What's Happening?
The Trump administration, through the Centers for Medicare & Medicaid Services (CMS), has introduced two new payment models, GLOBE and GUARD, aimed at reducing drug prices under Medicare Parts D and B. These models are part of a broader strategy to align
U.S. drug prices with those in economically comparable countries. The GLOBE model, set to start on October 1, 2026, will run until September 30, 2031, excluding biosimilars and drugs already under Medicare negotiation. GUARD will begin on January 1, 2027, and continue for five years. Both models are expected to save Medicare $11.9 billion and $14.1 billion, respectively, over their operational periods. The pharmaceutical industry has expressed concerns, arguing that these policies could increase costs for seniors and impact U.S. leadership in medicine.
Why It's Important?
The proposed models represent a significant shift in how Medicare approaches drug pricing, potentially leading to substantial savings for the program and its beneficiaries. By benchmarking U.S. drug prices to those in other countries, the administration aims to reduce the financial burden on seniors and the Medicare system. However, the pharmaceutical industry warns that such measures could stifle innovation and increase costs for American patients. The outcome of these proposals could influence future healthcare policies and the balance between cost savings and innovation in the pharmaceutical sector.
What's Next?
If implemented, the GLOBE and GUARD models will test new rebate formulas and pricing strategies over several years. The success of these models could lead to broader adoption of international pricing benchmarks in the U.S. healthcare system. Stakeholders, including lawmakers, healthcare providers, and the pharmaceutical industry, will likely engage in discussions and negotiations to address concerns and refine the proposals. The models' impact on drug prices, innovation, and patient access will be closely monitored.
