CMS Finalizes Global Benchmark for Efficient Drug Pricing (GLOBE) Model to Tackle Medicare Part B Drug Costs
On October 2, 2026, the Centers for Medicare & Medicaid Services (CMS) of the Department of Health and Human Services (HHS) published a final rule in the Federal Register, formalizing the implementation of the Global Benchmark for Efficient Drug Pricing (GLOBE) Model. This new mandatory Medicare payment model, set to become effective on November 30, 2026, represents a significant federal effort to address the escalating costs of prescription drugs covered under Medicare Part B. The GLOBE Model will test an alternative method for determining Medicare Part B drug inflation rebate amounts for specific separately payable drugs and biological products, with the overarching goal of reducing costs for both Original Medicare beneficiaries and the program, while preserving care quality.
The Persistent Challenge of High Drug Costs
The implementation of the GLOBE Model comes amidst growing concerns over the affordability of healthcare and prescription drugs in the United States. Data highlights a significant financial burden on American adults, particularly seniors. The West Health-Gallup Affordability Index indicates that only 61 percent of adults over 65 are considered "Cost Secure," struggling with access to quality, affordable care. Medicare Part B premiums and federal contributions have seen substantial increases, with beneficiary premiums rising 53 percent from 2016 to 2021 and federal revenue contributions increasing from $235.6 billion in 2016 to $386.0 billion in 2024. These figures underscore a broader trend of rising costs across all financing mechanisms within Medicare Part B.
The impact of high drug costs extends beyond financial strain, directly affecting patient health outcomes. Studies show that a significant portion of Americans, including Medicare beneficiaries, skip or ration medications due to cost. One in four adults reported not filling a prescription in 2024 because of expense, with this figure rising to 40 percent among those with lower incomes. This cost-related non-adherence leads to worse health outcomes, increased medical spending, and avoidable hospitalizations and deaths. Research suggests annual costs of medication non-adherence can reach $290 billion, contributing to hospitalizations and higher treatment expenditures. Furthermore, comparisons with other developed nations reveal a stark disparity: U.S. prescription drug prices exceed the combined average of non-U.S. OECD countries by 278 percent, with originator (brand-name) drug prices being 422 percent higher.
The GLOBE Model's Framework and Objectives
The GLOBE Model is established under section 1115A of the Social Security Act, which empowers the CMS Innovation Center to test innovative payment and service delivery models aimed at reducing federal healthcare expenditures while maintaining or improving quality of care. This model builds upon the foundation laid by the Inflation Reduction Act of 2022 (IRA), which created the Medicare Part B Drug Inflation Rebate Program. The IRA mandates drug manufacturers to pay rebates when drug prices increase faster than the rate of inflation, with CMS calculating and invoicing these rebates.
The GLOBE Model introduces an alternative approach to these rebate calculations for certain Part B drugs and biological products. While the specific details of this alternative methodology are not fully elaborated in the executive summary, its core purpose is to refine how inflation rebates are determined, with the expectation that this will lead to more efficient drug pricing and reduced costs. The model is mandatory, meaning participating entities will be required to adhere to its parameters.
Potential Implications and Outlook
By implementing this mandatory model, CMS aims to create a more financially sustainable environment for Medicare Part B. The alternative rebate calculation could place additional pressure on drug manufacturers to manage their pricing strategies more effectively, potentially leading to lower list prices or smaller price increases. For Original Medicare beneficiaries, a successful GLOBE Model could translate into reduced out-of-pocket expenses and improved access to essential medications, thereby mitigating the problem of cost-related non-adherence and its associated health complications. The broader Medicare program stands to benefit from reduced expenditures, contributing to its long-term solvency.
This initiative reflects a continued federal commitment to addressing drug pricing challenges. The GLOBE Model represents an evolution of existing policies, seeking to innovate within established frameworks to achieve greater efficiency and affordability. Its mandatory nature suggests a strong resolve from CMS to test its efficacy on a broad scale.
