Medicare & Medicaid Services finalized a mandatory payment model on Sept. 30 that ties rebates on some Medicare Part B drugs to prices paid in other wealthy countries. The Global Benchmark for Efficient Drug Pricing (GLOBE) Model begins Jan. 1, 2027, and runs through March 31, 2032.
Part B drugs are medicines given in a doctor's office or hospital outpatient clinic, such as infusions for cancer, rheumatoid arthritis, and eye disease. Patients in Original Medicare usually pay 20% coinsurance on these drugs, so a lower payment amount can directly lower what some patients owe.
But the final rule reaches fewer drugmakers than first proposed and promises far smaller savings. It applies to about a quarter of Medicare beneficiaries, chosen by where they live.
How the International Price Benchmark Works
Under current law, drugmakers owe Medicare a rebate when Part B drug prices rise faster than inflation. GLOBE tests a different approach, using "international drug pricing information to identify a benchmark that reflects prices paid in a set of economically comparable countries," according to the CMS announcement.
The comparison group includes 19 countries, among them Australia, Canada, France, Germany, Japan, and the United Kingdom, Becker's Hospital Review reported. CMS says Americans pay more than four times as much for brand-name prescription drugs as people in other developed countries.
"Medicare Part B patients and American taxpayers have paid significantly more for prescription medications than people in comparable countries," said CMS Administrator Dr. Mehmet Oz.
Under the model, rebates are tied to how far a drug's Medicare price sits above the international benchmark, not only to how fast its price rises. CMS says the rebates are meant to lower costs for both the program and patients in selected areas.
The model covers separately payable Part B drugs and biologics. After public comments, CMS excluded orphan-only drugs, plasma-derived products, certain cell and gene therapies, and biosimilars along with their reference biologics once a biosimilar is on the U.S. market.
Who Is Included and When Savings Begin
GLOBE applies to a randomly selected group of ZIP code areas covering about 25% of Medicare beneficiaries. Random selection by area lets officials compare spending and access in participating and nonparticipating regions, a common design for testing Medicare payment changes. The model applies to Original Medicare Part B, so people in Medicare Advantage plans are not directly included.
For those in selected areas, lower out-of-pocket costs may begin April 1, 2027, when the model's performance period starts. Rebate reconciliation continues through March 31, 2034.
The practical effect depends on where a patient lives and which drug they receive. Two neighbors in different ZIP codes could see different coinsurance for the same infusion. CMS has not published a list of the selected areas or said which drugs will see the largest changes.
People most likely to notice a difference are those on expensive, long-term clinic-administered treatments who lack supplemental Medigap coverage. Medigap plans often pay the 20% coinsurance, so many of those enrollees may see little direct change.
Narrower Rule and Smaller Savings
The final model is expected to save about $440 million in Medicare Part B spending over seven years, according to the final rule's estimate reported by Becker's.
STAT reported that the savings estimate dropped about 96% from the proposal, which projected nearly $12 billion, and that the final rule applies to only four drug companies. Companies that signed voluntary most-favored-nation pricing deals with the administration are exempt.
Those exemptions drew concern before the rule was final. A Lancet modeling study estimated that GLOBE could save $5.2 billion in its initial phase before exemptions, TheStreet reported. MedicalDaily reported that the study found confidential drugmaker deals could cut projected savings from GLOBE and its companion model by 71% to nearly 80%. The final GLOBE estimate suggests the exemptions narrowed the model even further.
GLOBE is one of several related programs. A companion model for Part D pharmacy drugs, called GUARD, remains in the proposed stage. A separate Medicaid model, GENEROUS, has signed agreements with 40 states and Puerto Rico, Becker's reported.
Next Steps for Patients and Clinics
Most beneficiaries do not need to do anything now. Patient costs will not change before April 2027, and the model does not require patients to switch drugs, doctors, or plans.
Medicare open enrollment runs Oct. 15 to Dec. 7. People who rely on Part B infusions and are weighing Original Medicare against Medicare Advantage can factor in that GLOBE applies only to Original Medicare, though the model alone is unlikely to outweigh differences in networks, premiums, and supplemental coverage.
Clinics and hospitals that give these drugs will need to track how the model affects them. CMS has not said how it will notify people in selected areas, so patients may want to review their Medicare Summary Notices after April 2027 for changes in what they owe.
Patients should not stop or delay a prescribed infusion because of the new model. Questions about costs can go to the clinic's billing office or to 1-800-MEDICARE.
Next to watch are the list of selected areas, any legal challenges from drugmakers, and a final decision on GUARD. MedicalDaily will report when CMS releases participant details.
Key Questions Answered
What is the GLOBE model? A mandatory Medicare model that calculates rebates on certain Part B drugs using prices paid in 19 comparable countries.
When does it start? The model begins Jan. 1, 2027. Lower out-of-pocket costs for some beneficiaries may begin April 1, 2027.
Who is included? About 25% of Medicare beneficiaries in randomly selected ZIP code areas. The model applies to Original Medicare Part B, not directly to Medicare Advantage enrollees.
Which drugs are excluded? Orphan-only drugs, plasma-derived products, certain cell and gene therapies, and biosimilars and their reference biologics once a biosimilar is on the market.
How much will it save? The final rule estimates about $440 million over seven years, about 96% less than projected for the proposal.
Do patients need to do anything? No. Patients should keep their prescribed treatments and direct cost questions to their clinic or 1-800-MEDICARE.
Published by Medicaldaily.com
