The Centers for Medicare & Medicaid Services finalized a mandatory drug pricing model for Original Medicare Part B on Wednesday, Sept. 30. The final rule puts its estimated savings at about $80 million a year. The proposed version had estimated about $2.3 billion a year. The rule is scheduled to appear in the Federal Register on Oct. 2 and takes effect Nov. 30.
The model is called GLOBE, short for Global Benchmark for Efficient Drug Pricing. CMS says the lower figure reflects the policies it finalized and other considerations, including more recent claims data.
What the model does
Under GLOBE, manufacturers of certain Part B drugs pay a rebate when U.S. prices exceed a benchmark built from prices in 19 comparable countries. CMS’s model page lists them, including Canada, France, Germany, Japan and the United Kingdom. The rebates go to the Medicare trust fund, according to CMS’s model page.
Part B covers drugs that clinicians administer, such as cancer therapies and drugs used to treat autoimmune conditions and arthritis. To be included, a drug must be a single-source drug or sole-source biological product with more than $100 million in Original Medicare Part B spending over a 12-month period. Biosimilars and their reference products are excluded once a biosimilar enters the U.S. market. CMS’s press release says the final rule also excludes orphan-only drugs, plasma-derived products and certain cell and gene therapies, a change from the proposal made in response to public comments.
Who is in it, and when
The model applies to people with Original Medicare who live in randomly selected areas covering about 25% of those beneficiaries. It starts Jan. 1, 2027; its performance years run from April 1, 2027, to March 31, 2032, with rebate payments continuing into 2034. People who may see lower out-of-pocket costs can begin to see them April 1, 2027, CMS says.
Why the savings estimate fell
The final rule estimates about $440 million in Medicare Part B net spending savings over the seven-year payment period, a total that includes $288 million in lower payments to Medicare Advantage plans. Annualized over that payment period, CMS puts the savings at about $80 million a year. The proposed rule had estimated about $2.3 billion a year. The agency says the “annualized amount in this final rule is lower than the GLOBE Model proposed rule because of the finalized policies and other considerations.” By Plainly Now’s arithmetic, $80 million is more than 96% below $2.3 billion.
The finalized policies CMS lists include the new exclusions, a different data source for adjusting prices by each country’s income, and moving the start from October 2026 to January 2027. The estimate also rests on an assumption about a separate program, the Medicaid GENEROUS model. CMS assumed that manufacturers that had signed GENEROUS agreements as of Aug. 17, 2026, would receive a waiver from mandatory participation in GLOBE, and left their drugs out of the estimate. The rule notes that changes in which manufacturers join GENEROUS would affect the estimate. For background, see our report on the Medicaid model.
The rule also shows how much spending the final model reaches. It estimates that GLOBE drugs would have made up about 3% of the Original Medicare Part B drug spending it examined in 2024 (excluding people also enrolled in Medicaid and drugs bought through the 340B discount program), falling to about 2% by the end of the model as more drugs come under Medicare’s price negotiation program. Because only 25% of beneficiaries live in model areas, the rule says, the model reduces “the drug spending targeted by the model to under 1 percent.”
What patients would pay
For drugs in the model, the usual 20% coinsurance falls. The rule’s example uses a $100 allowed amount. With a 10% coinsurance rate, the patient owes $10 instead of the usual $20, and Medicare pays $90.
Using illustrative 2024 data, the rule says 94% of the illustrative GLOBE drugs “would have a beneficiary coinsurance percentage between 2 and 12 percent.” The rule describes its drug list as illustrative, so what any one person pays depends on the drug and on whether they live in a model area.
Medicare Advantage and supplemental coverage
People enrolled in a Medicare Advantage plan are not in the model, because it covers beneficiaries whose primary coverage is Original Medicare. The rule also says people with supplemental insurance “may not directly benefit from the coinsurance reduction.” It adds that all Original Medicare Part B beneficiaries may see reduced Part B premiums, whatever their supplemental coverage.
CMS Administrator Dr. Mehmet Oz said in the agency’s announcement: “Medicare Part B patients and American taxpayers have paid significantly more for prescription medications than people in comparable countries.”