GLOBE and GUARD

Americans pay, on average, three times what residents of other developed countries pay for the same prescription drugs. Medicare Part B drug spending has grown faster than drug spending across all other payers since 2008. Part D drug spending in 2024 constituted approximately 30 percent of all U.S. drug expenditure. These disparities have driven two decades of policy proposals to tie U.S. drug prices to international benchmarks, none of which have been implemented at scale. The first Trump administration tried in 2020 through the Most Favored Nation Model, an interim final rule that would have pegged Medicare Part B drug reimbursement to international reference prices. Three federal courts enjoined it within days. The Biden administration rescinded it.

The second Trump administration is trying again, this time through CMMI’s Section 1115A demonstration authority and the formal notice-and-comment rulemaking process that the first attempt skipped. On December 19, 2025, CMS proposed two mandatory models: GLOBE for Medicare Part B and GUARD for Medicare Part D. Together with the voluntary GENEROUS model for Medicaid announced six weeks earlier, they constitute the most comprehensive attempt to implement international reference pricing across all three major federal health programs simultaneously.

The MFN Architecture: Three Models, Three Programs

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The administration’s drug pricing strategy operates through a layered structure that pairs voluntary participation in Medicaid with mandatory participation in Medicare, using different legal mechanisms for each.

GENEROUS (GENErating cost Reductions fOr U.S. Medicaid) launched November 6, 2025 as a voluntary five-year model running through 2030. Under GENEROUS, CMS negotiates supplemental rebate agreements with participating manufacturers to bring Medicaid drug prices to MFN levels. The model uses an eight-country reference basket (the six non-U.S. G-7 countries plus Denmark and Switzerland) and calculates the MFN price as the second-lowest PPP-adjusted net price among those countries. Manufacturers apply to CMS, negotiate key terms including coverage criteria and utilization management, and then sign supplemental rebate agreements with each participating state. The 14 manufacturers that previously signed MFN pricing deals with the White House, including Pfizer, Novo Nordisk, Eli Lilly, Amgen, AstraZeneca, Bristol Myers Squibb, Merck, and others, are expected to participate once terms are finalized. States participate voluntarily and can select MFN pricing on a drug-by-drug basis. Supplemental rebates under GENEROUS do not affect Medicaid Best Price or 340B ceiling prices, a critical design choice that avoids triggering cascading price reductions across federal drug pricing programs.

GLOBE (Global Benchmark for Efficient Drug Pricing) was proposed December 19, 2025 as a mandatory five-year model for Medicare Part B, running from October 1, 2026 through September 30, 2031. GLOBE replaces the domestic benchmark currently used to calculate manufacturer inflation rebates under the IRA’s Part B Inflation Rebate Program with an international benchmark derived from pricing data across 19 OECD countries with PPP-adjusted GDP at least 60 percent of the United States and minimum PPP-adjusted GDP of $400 billion. The 19 reference countries are Australia, Austria, Belgium, Canada, Czech Republic, Denmark, France, Germany, Ireland, Israel, Italy, Japan, the Netherlands, Norway, South Korea, Spain, Sweden, Switzerland, and the United Kingdom. Manufacturers must pay rebates to Medicare when the U.S. price exceeds the MFN-derived benchmark, replacing the IRA’s inflation-based rebate with an international price comparison.

GLOBE applies to a defined subset of Part B drugs: single-source drugs and sole-source biologicals in specific therapeutic categories (antigout agents, antineoplastics, blood products and modifiers, central nervous system agents, immunological agents, metabolic bone disease agents, and ophthalmic agents) with annual Medicare Part B FFS spending exceeding $100 million. Drugs with IRA maximum fair prices already in effect are excluded, as are biosimilars and their reference biologicals once a biosimilar enters the U.S. market. The model is geographically limited to approximately 25 percent of Medicare FFS beneficiaries in randomly selected regions. Beneficiary coinsurance in model regions would be reduced to 20 percent of the lower GLOBE benchmark amount rather than 20 percent of the current ASP-based price, producing direct out-of-pocket savings.

GUARD (Guarding U.S. Medicare Against Rising Drug Costs) was proposed the same day as a mandatory five-year model for Medicare Part D, running from January 1, 2027 through December 31, 2031. GUARD applies the same MFN pricing methodology as GLOBE but targets Part D drugs. It modifies the IRA’s Part D inflation rebate calculation by replacing the domestic inflation benchmark with an international reference price derived from the same 19-country basket. Like GLOBE, GUARD encompasses approximately 25 percent of Part D enrollees in randomly selected geographic areas. Rebate invoicing and reconciliation continue through 2033 for both models.

The IRA Waiver and What It Means

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The most legally consequential design choice in GLOBE and GUARD is the decision to use Section 1115A waiver authority to override the IRA’s inflation rebate framework. The IRA established a domestic benchmark for manufacturer rebates: if a drug’s price increases faster than the rate of inflation, the manufacturer owes a rebate on the excess. GLOBE and GUARD replace that domestic benchmark with an international one. If the U.S. price exceeds what comparable countries pay, the manufacturer owes a rebate on the difference, regardless of whether the price has increased faster than domestic inflation.

This substitution transforms the economic logic of the rebate. The IRA’s inflation rebate constrains price growth. The MFN rebate constrains price levels. A manufacturer whose drug is priced at $10,000 per treatment in the U.S. and $3,000 in comparable countries owes no inflation rebate if the U.S. price has not increased faster than the CPI. Under GLOBE or GUARD, that manufacturer would owe a rebate on the $7,000 differential. The international benchmark creates a gravitational pull toward price convergence that the inflation benchmark does not.

CMS invokes Section 1115A’s authority to waive Medicare and Medicaid requirements “as may be necessary solely for purposes of testing models.” The agency argues that replacing the IRA inflation rebate formula with an international reference price formula is a permissible model test. Whether courts agree will depend on how broadly they interpret 1115A’s waiver authority and whether they view the replacement of a congressionally enacted rebate formula with an administratively created alternative as within the scope of “testing” a payment model. The IRA’s judicial review limitations for Innovation Center models, codified at 42 U.S.C. Section 1315a(d), may complicate but will not prevent legal challenges. The three courts that enjoined the first MFN model in 2020 found jurisdiction despite similar review limitations, relying on APA procedural claims, ultra vires arguments, and constitutional separation of powers theories.

The Drug Categories at Stake

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GLOBE’s therapeutic category restrictions focus the model on the highest-cost segments of Medicare Part B drug spending. Oncology drugs represent the largest single category. Physician-administered chemotherapy, immunotherapy, and targeted therapy agents billed under Part B constitute the backbone of cancer treatment spending in Medicare. Rheumatology and immunology agents, including biologics for rheumatoid arthritis, psoriasis, and inflammatory bowel disease, represent the second major category. Ophthalmic agents, particularly anti-VEGF injections for macular degeneration and diabetic retinopathy, represent substantial per-beneficiary spending. Endocrinology agents overlap with the BALANCE model’s GLP-1 coverage in complex ways, as some GLP-1 products are administered in clinical settings and billed under Part B.

The $100 million annual spending threshold and the exclusion of drugs with IRA maximum fair prices in effect create an evolving model drug list. As the IRA negotiation program selects additional drugs for price negotiation (the third cycle was announced in early 2026, including the first Part B drugs), those drugs exit the GLOBE model. Conversely, new high-cost drugs that enter the market above the $100 million threshold and are not yet subject to IRA negotiation would enter the model. The interaction creates a two-track pricing regime in which some drugs are subject to congressionally enacted price negotiation and others are subject to administratively imposed international reference pricing.

GUARD’s Part D scope is broader in therapeutic coverage but uses the same international benchmarking methodology. The model targets single-source drugs and sole-source biologicals with Part D spending above thresholds that CMS has not fully specified in the NPRM. The 25 percent geographic sampling means that Part D plans must manage a split formulary environment in which some enrollees are in GUARD regions and others are not, creating operational complexity for national plan sponsors.

The Manufacturer Response Landscape

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Fourteen manufacturers signed voluntary MFN pricing agreements with the White House prior to the GLOBE and GUARD proposals. Those agreements applied primarily to Medicaid and direct-to-consumer pricing through TrumpRx, not to Medicare Part B or Part D. GLOBE and GUARD extend MFN pricing into Medicare’s two drug benefit programs through mandatory models, not voluntary agreements. Manufacturers cannot opt out.

The pharmaceutical industry’s response has split along a predictable axis. Individual manufacturers that signed voluntary MFN deals gained favorable political positioning, tariff relief in some cases, and expanded market access (as with the GLP-1 pricing agreements that opened Medicare coverage through BALANCE). The mandatory GLOBE and GUARD models, imposed through rulemaking rather than negotiated bilaterally, remove the voluntary element. The Pharmaceutical Research and Manufacturers of America (PhRMA) and individual companies are expected to challenge both NPRMs during the comment period, and litigation is widely anticipated if the rules are finalized.

The legal vulnerability is real but not necessarily fatal. The first MFN model failed on procedural grounds: it was issued as an interim final rule without notice-and-comment rulemaking, and courts found the skip of APA procedures unlawful. GLOBE and GUARD are proposed through full notice-and-comment NPRMs, eliminating the procedural deficiency that doomed the first attempt. The substantive legal questions, whether Section 1115A authorizes replacing a congressionally enacted rebate formula, whether the model exceeds CMMI’s statutory scope, whether the scale of the models (25 percent of beneficiaries, five-year duration, mandatory participation) is consistent with “testing” rather than “implementing” a new payment system, remain available to challengers. But the procedural ground is firmer.

The IRA Interaction Problem

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GLOBE and GUARD operate alongside, not in replacement of, the IRA’s drug pricing provisions. The IRA’s Medicare Drug Price Negotiation Program has produced maximum fair prices for 10 drugs effective in 2026, with a second cohort (including Ozempic, Wegovy, and Rybelsus) selected for prices effective in 2027. The IRA’s inflation rebate programs for Part B and Part D continue to operate. The Part D benefit redesign, including the $2,100 annual out-of-pocket cap, the manufacturer discount program, and the premium stabilization demonstration, all remain in effect.

GLOBE and GUARD layer MFN-based rebates on top of this existing framework. A drug that is already subject to IRA inflation rebates could face additional MFN rebates under GLOBE or GUARD if the international benchmark is lower than the inflation-adjusted price. A drug that exits IRA negotiation eligibility (because its exclusivity period ends or a generic enters) could enter GLOBE or GUARD eligibility if it meets the model’s spending thresholds. The overlapping calculations create manufacturer exposure to multiple concurrent rebate obligations that may, in combination, produce effective price floors that approach or reach international levels.

For Part D plan sponsors, the interaction between GUARD’s MFN rebates and the existing Part D benefit structure creates actuarial complexity. Plan bids for 2027 are due in June 2026. If GUARD is finalized by then, plans must model the impact of MFN rebates on drug costs, beneficiary cost-sharing, manufacturer discount obligations, and federal reinsurance calculations within a 25 percent geographic sample of their enrollee population. If GUARD is not finalized before bid submission, plans must bid without knowing whether the model will apply to a quarter of their members.

What Comes Next

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The GLOBE and GUARD NPRMs have a comment deadline of February 23, 2026. GLOBE’s proposed start date of October 1, 2026 requires a final rule no later than early August 2026 to satisfy the Congressional Review Act’s 60-day delayed effective date requirement. GUARD’s proposed start date of January 1, 2027 provides more time for finalization and implementation.

The comment period will generate substantial industry opposition. The finalization timeline will be watched for signals about whether CMS intends to proceed on the proposed schedule or extend the implementation date to address stakeholder concerns. Litigation is expected regardless of the final rule’s content, and preliminary injunction motions could delay or block implementation even if CMS finalizes on schedule.

The broader significance of GLOBE and GUARD extends beyond the specific drugs and rebates they target. If finalized and upheld, they establish the precedent that CMMI can use Section 1115A to override congressionally enacted drug pricing frameworks with administratively determined international benchmarks. That precedent, combined with GENEROUS’s voluntary Medicaid framework and BALANCE’s negotiated GLP-1 pricing, would give CMS a toolkit for pharmaceutical pricing that operates largely outside the IRA’s statutory negotiation process. For an administration that has expressed skepticism about the IRA’s pace and scope, that toolkit is the point.

Related Reading

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MCR-04_12 The IRA Drug Negotiation Process: First Cohort MFPs, Manufacturer Litigation, and What Comes Next MCR-04_09 Part D in 2026-2027: Drug Negotiation, Formulary Disruption, and the BALANCE Bridge MCR-07_04 Prescription Drug Costs: What Changes Are Coming to Your Medications