What's Happening?
The Centers for Medicare & Medicaid Services (CMS) has introduced two new payment models, GLOBE and GUARD, as part of the Trump administration's initiative to lower drug prices. These models aim to apply
to medicines covered under Medicare Part D and Part B, which provide outpatient prescription drug benefits and outpatient services, respectively. The models will use President Trump's most favored nation (MFN) pricing approach, aligning U.S. Medicare payments with those in economically comparable countries. If implemented, these models will impose mandatory rebates on drugmakers, supplementing the existing Medicare drug price negotiations initiated under the Biden administration. The GLOBE model is expected to start on October 1, 2026, and run until September 30, 2031, while GUARD is set to begin on January 1, 2027, and continue for five years. CMS projects significant savings, estimating that GLOBE will reduce Medicare spending by $11.9 billion and GUARD by $14.1 billion over their respective durations.
Why It's Important?
The introduction of these models is significant as it represents a continued effort to address the high cost of prescription drugs in the U.S., a major concern for many Americans, particularly seniors who rely on Medicare. By benchmarking U.S. drug prices to those in other countries, the models aim to reduce the financial burden on the Medicare system and its beneficiaries. However, the pharmaceutical industry, represented by PhRMA, has expressed concerns that these policies could lead to increased costs for seniors and potentially undermine U.S. leadership in medical research and development. The industry's apprehension highlights the tension between reducing drug prices and maintaining incentives for innovation in the pharmaceutical sector.
What's Next?
The proposed models are set to be implemented in the coming years, with GLOBE starting in 2026 and GUARD in 2027. As these models are rolled out, there will likely be ongoing debates and potential legal challenges from the pharmaceutical industry, which may argue against the imposition of foreign price controls. Additionally, the impact of these models on drug prices, Medicare spending, and the pharmaceutical industry's research and development efforts will be closely monitored. Stakeholders, including policymakers, healthcare providers, and patient advocacy groups, will need to assess the models' effectiveness in achieving their intended goals without adversely affecting drug availability and innovation.
