On Sunday, December 21, the Centers for Medicare & Medicaid Services (CMS) announced in two separate press releases that it is proposing new drug payment models to address rising drug costs in Medicare Part D and Part B. According to the news release, the Guarding U.S. Medicare Against Rising Drug Costs (GUARD) Model and the Global Benchmark for Efficient Drug Pricing (GLOBE) Model are expected to lower spending for Medicare beneficiaries without hurting their quality of care while also improving the sustainability of the Medicare program and the Medicare Trust Fund and protecting innovation.
Americans pay, on average, three times what other developed countries pay for the same medications, CMS stated. Medicare Part D drug spending in 2024 made up about 30 percent of drug spending in the U.S. According to the Health and Human Services Secretary (HHS) Office of the Assistant Secretary for Planning and Evaluation, drug spending in Medicare Part B was nearly four times higher than drug spending across all payers (Medicare, Medicaid, commercial) between 2008 and 2021.
CMS outlined two proposed models—GUARD and GLOBE—that would test new approaches to calculating Medicare drug inflation rebates by incorporating international pricing benchmarks. The GUARD Model would apply to Medicare Part D outpatient prescription drugs and would adjust the inflation rebate formula by factoring in prices paid for comparable drugs in economically similar countries, while incorporating existing manufacturer rebates and discounts. The GLOBE Model would take a parallel approach for certain separately payable Medicare Part B drugs administered in clinical settings, modifying the inflation rebate calculation using international drug pricing data. Together, the models aim to evaluate whether aligning rebate calculations more closely with global prices can reduce Medicare program spending while maintaining or improving the quality of care for beneficiaries.
“On May 12, President Trump ordered an all-of-government response to the unfair gap between U.S. drug prices and what other nations pay,” HHS Robert F. Kennedy, Jr., said in a statement. “CMS is answering that call with two new models under Parts B and D that tie drug prices and rebates to costs in comparable countries.”
The GUARD Model would begin Jan. 1, 2027, and operate for five years with rebate invoicing and payment continuing until 2033. The model would cover 25 percent of Part D enrollees and apply only to beneficiaries living in randomly selected geographic areas of the country.
GLOBE inclusion criteria would exclude biosimilars and their reference biologics once a biosimilar is approved in the United States. The GLOBE Model would also operate for five years, from Oct. 1, 2026, to Sept. 30, 2031, with rebate invoicing and reconciliation continuing until Sept. 30, 2033. Similar to the GUARD Model, the GLOBE model would apply to Medicare beneficiaries residing in a defined geographic area, representing approximately 25 percent of the Medicare beneficiary population in the United States.
