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Proposed Rule2025-23702

Global Benchmark for Efficient Drug Pricing (GLOBE) Model

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Published

December 23, 2025

Issuing agencies

Health and Human Services DepartmentCenters for Medicare & Medicaid Services

Abstract

This proposed rule proposes to implement the Global Benchmark for Efficient Drug Pricing Model ("GLOBE Model"), a new Medicare payment model under section 1115A of the Social Security Act (the Act). The GLOBE Model would test whether a payment model that uses an alternative method for calculating Part B inflation rebate amounts for certain separately payable Part B drugs and biologicals products reduces costs for Medicare fee-for-service (FFS) beneficiaries and the Medicare program while preserving quality of care.

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[Federal Register Volume 90, Number 244 (Tuesday, December 23, 2025)]
[Proposed Rules]
[Pages 60244-60336]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-23702]

[[Page 60243]]

Vol. 90

Tuesday,

No. 244

December 23, 2025

Part II

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Part 513

Global Benchmark for Efficient Drug Pricing (GLOBE) Model; Proposed
Rule

Federal Register / Vol. 90 , No. 244 / Tuesday, December 23, 2025 /
Proposed Rules

[[Page 60244]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 513

[CMS-5545-P]
RIN 0938-AV66

Global Benchmark for Efficient Drug Pricing (GLOBE) Model

AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).

ACTION: Proposed rule.

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SUMMARY: This proposed rule proposes to implement the Global Benchmark
for Efficient Drug Pricing Model (``GLOBE Model''), a new Medicare
payment model under section 1115A of the Social Security Act (the Act).
The GLOBE Model would test whether a payment model that uses an
alternative method for calculating Part B inflation rebate amounts for
certain separately payable Part B drugs and biologicals products
reduces costs for Medicare fee-for-service (FFS) beneficiaries and the
Medicare program while preserving quality of care.

DATES: To be assured consideration, comments must be received at one of
the addresses provided below, by February 23, 2026.

ADDRESSES: In commenting, please refer to file code CMS-5545-P.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to <a href="http://www.regulations.gov">http://www.regulations.gov</a>. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-5545-P, P.O. Box 8013,
Baltimore, MD 21244-8013.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-5545-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Vinod Mitta, (667) 290-8712 or
<a href="/cdn-cgi/l/email-protection#bbfcf7f4f9fed6d4dfded7fbd8d6c895d3d3c895dcd4cd">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: <a href="http://www.regulations.gov">http://www.regulations.gov</a>. Follow the search instructions on that website to
view public comments. CMS will not post on <a href="http://Regulations.gov">Regulations.gov</a> public
comments that make threats to individuals or institutions or suggest
that the commenter will take actions to harm an individual. CMS
continues to encourage individuals not to submit duplicative comments.
We will post acceptable comments from multiple unique commenters even
if the content is identical or nearly identical to other comments. We
encourage commenters to include supporting facts, research, and
evidence in their comments. When doing so, commenters are encouraged to
provide citations to the published materials referenced, including
active hyperlinks. Likewise, commenters who reference materials which
have not been published are encouraged to upload relevant data
collection instruments, data sets, and detailed findings as a part of
their comment. Providing such citations and documentation will assist
us in analyzing the comments.
Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a
plain language summary of this rule may be found at <a href="https://www.regulations.gov/">https://www.regulations.gov/</a>.

I. Executive Summary and Background

A. Executive Summary

1. Purpose
The purpose of this proposed rule is to propose the implementation
and testing of a new mandatory model under the authority of the Centers
for Medicare & Medicaid Services (CMS) Center for Medicare and Medicaid
Innovation (CMMI) (Innovation Center). Section 1115A of the Social
Security Act (the Act) authorizes the Innovation Center to test
innovative payment and service delivery models expected to reduce
Medicare, Medicaid, and Children's Health Insurance Program (CHIP)
expenditures while preserving or enhancing the quality of care
furnished to the beneficiaries of such programs.
2. Summary of Major Provisions
a. Proposed GLOBE Model Drugs
The proposed Global Benchmark for Efficient Drug Pricing Model
(``GLOBE Model'') would focus on a set of Part B rebatable drugs that
are single source drugs and sole source biological products that are
furnished to a cohort of beneficiaries in the traditional Medicare
program. The set of included drugs, as proposed in section II.B. of
this proposed rule, would include certain Part B rebatable drugs as
identified in 42 CFR 427.101 for the purpose of the Medicare Part B
Drug Inflation Rebate Program and that meet the proposed definition of
GLOBE Model drugs in proposed 42 CFR 513.130. Drug selection (and
removal, if applicable) for the model test would be determined by CMS
based on the eligibility criteria and would not be subject to appeal.
b. Proposed Defined Population and Intervention
The proposed cohort of beneficiaries is described in section II.C.
of this proposed rule. This cohort would be identified from
approximately 25 percent of beneficiaries who are enrolled in
traditional Medicare Part B and meet certain criteria (as determined by
CMS as set forth in proposed 42 CFR 513.120). These beneficiaries must
have traditional Medicare Part B as their primary payer, as defined by
a beneficiary being enrolled in Medicare Part B fee-for-service (FFS),
and must not be enrolled in a Medicare Advantage plan, section 1876
cost plan,\1\ or section 1833 healthcare prepayment plan.\2\
Beneficiaries must not have other group health coverage that is a
primary payer (such as employer-sponsored health insurance). Finally,
beneficiaries must be identified by CMS for inclusion in the model
(based on the beneficiary's address of record at a certain point in
time being within the GLOBE Model geographic areas) and must not be
identified by CMS for inclusion in the comparison group or otherwise
not eligible for inclusion. Medicare beneficiaries who are in the
selected cohort, or ``GLOBE Model beneficiaries,'' would not be model
participants \3\ but would benefit from reduced coinsurance, as
applicable, when they receive a GLOBE Model drug as described in
section II.G.7. of this

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proposed rule. When a GLOBE Model beneficiary receives a GLOBE Model
drug on a date of service where they are identified as a GLOBE Model
beneficiary, separately payable claim lines for that service would be
included in the calculation of GLOBE Model billing units as described
in section II.G.4. of this proposed rule. Beneficiary selection for the
model cohort and comparison group (and removal, if applicable) would be
solely determined by CMS and would not be subject to appeal. Providers
and suppliers who furnish GLOBE Model drugs to Medicare FFS
beneficiaries who are in the model cohort would not be model
participants and would continue to buy and bill for GLOBE Model drugs
as usual and receive separate payment under Medicare Part B (if
applicable). These providers and suppliers include, but may not be
limited to, hospital outpatient departments, physician practices,
ambulatory surgical centers, pharmacies enrolled as durable medical
equipment (DME) suppliers. When the GLOBE Model reduced beneficiary
coinsurance applies to units of GLOBE Model drugs furnished to Medicare
Part B FFS beneficiaries who are included in the GLOBE Model
beneficiary cohort, the provider or supplier would reduce the amount of
coinsurance charged to the beneficiary and the portion of the Medicare
Part B allowed amount that would be payable by Medicare Part B would be
adjusted upwards. For example, if the Medicare Part B allowed amount
under the GLOBE Model is $100 and the GLOBE Model beneficiary
coinsurance percentage is reduced to 10 percent (instead of the usual
20 percent), the Medicare Part B program payment to the provider or
supplier would be adjusted upward and would be $90 (instead of the
usual $80) and the beneficiary coinsurance financial responsibility
would be $10.
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\1\ As established in section 1876 of the Act (42 U.S.C.
1395mm).
\2\ As established in section 1833 of the Act (42 U.S.C. 1395l).
\3\ As proposed in section II.E. of this proposed rule,
manufacturers of GLOBE Model drugs would be model participants.
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c. Proposed Manufacturer Participation
The proposed GLOBE Model would require mandatory participation for
all manufacturers (as defined in 42 CFR 427.20) of Part B rebatable
drugs that are also GLOBE Model drugs (as identified in proposed 42 CFR
513.130 and discussed in section II.B. of this proposed rule). When
Part B rebatable drugs subject to the GLOBE Model are furnished to
Medicare FFS beneficiaries who are in the model cohort, manufacturers
that are GLOBE Model participants would pay GLOBE Model rebates to the
Medicare Part B account in the Federal Supplementary Medical Insurance
Trust Fund if the amount specified in section 1847A(i)(3)(A)(ii)(I) of
the Act for the GLOBE Model drug exceeds a benchmark amount that would
be based on available international drug pricing information (as
described in section II.G. of this proposed rule), which would not be
less than any rebates owed under the Medicare Part B Drug Inflation
Rebate Program. The total GLOBE Model rebate amount would only apply to
certain units of the GLOBE Model drugs (as identified in proposed 42
CFR 513.520) and would be solely determined by CMS and would not be
subject to appeal. Manufacturers would have the opportunity to submit a
Suggestion of Error if the manufacturer believes that there is a
mathematical error or errors to be corrected.
d. Model Purpose
The intent of the proposed GLOBE Model is to test an innovative
payment model that modifies the Part B inflation rebate amount for
GLOBE Model drugs using international drug pricing information to
identify a benchmark that reflects prices paid in a set of economically
comparable countries (as discussed in section II.G.1.e. of this
proposed rule), which CMS expects would reduce program expenditures for
Medicare Part B while preserving or enhancing beneficiaries' quality of
care. As described in section II.G.2. of this proposed rule, CMS
proposes that the model test would include two approaches for
identifying a benchmark amount for the modified rebate calculation--
using differently sourced international drug pricing information and
different calculations--and the model evaluation would assess the
impacts of testing these different approaches for identifying a
benchmark amount for the modified rebate calculation. One approach,
described in section II.G.2.a. of this proposed rule (Method I), would
use existing international drug pricing information to identify a
benchmark based on an estimation of the lowest international price
among the set of economically comparable countries, which may be tied
to pricing data that represent list, invoice, ex-manufacturer sales,
other prices, or a combination of such prices as available in
commercially-available data sources. The other approach, described in
section II.G.2.b. of this proposed rule (Method II), would use
voluntary manufacturer-submitted international drug net pricing data to
estimate a benchmark based on an average international price among the
set of economically comparable countries, which would reflect net
prices realized by a manufacturer.
In this proposed rule, we propose to test the GLOBE Model in a
manner that captures all applicable billing units for all separately
payable Medicare Part B FFS claims for GLOBE Model drugs that are
furnished to Medicare Part B FFS beneficiaries who are in the model
cohort (on the date of service) and that are paid under the GLOBE Model
for dates of service during a performance year and for which the GLOBE
Model beneficiary coinsurance and adjusted payments to providers and
suppliers could apply. For purposes of calculating the total GLOBE
Model rebate amount, applicable billing units would be identified by
CMS several months after the end of a calendar quarter (as described in
section II.G. of this proposed rule) and additional time is necessary
for calculations of rebate amounts and creating invoices. This means
that GLOBE Model test processes for claims processing, data collection,
invoicing, payment of GLOBE Model rebates, and reconciliation would
occur concurrently with and continue after the end of a performance
year and subsequent years after the last performance year.
e. Proposed Model Performance Period
The proposed GLOBE Model would have a 7-year test period that
includes 5 performance years, beginning October 1, 2026, and ending
September 30, 2031, during which the GLOBE Model beneficiary
coinsurance and adjusted payments to providers and suppliers could
apply and monitoring activities would occur, and 7 payment years,
beginning October 1, 2026, and ending September 30, 2033, during which
CMS would calculate, invoice, collect, and reconcile the GLOBE Model
rebates for a performance year. The model evaluation would encompass
the 7-year test period.
f. Proposed Model Waivers
We believe it would be necessary to waive certain requirements of
title XVIII of the Act and related program requirements codified in
regulations solely for purposes of carrying out the testing of the
GLOBE Model under section 1115A(b) of the Act. Specifically, as further
described in section II.O. of this proposed rule, we propose to waive
provisions in section 1847A(i), 1833(a), and 1833(t) of the Act to the
extent necessary to permit testing of an alternative rebate calculation
for certain units of GLOBE Model drugs and collect GLOBE Model rebate
amounts. We propose to issue waivers using the waiver authority under
section 1115A(d)(1) of the Act. Each of the proposed waivers is
discussed in detail in section II.O. of this proposed rule.

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We propose to codify the requirements of the GLOBE Model at 42 CFR
part 513. We propose at Sec. 513.800 that should any provision of the
proposed part 513 be held invalid or unenforceable by its terms, or as
applied to any person or circumstance, such provisions would be
severable from the remainder of part 513 and the invalidity or
unenforceability would not affect the remainder of the provisions of
part 513. For example, should the proposed alternate rebate calculation
payment methodology in this proposed rule be deemed invalid or
unenforceable, the underlying obligation under current statute will
continue. We seek comment on our proposed severability policies.
3. Summary of Costs and Benefits
In section IV. of this proposed rule, we set forth a detailed
analysis of the regulatory and Federalism impacts that the proposed
GLOBE Model would have on affected entities and beneficiaries. As
detailed in section II.A. of this proposed rule, this proposed rule
would establish a 7-year GLOBE Model alternative payment test for
certain separately payable Medicare Part B rebatable drugs furnished in
the outpatient setting to Medicare FFS beneficiaries in the model
cohort and that are paid under the GLOBE Model. Tables 13, 14, and 15
in section IV.D. of this proposed rule display the estimated overall
impact of the proposed GLOBE Model on the Medicare and Medicaid
programs.
We estimate that the GLOBE Model would result in overall savings of
$11.9 billion in Medicare Part B net spending during the 7-year model,
inclusive of $8.4 billion in Medicare Part B FFS, 7.5 billion in
Medicare Advantage (MA) savings, and $4 billion in premium offset
impacts. In this estimate, we assume manufacturer behavioral changes
and beneficiary utilization changes, as described in section IV. of
this proposed rule. We estimate savings for the MA program of $7.5
billion due to the way CMS calculates MA rates using Medicare FFS
claims, which would include claims paid under the GLOBE Model beginning
with rate setting for 2028, and savings for the Medicaid program of
around $1.0 billion, of which roughly $0.7 billion would be federal
savings and roughly $0.3 billion would be state savings.\4\ When
annualized over the 7-year period, we estimate that the GLOBE Model
would result in overall cost savings in Medicare Part B FFS net
spending of approximately $2.3 billion at both the 3 and 7 percent
rates of discount.
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\4\ Note: Totals do not add up due to rounding. See section IV.
of this proposed rule for the Regulatory Impact Analysis.
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B. Background

A 2024 report from the Office of the Assistant Secretary for
Planning and Evaluation (ASPE) revealed that U.S. prices for U.S.
originator drugs were 422 percent higher than other countries.\5\ \6\ A
number of studies have also demonstrated observable differences in
pricing dynamics of single source \7\ versus multi-source,\8\ where
multi-source drugs and biological products typically have higher price
concessions and manufacturer discounts than single source drugs and
sole source \9\ \10\ \11\ biologics.
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\5\ This study reports unadjusted ratios, meaning they have not
been adjusted to account for GDP per capita. Available at: <a href="https://aspe.hhs.gov/sites/default/files/documents/f96a072f8f82f3ba546abd52bfcaeb57/aspe-cover-idr-pricing-availability.pdf">https://aspe.hhs.gov/sites/default/files/documents/f96a072f8f82f3ba546abd52bfcaeb57/aspe-cover-idr-pricing-availability.pdf</a>.
\6\ U.S. originator drugs are the original biological products
and drugs developed and licensed or approved via section 351(a) of
the Public Health Services Act or submitted under section 505(b) and
approved under section 505(c) of the Federal Food, Drug, and
Cosmetic Act (FD&C Act). U.S. originator drugs are also sometimes
called brand name drugs, reference listed drug, or reference
products.
\7\ Single source drugs and biological products in this sentence
refers to drugs without generic competition (drugs approved under
section 505(j) of the FD&C Act) and biological products without
biosimilar competition (biological products licensed under 351(k) of
the Public Health Service Act).
\8\ Multi-source refers to drugs and biological product with
generic (drug approved under section 505(j) of the FD&C Act) or
biosimilar competition (biological products licensed under 351(k) of
the Public Health Service Act).
\9\ Jofre-Bonet, Mireia, et al. ``The Price Effects of
Biosimilars in the United States.'' Value in health: the journal of
the International Society for Pharmacoeconomics and Outcomes
Research vol. 28,5 (2025): 742-750. doi: 10.1016/j.jval.2025.02.008.
\10\ Changes in the List Prices of Prescription Drugs, 2017 to
2023, Office of the Assistant Secretary for Planning and Evaluation
(October 6, 2023). Available at: <a href="https://aspe.hhs.gov/sites/default/files/documents/e24f630a33f0a0585337c65745904487/aspe-drug-price-tracking-brief.pdf">https://aspe.hhs.gov/sites/default/files/documents/e24f630a33f0a0585337c65745904487/aspe-drug-price-tracking-brief.pdf</a>.
\11\ San-Juan-Rodriguez, A, et al. Trends in List Prices, Net
Prices, and Discounts for Originator Biologics Facing Biosimilar
Competition. JAMA Netw Open. 2019;2(12): e1917379. doi:10.1001/
jamanetworkopen.2019.17379.
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Recent CMS analysis of claims data for 2024 shows that total
Medicare spending is at $70.71 billion, with more than two-thirds
($46.38 billion) of this spend being attributed to Medicare Part B
rebatable drugs. Research has shown Medicare Part B drug spending is
also concentrated among a small number of drugs. In 2021, the top 20
drugs accounted for over half of total Medicare Part B FFS drug
spending, with the top 10 representing 40 percent.\12\ Notably, all 20
drugs were biological products.
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\12\ Medicare Part B Drug Pricing, Office of the Assistant
Secretary for Planning and Evaluation (June 9, 2023).
Available at: <a href="https://aspe.hhs.gov/sites/default/files/documents/fb7f647e32d57ce4672320b61a0a1443/aspe-medicare-part-b-drug-pricing.pdf">https://aspe.hhs.gov/sites/default/files/documents/fb7f647e32d57ce4672320b61a0a1443/aspe-medicare-part-b-drug-pricing.pdf</a>.
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To discourage drug manufacturers from increasing drug prices faster
than the rate of inflation and to improve access to affordable
treatments for Medicare beneficiaries, the Inflation Reduction Act of
2022 created the Medicare Part B Drug Inflation Rebate Program. If drug
manufacturers raise prices for certain drugs faster than the rate of
inflation for a calendar quarter beginning with the first quarter of
2023, manufacturers must pay a rebate to the Medicare Part B account in
the Federal Supplementary Medical Insurance Trust Fund and Medicare
lowers beneficiary coinsurance amounts for applicable drugs
accordingly.
Medicare Part B FFS drug spending \13\ has grown by 85.8 percent
($18.7 billion) \14\ from 2014 to 2021 with the standard monthly
Medicare Part B premium for beneficiaries increasing by 41.5 percent
($104.90 \15\ to $148.50 \16\). Based on the increasing Medicare Part B
FFS and beneficiary drug spending, we propose to test a model that
reduces Medicare Part B FFS drug spending and beneficiary coinsurance
amounts using international drug pricing information as a benchmark to
test an alternative Part B inflation rebate amount calculation for
certain single source drugs and sole source biological products that
would reduce Medicare program expenditures while preserving or
enhancing quality of care.
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\13\ Measured by drug allowed charges.
\14\ Medicare Part B Drug Pricing, Office of the Assistant
Secretary for Planning and Evaluation (June 9, 2023).
Available at: <a href="https://aspe.hhs.gov/sites/default/files/documents/fb7f647e32d57ce4672320b61a0a1443/aspe-medicare-part-b-drug-pricing.pdf">https://aspe.hhs.gov/sites/default/files/documents/fb7f647e32d57ce4672320b61a0a1443/aspe-medicare-part-b-drug-pricing.pdf</a>.
\15\ CMS announces major savings for Medicare beneficiaries.
Available at: <a href="https://www.cms.gov/newsroom/press-releases/cms-announces-major-savings-medicare-beneficiaries">https://www.cms.gov/newsroom/press-releases/cms-announces-major-savings-medicare-beneficiaries</a>.
\16\ 2021 Medicare Parts A & B Premiums and Deductibles.
Available at: <a href="https://www.cms.gov/newsroom/fact-sheets/2021-medicare-parts-b-premiums-and-deductibles">https://www.cms.gov/newsroom/fact-sheets/2021-medicare-parts-b-premiums-and-deductibles</a>.
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The pace of growth in drug prices varies across disease categories.
A report by the Healthcare Distribution Alliance (HDA) Research
Foundation, showed that drugs classified in immunology, oncology,
rheumatology, endocrinology and ophthalmology are among the top 20
therapeutic classes based on spending or prescriptions volume in the
United States and that most of these categories have shown notable
growth

[[Page 60247]]

between 2023 and 2024.\17\ This trend is also observed in Medicare Part
B FFS drugs, where these five therapeutic classes represent at least
$24 billion in Medicare Part B FFS allowed charges in
2024.18 19 20
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\17\ HDA Research Foundation. HDA 96th Edition HDA Factbook. The
Facts, Figures, and Trends in Healthcare (2025-2026). Available at:
<a href="https://www.hda.org/publications/">https://www.hda.org/publications/</a>.
\18\ CMS. Medicare Utilization for Medicare Part B FFS.
Available at: <a href="https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-fee-for-service-parts-a-b/medicare-utilization-part-b">https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-fee-for-service-parts-a-b/medicare-utilization-part-b</a>.
\19\ Dickson, S.R., and James, K.E. Treatments Associated with
Manufacturer Payments to Ophthalmologists. JAMA Health Forum, 2023,
4 (9): e232951. doi:10.1001/jamahealthforum.2023.2951.
\20\ Desai S., Sekimitsu, S., Rossin, E.J., Zebardast, N. Trends
in Anti-Vascular Endothelial Growth Factor Original Medicare Part B
Claims in the United States, 2014-2019. Ophthalmic Epidemio, 2024,
31(5): 468-477. doi: 10.1080/09286586.2024.2310854.
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Increasingly high drug costs limit access to care and treatment
which in turn results in complications that can lead to worse health
outcomes and premature death. This results in increased medical
spending to treat patients' conditions and potentially avoidable
expenditures for all payers, including CMS.\21\ Results from recent
surveys revealed that many Americans, including Medicare beneficiaries,
face significant financial burden of care that results in skipping or
rationing medication due to cost.\22\ A survey conducted in June 2025
showed that one quarter of adults reported not filling their
prescription in 2024 because of cost; among those who had taken a
prescription, one in three stated they did not fill at least one
prescription because of the cost.\23\ Financial toxicity, or the
negative impact that the monetary burden of medical care can have on
patients' well-being, fiscal security, and overall health,\24\ can be
most pronounced among the elderly population and among patients where
the cost of treatment is high and with low income. One in four adults
taking prescriptions report difficulty affording their medication,
including 40 percent of those with household income of less than
$40,000 per year.\25\ A separate survey conducted concluded that about
4 in 10 older adults with Medicare reported problems accessing
healthcare because of its costs, and that 14 percent of Medicare
beneficiaries stated they skipped taking or sometimes did not even fill
their prescription because of the expense.\26\ Studies show that
Medicare patients with cancer and certain chronic conditions are more
likely to report cost-related medication non-adherence (that is, not
taking medications as prescribed or indicated by a physician due to
cost).27 28 29
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\21\ Nekui F., Galbraith A.A., Briesacher B.A., Zhang F.,
Soumerai S.B., Ross-Degnan D., Gurwitz J.H., Madden J.M. Cost-
related Medication Nonadherence and Its Risk Factors Among Medicare
Beneficiaries. Medical Care. 2021;59(1):13-21. <a href="https://doi.org/10.1097/MLR.0000000000001458">https://doi.org/10.1097/MLR.0000000000001458</a>.
\22\ Arnold Ventures, Commonwealth Fund, and PerryUndem. Drug
Costs and Their Impact on Care. February 10, 2025. Available at:
<a href="https://www.arnoldventures.org/stories/drug-costs-and-their-impact-on-care">https://www.arnoldventures.org/stories/drug-costs-and-their-impact-on-care</a>.
\23\ Center for Opinion Research and I-MAK Survey. Understanding
Americans' Top Concerns on Drug Pricing: Corporate Greed and Patent
Reform. Available at: <a href="https://www.i-mak.org/survey/">https://www.i-mak.org/survey/</a>.
\24\ Ehsan AN, Wu CA, Minasian A, et al. Financial Toxicity
Among Patients With Breast Cancer Worldwide: A Systematic Review and
Meta-analysis. JAMA Netw Open. 2023;6(2):e2255388. doi:10.1001/
jamanetworkopen.2022.55388.
\25\ Sparks, G., Kirzinger, A., Montero, A., et al. Public
Opinion on Prescription Drugs and Their Prices. KFF Poll Finding,
October 4, 2024. Available at: <a href="https://www.kff.org/health-costs/public-opinion-on-prescription-drugs-and-their-prices/">https://www.kff.org/health-costs/public-opinion-on-prescription-drugs-and-their-prices/</a>.
\26\ The Commonwealth Fund. Medicare's Affordability Problem: A
Look at the Cost Burdens Faced by Older Enrollees. Issue Briefs,
September 19, 2023. Available at: <a href="https://www.commonwealthfund.org/publications/issue-briefs/2023/sep/medicare-affordability-problem-cost-burdens-biennial">https://www.commonwealthfund.org/publications/issue-briefs/2023/sep/medicare-affordability-problem-cost-burdens-biennial</a>.
\27\ Zhang, J.X, and Meltzer, D.O. Prevalence and Persistence of
Cost-related Medication Non-Adherence Before and During the COVID-19
Pandemic Among Medicare Patients at High Risk of Hospitalization.
PLoS One, 2023, 18(8): e0289608. doi: 10.1371/journal.pone.0289608.
\28\ Zhang, J.X., and Meltzer, D.O. Longitudinal Progression of
Cost-related Medication Non-Adherence Among Medicare Patients with
Diabetes at High Risk of Hospitalization: The Role of Dual
Eligibility. PLoS One, 2025, 20(8): e0329031. doi: 10.1371/
journal.pone.0329031.
\29\ Cutler, R.L., Fernandez-Llimos, F., Frommer, M., Benrimoj,
C, et al. Economic Impact of Medication Non-adherence by Disease
Groups: A Systematic Review. BMJ Open, 2018, 8(1): e016982. DOI:
10.1136/bmjopen-2017-016982.
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Studies have also shown that the impacts on access to care due to
costs can be significant. A literature review concluded that annual
costs of medication non-adherence are up to $290 billion, that 10
percent of hospitalizations in adults are attributed to medication non-
adherence, with the typical non-adherent patient requiring three extra
visits per year leading to $2,000 in increased treatment costs per
year.\30\ This paper also found that cancer patients experience more
than double the cost variation compared to other disease groups.
Further, a 2020 report estimated that up to 112,000 seniors could die
prematurely because drug prices are so high that they cannot afford
their medication, and that Medicare could be spending $17.7 billion
annually on avoidable medical spending because of complications
associated with cost-related medication non-adherence.\31\
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\30\ Cutler, R.L., Fernandez-Llimos, F., Frommer, M., Benrimoj,
C, et al. Economic Impact of Medication Non-adherence by Disease
Groups: A Systematic Review. BMJ Open, 2018, 8(1): e016982. DOI:
10.1136/bmjopen-2017-016982.
\31\ Xcenda. Modeling the Population Outcomes of Cost-Related
Non-adherence: Model Report. September 21, 2020. Available at:
<a href="https://global-uploads.webflow.com/5e5972d438ab930a0612707f/5fa9bf4419f4da03a7daf190_WHPC-Xcenda_NonAdherence%20Population%20Model_Report_22Oct2020r.pdf">https://global-uploads.webflow.com/5e5972d438ab930a0612707f/5fa9bf4419f4da03a7daf190_WHPC-Xcenda_NonAdherence%20Population%20Model_Report_22Oct2020r.pdf</a>.
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1. Medicare Part B Drug Benefit
a. Medicare Payment for Separately Payable Under Medicare Part B Drugs
The majority of drugs covered under Medicare Part B generally fall
into three categories: drugs furnished incident to a physicians'
service which are not usually self-administered by the patient (section
1861(s)(2)(A) and (B) of the Act), drugs administered via a covered
item of durable medical equipment (DME) (section 1861(s)(6) of the
Act), and drugs specified by statute (for example, vaccines (section
1861(s)(10)(A) and (B) of the Act), oral cancer drugs (section
1861(s)(2)(Q) of the Act), oral antiemetics (section 1861(s)(2)(T) of
the Act), and immunosuppressive therapy (section 1861(s)(2)(J) of the
Act)).
Many drugs payable under Medicare Part B are administered via
injection or infusion in a physician office, a Hospital Outpatient
Department (HOPD), and certain other outpatient settings, such as
ambulatory surgery centers (ASCs), and, when Medicare allows separate
payment for these drugs, the payment limit is typically based on the
methodology described in section 1847A of the Act. Payment for these
drugs does not include payment for administration; payment for drug
administration services is made in accordance with the applicable
payment policy for the setting in which the drug was furnished, such as
the Physician Fee Schedule (PFS), the Hospital Outpatient Prospective
Payment System (OPPS), or the Ambulatory Surgical Center Payment
System. Medicare Part B also allows separate payment for drugs in less
common situations such as osteoporosis drugs furnished by a home health
agency, and when a beneficiary does not have benefits available under
the Medicare Part A program.
The payment methodology described in section 1847A of the Act is
generally based on the volume-weighted average sales price (ASP) for
all National Drug Codes (NDCs) that are assigned to a Healthcare Common
Procedure Coding System (HCPCS) Level II code for the drug plus an add-
on percentage. For most HCPCS Level II codes, the add-on percentage is
6 percent except during the initial sales period when ASP is not yet
available, for certain qualifying

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biosimilar biological products, and in certain circumstances specified
within section 1847A(d)(3)(C) of the Act. When ASP is not yet available
and the wholesale acquisition cost (WAC) is used, the add-on is 3
percent. Section 11403 of the Inflation Reduction Act of 2022 requires
a temporary, 5-year increase for qualifying biosimilar biological
products (as defined in section 1847A(b)(8)(iii) of the Act) that have
an ASP less than the ASP of the reference biological product. In these
cases, the add-on is 8 percent of the reference biological product's
ASP. Following the applicable five-year period (as described in section
1847A(b)(8)(ii) of the Act) for these qualifying biosimilar biological
products, the add-on percentage reverts back to 6 percent of the
reference biological product's ASP.
The volume-weighted ASP for a HCPCS Level II code is calculated by
CMS quarterly using manufacturer-submitted data on sales to all
purchasers (with limited exceptions as articulated in section
1847A(c)(2) of the Act,\32\ such as sales at nominal charge and sales
exempt from Medicaid best price) \33\ with manufacturer rebates,
discounts, and price concessions included in the ASP calculation (that
is, the sales price is net of these rebates, discounts, and price
concessions). The ASP-based payment limit that Medicare pays for a
separately payable Medicare Part B FFS drug claim does not vary based
on the exact price an individual provider or supplier pays to acquire
the drug. This payment methodology may create an incentive for the use
of more expensive drugs. Although the statute does not specifically
state what the add-on represents, as noted in the MedPAC report,\34\ it
may be needed to account for handling and overhead costs and additional
mark-up in U.S. distribution channels that are not captured in the
manufacturer-reported ASP.
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\32\ OMB Control Number 0938-0921, Centers for Medicare &
Medicaid Services.
\33\ Best price is defined in section 1927(c)(1)(C) of the Act.
\34\ MedPAC, June 2017, ``Medicare Part B Drug Payment Policy
Issues,'' accessed via <a href="https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/jun17_ch2.pdf">https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/jun17_ch2.pdf</a>.
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Currently, under Medicare Part B, beneficiary cost-sharing \35\ is
generally 20 percent of the Medicare-allowed amount. The term
``Medicare-allowed amount'' means the maximum amount that a provider or
supplier would be paid for a covered health care service or drug.
However, for items and services paid under the OPPS, beneficiaries are
only financially responsible for a copayment amount up to the amount of
the inpatient hospital deductible.\36\ Medicare pays for the remaining
portion of the Medicare allowed amount.\37\
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\35\ Not including the annual deductible.
\36\ Section 1833(t)(8)(C)(i) of the Act limits the amount of
beneficiary copayment that may be collected for a procedure
performed in a year to the amount of the inpatient hospital
deductible for that year. This limit is $1,676 in 2025.
\37\ Centers for Medicare & Medicaid Services. Outpatient
Services Payment for People with Medicare Part B, Revised May 2021.
Available at: <a href="https://www.medicare.gov/publications/02118-Part-B-Outpatient-Services-Payment.pdf">https://www.medicare.gov/publications/02118-Part-B-Outpatient-Services-Payment.pdf</a>.
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b. Medicare Part B Drug Inflation Rebate Program
Section 11101 of the Inflation Reduction Act of 2022 (IRA) (Pub. L.
117-169, enacted August 16, 2022) established requirements under which
drug manufacturers must pay Part B inflation rebate amounts if they
raise their prices for certain drugs payable under Medicare Part B
faster than the rate of inflation. Specifically, section 11101 of the
IRA amended section 1847A of the Act by adding new subsection (i) which
establishes a requirement for drug manufacturers to pay rebates into
the Medicare Part B account in the Federal Supplementary Medical
Insurance Trust Fund for Part B rebatable drugs for each calendar
quarter beginning on or after January 1, 2023, if the amount specified,
as determined under section 1847A(i)(3)(A)(ii) of the Act exceeds the
inflation-adjusted payment amount, which is calculated as set forth in
section 1847A(i)(3)(C) of the Act. The IRA also provides for an
adjustment to the beneficiary coinsurance amount in cases where the
price of a Part B rebatable drug increases faster than the rate of
inflation such that the beneficiary coinsurance is calculated based on
the lower inflation-adjusted payment amount instead of the applicable
payment amount, resulting in a coinsurance percentage that is equal to
20 percent of the inflation-adjusted payment amount as described in
section 1847A(i)(3)(C) of the Act for a calendar quarter. Section
1847A(i)(2) of the Act defines a ``Part B rebatable drug,'' in part, as
a single source drug or biological product (as defined in section
1847A(c)(6)(D) of the Act), including a biosimilar biological product
(as defined in section 1847A(c)(6)(H) of the Act), for which payment is
made under Medicare Part B. Certain product categories are excluded
from the definition of a Part B rebatable drug pursuant to 42 CFR
427.101(b). Currently excluded product categories include: (1)
qualifying biosimilar biological products; \38\ (2) products with
historically excepted grouped billing and payment codes; (3) products
billed under a ``not otherwise classified'' (NOC) code; (4)
radiopharmaceutical drugs and biological products; (5) skin
substitutes; (6) drugs with average total allowed charges under the
applicable threshold ; (7) certain vaccines and other products; \39\
and (8) generic drugs.\40\ The applicable threshold specified in
section 1847A(i)(2) of the Act was equal to $100 for applicable
calendar quarters in 2023. Thereafter, CMS calculates the applicable
threshold as equal to the unrounded applicable threshold calculated for
the prior calendar year increased by the percentage increase in the
consumer price index for all urban customers (CPI-U) for the 12-month
period ending with June of the previous year, rounded to the nearest
multiple of $10.\41\
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\38\ Qualifying biosimilar biological products are defined under
section 1847A(b)(8)(B)(iii) of the Act and, during the applicable 5-
year period, must have an ASP that is not more than the ASP of the
reference biological product for a calendar quarter to qualify for
an add-on amount equal to 8 percent of the payment amount calculated
under section 1847A(b)(4) of the Act for the reference biological
product.
\39\ This includes influenza, pneumococcal, hepatitis B, and
COVID-19 vaccines, and monoclonal antibodies used for treatment or
post-exposure prophylaxis of COVID-19.
\40\ Part B drugs submitted in an Abbreviated New Drug
Application (ANDA) and approved under section 505(j) of the FD&C
Act.
\41\ 42 CFR 427 Subpart B, Electronic Code of Federal
Regulations. <a href="https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-427">https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-427</a>. For applicable calendar quarters during 2023,
the applicable threshold was $100.
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For each calendar quarter beginning on or after January 1, 2023,
the manufacturer of a Part B rebatable drug is required, for such drug,
not later than 30 days after date of receipt (as defined in 42 CFR
427.505) of the Rebate Report from CMS, to pay a rebate into the
Medicare Part B account in the Federal Supplementary Medical Insurance
Trust Fund if the amount specified in section 1847A(i)(3)(A)(ii) of the
Act exceeds the inflation-adjusted payment amount (calculated as set
forth in section 1847A(i)(3)(C) of the Act) for an applicable calendar
quarter. With respect to invoicing manufacturers for the rebate amount
owed, under section 1847A(i)(1) of the Act, CMS must report rebate
amounts to each manufacturer of a Part B rebatable drug no later than 6
months after the end of each calendar quarter, except that for calendar
quarters beginning in 2023 and 2024, CMS had until September 30, 2025,
to invoice manufacturers for rebates. In the CY 2025 Physician Fee
Schedule (PFS) final

[[Page 60249]]

rule (89 FR 98228 through 98313) \42\ to implement section 11101 of the
IRA, CMS codified these requirements and established other policies at
42 CFR part 427. In the CY 2026 PFS final rule (90 FR 49733 through
49739),\43\ CMS adopted certain limited modifications to the policies
for the Medicare Prescription Drug Inflation Rebate Program set forth
in part 427 under title 42, chapter IV of the Code of Federal
Regulations (CFR) for Part B. For example, at 42 CFR 427.302(c)(5)
described how CMS identifies the payment amount benchmark quarter in
certain instances and the calculation for the Part B rebate amount in
such instances.
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\42\ ``Medicare and Medicaid Programs; CY 2025 Payment Policies
Under the Physician Fee Schedule and Other Changes to Part B Payment
and Coverage Policies; Medicare Shared Savings Program Requirements;
Medicare Prescription Drug Inflation Rebate Program; and Medicare
Overpayments,'' 89 FR 98228-98313 (December 9, 2024).
\43\ ``Medicare and Medicaid Programs; CY 2026 Payment Policies
Under the Physician Fee Schedule and Other Changes to Part B Payment
and Coverage Policies; Medicare Shared Savings Program Requirements;
and Medicare Prescription Drug Inflation Rebate Program,'' 90 FR
49266-50481 (November 5, 2025).
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c. Medicare Drug Price Negotiation Program
Sections 11001 and 11002 of IRA establish the Medicare Drug Price
Negotiation Program (hereinafter the ``Negotiation Program'') to
negotiate maximum fair prices (MFPs) \44\ for certain high expenditure,
single source drugs and biological products. The requirements for this
program are described in sections 1191 through 1198 of the Act, as
added by sections 11001 and 11002 of the IRA. Additionally, on July 4,
2025, the Working Families Tax Cuts Act (Pub. L. 119-21) was signed
into law. Section 71203 of the Working Families Tax Cuts Act expanded
protections for certain orphan drugs in section 1192(e) of the Act.
Drugs payable under Medicare Part B are eligible to be selected for
negotiation for initial price applicability year 2028.
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\44\ In accordance with section 1191(c)(3) of the Act, MFP
means, with respect to a year during a price applicability period
and with respect to a selected drug (as defined in section 1192(c)
of the Act) with respect to such period, the price negotiated
pursuant to section 1194 of the Act, and updated pursuant to section
1195(b) of the Act, as applicable, for such drug and year.
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2. Medicare and Beneficiary Spending
a. Historical Trending
An Issue Brief from ASPE evaluated Medicare Part B total spending
and fee-for-service (FFS) drug allowed charges from 2014 to 2021.\45\
Medicare Part B total spending increased from $265.9 billion in 2014 to
$405.5 billion in 2021, representing an increase of $139.6 billion.
Medicare Part B FFS drug allowed charges increased from $21.8 billion
in 2014 to $40.5 billion in 2021, an increase of $16.4 billion. While
total spending and drug allowed charges have both increased
significantly, Medicare Part B FFS drug allowed charges have seen
higher spending growth. In 2014, Medicare Part B FFS drug allowed
charges represented about 12.1 percent of Medicare Part B FFS spending
but grew to approximately 20 percent in 2021.\46\
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\45\ Medicare Part B Drug Pricing, Office of the Assistant
Secretary for Planning and Evaluation (June 9, 2023). Available at:
<a href="https://aspe.hhs.gov/sites/default/files/documents/fb7f647e32d57ce4672320b61a0a1443/aspe-medicare-part-b-drug-pricing.pdf">https://aspe.hhs.gov/sites/default/files/documents/fb7f647e32d57ce4672320b61a0a1443/aspe-medicare-part-b-drug-pricing.pdf</a>.
\46\ Medicare Part B Drug Pricing, Office of the Assistant
Secretary for Planning and Evaluation (June 9, 2023). Exhibit 3:
Part B FFS drugs' share of Part B FFS spending, 2014 to 2021 from
<a href="https://aspe.hhs.gov/sites/default/files/documents/fb7f647e32d57ce4672320b61a0a1443/aspe-medicare-part-b-drug-pricing.pdf">https://aspe.hhs.gov/sites/default/files/documents/fb7f647e32d57ce4672320b61a0a1443/aspe-medicare-part-b-drug-pricing.pdf</a>.
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The same report also found that between 2014 and 2021, Medicare
Part B FFS drug spending per enrollee grew on ``average at 9.2 percent
annually'' more than three times the rate of Medicare Part D (2.6
percent) and nearly four times as high as the rate of per capita annual
prescription drug spending (2.4 percent). Medicare Part B FFS drug
spending was also concentrated among a few drugs where the top 20 drugs
accounted for greater than 50 percent of drug spending in 2021 and the
top 10 drugs accounted for 40 percent of drug spending in the same
period. When comparing biological products to non-biologicals,
biological products accounted for 89 percent of the Medicare Part B FFS
drug spending growth between 2008 and 2021 and 79 percent of Medicare
Part B FFS drug spending in 2021. When reviewing Medicare Part B FFS
spending on multi-source drugs and biological products in 2021, generic
drugs \47\ accounted for only 2 percent of spending and only 3 of the
top 20 drugs by spend \48\ (all biological products) were multi-source.
Therefore, the majority of Medicare Part B FFS drug expenditures in
2021 were attributable to single source drugs and sole source
biological products.
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\47\ Generic drugs are submitted in an Abbreviated New Drug
Application (ANDA) and approved under section 505(j) of the FD&C
Act. For Medicare Part B FFS, generic drugs share the same HCPCS
Level II code as the originator drug.
\48\ The three multi-source biological products in the top 20
Part B drugs by total Medicare Payments were Rituxan (rituximab),
Remicade (infliximab), and Neulasta (pegfilgrastim).
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An ASPE report evaluating Medicare Part B FFS spending from 2018 to
2023 estimated biosimilar biological product competition (multi-source
biological products) reduced spending by $12.9 billion, a 31 percent
decrease compared to projected spending if only the reference
biological product existed.\49\ Savings after biosimilar biological
product competition entered the market were driven by a mix of
beneficiary switches to a lower-priced biosimilar biological product
and price reductions in the reference biological products.
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\49\ Medicare Part B Enrollee Use and Spending on Biosimilars,
2018-2023, Office of the Assistant Secretary for Planning and
Evaluation (January 2025). Available at: <a href="https://aspe.hhs.gov/sites/default/files/documents/be065dbbd1f866c65cf627995bd2ea56/biosimilars-medicare-part-b.pdf">https://aspe.hhs.gov/sites/default/files/documents/be065dbbd1f866c65cf627995bd2ea56/biosimilars-medicare-part-b.pdf</a>.
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It is also important to note that the number of enrollees for
Medicare Part B FFS has decreased (8.8 percent) between 2016 to 2021
(34 million to 31 million),\50\ while Medicare Part B FFS drug allowed
charges has increased (47 percent) for the same time period.\51\
Therefore, this increase in Medicare Part B FFS spending for drugs
during this period is likely explained more by increases in the prices
of drugs, introduction of new drugs,\52\ changes in utilization of
drugs, and changes in the mix of drugs for those beneficiaries who
received them more so than the changes in Medicare Part B
enrollment.\53\
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\50\ Medicare Part B FFS enrollment derived from Table V.B3 of
the 2023 Annual Report of the Board of Trustees of the Federal
Hospital Insurance and Federal Supplementary Medical Trust Funds.
Available at: <a href="https://www.cms.gov/oact/tr/2023">https://www.cms.gov/oact/tr/2023</a>.
\51\ Medicare Part B Drug Pricing, Office of the Assistant
Secretary for Planning and Evaluation (June 9, 2023). Exhibit 3:
Part B FFS drugs' share of Part B FFS spending, 2014 to 2021.
Available at: <a href="https://aspe.hhs.gov/sites/default/files/documents/fb7f647e32d57ce4672320b61a0a1443/aspe-medicare-part-b-drug-pricing.pdf">https://aspe.hhs.gov/sites/default/files/documents/fb7f647e32d57ce4672320b61a0a1443/aspe-medicare-part-b-drug-pricing.pdf</a>.
\52\ Hyland MF, Sachs RM, Robillard L., Hayford TB, Bai G.
Spending on and Use of Clinician-Administered Drugs in Medicare.
JAMA Health Forum. September 8, 2023. Available at: <a href="https://jamanetwork.com/journals/jama-health-forum/fullarticle/2809283">https://jamanetwork.com/journals/jama-health-forum/fullarticle/2809283</a>.
\53\ The average annual growth in number of Medicare Part B FFS
beneficiaries was less than 2.5 percent from 2014 to 2021, so the
change in Medicare Part B beneficiaries does not fully account for
the average annual growth in Medicare Part B drug spending (9.2
percent annual growth). Instead, the increase during this period is
more fully explained by increases in the prices of drugs,
introduction of new drugs, changes in drug utilization, and changes
in the mix of drugs than by increases in Medicare enrollment.
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b. Impact on Premiums, Beneficiaries, and Taxpayers
Medicare Part B is funded by premiums paid by beneficiaries and
general federal revenues. Total Medicare Part B Premium amounts
increased from $74 billion in 2016 to $113 billion in 2021,
representing an increase of $39

[[Page 60250]]

billion.\54\ While this increase in total Medicare Part B premiums is
partially attributable to the increase in beneficiaries from 52 million
to 58 million,\55\ there was also a rise in premium amount per enrollee
from $1,423 in 2016 to $1,942 in 2021. A research study found the 2024
Medicare Part B premiums accounted for more than 10 percent of annual
per capita income for 12 percent of Medicare Part B beneficiaries--
approximately 7.4 million of the 61 million Medicare Part B
beneficiaries.\56\ The rise in premiums is partly due to projected
costs for new drugs, price changes for health care services, new
technologies, and assumed utilization increases.57 58 59
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\54\ CMS Program Statistics--Medicare Premiums, Centers for
Medicare & Medicaid Services. Medicare Part B Premiums are from
Table, MDCR Premiums 4. Available at: <a href="https://data.cms.gov/summary-statistics-on-use-and-payments/medicare-premium-reports/cms-program-statistics-medicare-premiums">https://data.cms.gov/summary-statistics-on-use-and-payments/medicare-premium-reports/cms-program-statistics-medicare-premiums</a>.
\55\ These enrollment numbers include total Medicare Part B
beneficiaries in Medicare Part B FFS, Medicare Advantage plans,
section 1876 cost plans, and section 1833 healthcare prepayment
plans. Medicare Part FFS enrollment for 2016 and 2021 were 34
million and 31 million, respectively.
\56\ Cottrill A, Cubanski J, Neuman T, Smith K. Seven Million
People with Medicare Spend More Than 10% of Income on Part B
Premiums--The Reconciliation Bill Could Drive the Number Higher.
Kaiser Family Foundation (June 23, 2025). Available at: <a href="https://www.kff.org/medicare/issue-brief/seven-million-people-with-medicare-spend-more-than-10-of-income-on-part-b-premiums-the-reconciliation-bill-could-drive-the-number-higher/">https://www.kff.org/medicare/issue-brief/seven-million-people-with-medicare-spend-more-than-10-of-income-on-part-b-premiums-the-reconciliation-bill-could-drive-the-number-higher/</a>.
\57\ 2025 Medicare Parts A & B Premiums and Deductibles, Centers
for Medicare & Medicaid Services (November 8, 2024). Available at:
<a href="https://www.cms.gov/newsroom/fact-sheets/2025-medicare-parts-b-premiums-and-deductibles">https://www.cms.gov/newsroom/fact-sheets/2025-medicare-parts-b-premiums-and-deductibles</a>.
\58\ Neuman T, Cubanski J, Freed M. Monthly Part B Premiums and
Annual Percentage Increases. Kaiser Family Foundation (January 12,
2022). Available at: <a href="https://www.kff.org/medicare/slide/monthly-part-b-premiums-and-annual-percentage-increases/">https://www.kff.org/medicare/slide/monthly-part-b-premiums-and-annual-percentage-increases/</a>.
\59\ Congressional Research Service. Medicare: Part B Premiums.
CRS Report R40082. Washington, DC: Library of Congress, 2021.
Available at: <a href="https://www.congress.gov/crs_external_products/R/PDF/R40082/R40082.48.pdf">https://www.congress.gov/crs_external_products/R/PDF/R40082/R40082.48.pdf</a>.
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In addition to a monthly premium, Medicare Part B FFS beneficiaries
typically need to cover 20 percent of the cost of a Medicare Part B
drug once their Medicare Part B deductible is met. Medicare Part B FFS
does not have an out-of-pocket maximum, whereas other forms of coverage
such as MA plans and Medigap policies may have a maximum. While the IRA
has reduced beneficiary coinsurance for certain Medicare Part B drugs
whose prices have risen faster than inflation, beneficiaries may
continue to experience significant cost sharing as overall Medicare
Part B FFS spending has increased. As previously discussed, this
increase is likely driven by high overall prices and the introduction
of new drugs.60 61
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\60\ Hyland MF, et al. Spending on and Use of Clinician-
Administered Drugs in Medicare. JAMA Health Forum.
2023;4(9):e232941. doi:10.1001/jamahealthforum.2023.2941.
\61\ Changes in the List Prices of Prescription Drugs, 2017 to
2023, Office of the Assistant Secretary for Planning and Evaluation
(October 6, 2023). Available at: <a href="https://aspe.hhs.gov/sites/default/files/documents/e24f630a33f0a0585337c65745904487/aspe-drug-price-tracking-brief.pdf">https://aspe.hhs.gov/sites/default/files/documents/e24f630a33f0a0585337c65745904487/aspe-drug-price-tracking-brief.pdf</a>.
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Further, as discussed earlier in this section, increasing high drug
costs limit access to care and treatment which in turn results in
complications that can lead to worse health outcomes and increased
medical spending. For example, though not specific to Medicare Part B,
the national healthcare expenditure (NHE) out-of-pocket (OOP) spending
increased by 25.5 percent ($102.7 billion) between 2019 to 2023.\62\
High OOP costs have been shown to reduce medication adherence. A study
on specialty drugs found that 30 percent of new cancer drug
prescriptions went unfilled among patients without low-income
subsidies, while another showed that 7 percent of adults 65 and older
skipped or did not take their medications as prescribed because of
cost.63 64 Research has also found multiple indications of
worse health status were associated with a higher likelihood of cost-
related nonadherence to medications.\65\
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\62\ The 25.5 percent and $102.7 billion was calculated using
NHE Table 3: National Health Expenditures, by Source of Funds for
out of pockets costs for years 2019 and 2023. Available at: <a href="https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data/nhe-fact-sheet">https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data/nhe-fact-sheet</a>.
\63\ Dusetzina SB, Huskamp HA, Rothman RL, Pinheiro LC, Roberts
AW, Shah ND, Walunas TL, Wood WA, Zuckerman AD, Zullig LL, Keating
NL. Many Medicare Beneficiaries Do Not Fill High-Price Specialty
Drug Prescriptions. Health Affairs (December 2021). <a href="https://doi.org/10.1377/hlthaff.2021.01742">https://doi.org/10.1377/hlthaff.2021.01742</a>.
\64\ Anderer S. High Drug Costs Influence Nonadherence to
Medications Among Older Adults. JAMA. Published online October 4,
2024; 332(16):1323. <a href="https://doi.org/10.1001/jama.2024.19690">https://doi.org/10.1001/jama.2024.19690</a>.
\65\ Nekui F, Galbraith AA, Briesacher BA, Zhang F, Soumerai SB,
Ross-Degnan D, Gurwitz JH, Madden JM. Cost-related Medication
Nonadherence and Its Risk Factors Among Medicare Beneficiaries.
Medical Care. 2021;59(1):13-21. <a href="https://doi.org/10.1097/MLR.0000000000001458">https://doi.org/10.1097/MLR.0000000000001458</a>.
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The second source for Medicare Part B funding comes from general
federal revenues, which taxpayers primarily finance. General revenues
fund approximately 75 percent of Medicare Part B expenditures, with
beneficiary premiums accounting for the remaining 25 percent of
projected expenditures.\66\ Historical trend analysis on Medicare Part
B spending has shown an increase in annual federal revenue contribution
from $235.6 billion in 2016 to $386.0 billion in 2024, illustrating the
growth in general federal revenues in Medicare Part B financing.\67\
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\66\ U.S. Government Accountability Office. Federal Trust Funds
and Other Dedicated Funds: Fiscal Sustainability Is a Growing
Concern for Some Key Funds. GAO-20-156. Washington, DC: GAO, January
2020. Available at: <a href="https://www.gao.gov/assets/gao-20-156.pdf">https://www.gao.gov/assets/gao-20-156.pdf</a>.
\67\ 2025 Annual Report of the Boards of Trustees of the Federal
Hospital Insurance and Federal Supplementary Medical Insurance Trust
Funds. Centers for Medicare & Medicaid Services, Office of the
Actuary. June 2025. Available at: <a href="https://www.cms.gov/oact/tr/2025">https://www.cms.gov/oact/tr/2025</a>.
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c. Relative High Price of Medicare Part B Drugs
Research from ASPE and RAND provides comparative data on U.S.
prescription drug prices relative to 32 other Organisation for Economic
Co-operation and Development (OECD) countries.\68\ These studies
examine pricing patterns of prescription drugs and present findings on
how U.S. prescription drug costs compare to international benchmarks.
OECD countries are generally developed, high-income nations, making
them suitable comparators for evaluating drug prices.
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\68\ The 32 countries compared to were Australia, Austria,
Belgium, Canada, Chile, Czech Republic, Estonia, Finland, France,
Germany, Greece, Hungary, Ireland, Italy, Japan, Latvia, Lithuania,
Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland,
Portugal, Slovakia, Slovenia, South Korea, Spain, Sweden,
Switzerland, Turkey, and United Kingdom.
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ASPE funded research published in July 2022 indicated that U.S.
prescription drugs prices exceeded those of non-U.S. OECD countries
combined by 256 percent \69\ using 2018 data.\70\ In 2024, the study
was updated with pricing information from 2022 and showed an even
larger gap of 278 percent compared to non-U.S. OECD countries
combined.\71\ When comparing the U.S. against individual G7
countries,\72\ the price differential ranged from 229 percent higher
than Canada to 347 percent higher than Japan.
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\69\ Authors calculated price indexes using U.S. volume weights
to account for differences in volume and mix of drugs across
countries.
\70\ Ratios from this study are not adjusted for differences in
purchasing power-adjusted GDP per capita. See Andrew W. Mulcahy,
Christopher M. Whaley, Mahlet Gizaw, Daniel Schwam, Nathaniel
Edenfield, and Alejandro Uriel Becerra-Ornelas, International
Prescription Drug Price Comparisons: Current Empirical Estimates and
Comparisons with Previous Studies, RAND Corporation, RR-2956-ASPEC,
2021. Available at: <a href="https://www.rand.org/pubs/research_reports/RR2956.html">https://www.rand.org/pubs/research_reports/RR2956.html</a>.
\71\ Ratios from this study are not adjusted for differences in
purchasing power-adjusted GDP per capita. Available at: <a href="https://pmc.ncbi.nlm.nih.gov/articles/PMC11147645/">https://pmc.ncbi.nlm.nih.gov/articles/PMC11147645/</a>.
\72\ The G7 countries are Canada, France, Germany, Italy, Japan
the United Kingdom, and the U.S.
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This analysis reveals even larger pricing differences when
examining

[[Page 60251]]

originator drugs separately. U.S. originator drug prices are 422
percent higher than non-U.S. OECD countries combined. Among individual
G7 countries, the difference between U.S. and the international prices
ranged from 324 percent higher than Canada to 464 percent higher than
Japan. These data points indicate there are significant cost
differences within the global pharmaceutical market for U.S. originator
drugs and international originator drugs.\73\
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\73\ An international originator is an original biological
product or drug approved or licensed in a non-U.S. country under
that non U.S. country's regulatory framework under a pathway similar
to 351(k) of the PHS Act or approved under a pathway similar to
section 505(c) of the FD&A Act in the U.S. Individual countries
differ in the regulatory processes and standards governing approval
of drugs and biologicals. Use of international drug pricing
information in the proposed GLOBE Model should not be interpreted to
connote FDA approval or to otherwise describe any scientific or
regulatory relationship between U.S.-approved and non-U.S.-approved
products.
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In contrast, the unbranded generic drug market, not including
biologics such as biosimilar biological products, shows different
pricing dynamics. The same study showed U.S. unbranded generic pricing
was 67 percent of the average price among non-U.S. OECD countries. The
comparison of U.S. prices to individual G7 countries for unbranded
generic drugs shows pricing that is 39 percent lower than Canada and 46
percent lower than Germany. This indicates that pricing patterns vary
significantly between originator drugs and generic drugs in the U.S.
market.
A separate ASPE analysis examined Medicare Part B drugs. The study
evaluated drug prices for the top 50 Part B drugs against non-U.S. OECD
countries using 2018 drug spending data.\74\ Although this report
included only 50 drugs, those drugs accounted for 80 percent of the
total 2018 Medicare Part B drug spending. The analysis found that U.S.
prices were 211 percent higher than other OECD countries on
average.\75\ In G7 country comparisons, the difference between the U.S.
and individual countries for U.S. originators and international
originators drugs ranged from 148 percent higher than Japan to 225
percent higher than France.\76\
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\74\ U.S. Department of Health and Human Services, Office of the
Assistant Secretary for Planning and Evaluation. (2020). Medicare
FFS Part B and International Drug Prices: A Comparison of the Top 50
Drugs. Available at:
<a href="https://aspe.hhs.gov/sites/default/files/migrated_legacy_files//197401/Part-B%20Drugs-International-Issue-Brief.pdf">https://aspe.hhs.gov/sites/default/files/migrated_legacy_files//197401/Part-B%20Drugs-International-Issue-Brief.pdf</a>.
\75\ These unadjusted price ratios of US to non-US OECD
countries are taken from Table 4, Overall Ratios Spending for
Matched Part B Drugs by Country, of this report: <a href="https://aspe.hhs.gov/sites/default/files/migrated_legacy_files/197401/Part-B%20Drugs-International-Issue-Brief.pdf">https://aspe.hhs.gov/sites/default/files/migrated_legacy_files/197401/Part-B%20Drugs-International-Issue-Brief.pdf</a>. The reported price ratio
were converted to a percentage. The report also adjusts for
purchasing power-adjusted GDP per capita. After adjusting for
purchasing power-adjusted GDP per capita, the adjusted US to non-US
OECD country price ratio decreases to 1.53 (153 percent). This price
ratio is also volume weighted.
\76\ These unadjusted price ratios of US to non-US OECD
countries are taken from Table 4, Overall Ratios Spending for
Matched Part B Drugs by Country, of this report: <a href="https://aspe.hhs.gov/sites/default/files/migrated_legacy_files/197401/Part-B%20Drugs-International-Issue-Brief.pdf">https://aspe.hhs.gov/sites/default/files/migrated_legacy_files/197401/Part-B%20Drugs-International-Issue-Brief.pdf</a>. The reported price ratios
were converted to a percentage. The report also adjusts for
purchasing power-adjusted GDP per capita. The adjusted price ratio
changes to 1.06 (106 percent) for Japan and 1.66 (166 percent) for
France. These price ratios are also volume weighted.
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The research findings indicate that U.S. prices used to calculate
ASP rates for Medicare Part B FFS payment limits are different from
prices in international comparator countries. This price differential
has led to recurring policy discussions about potential approaches for
reducing Medicare Part B drug and biological product spending by
reviewing international prices. Research from the Brookings Institute
indicates that many non-U.S. OECD countries use international reference
pricing as a benchmark when negotiating with prescription drug
manufacturers, demonstrating that this practice is established among
manufacturers.\77\
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\77\ Young, C.L., Frank, R.G., & Sachs, R. (2025). International
reference pricing for prescription drugs. Brookings Institution.
Available at: <a href="https://www.brookings.edu/articles/international-reference-pricing-for-prescription-drugs/">https://www.brookings.edu/articles/international-reference-pricing-for-prescription-drugs/</a>.
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The data shows that U.S. prescription drug prices, particularly for
U.S. originator drugs,\78\ exceed those found in other OECD countries.
In addition, prior studies on generic drug pricing in the U.S. have
shown that generic drug prices generally compare to or fall below
international comparisons; suggesting that high overall drug costs are
primarily driven by originator, single source drugs or sole source
biological products. Based on the high spending by Medicare Part FFS
and Medicare Part B beneficiaries on single source drugs and sole
source biological products, in this proposed rule, we propose the GLOBE
Model to test the impact of using international drug pricing
information as a benchmark for an alternative Part B inflation rebate
amount calculation for a subset of Medicare Part B rebatable drugs
(certain single source drugs and sole source biological products) on
Medicare program expenditures and quality of care.
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\78\ U.S. originator drugs are the original biologics and drugs
developed and licensed or approved via section 351(a) of the Public
Health Services Act or submitted under section 505(b) and approved
under section 505(c) of the Federal Food, Drug, and Cosmetic Act
(FD&C Act). U.S. originator drugs are also sometimes called brand
name drugs, reference listed drug, or reference products.
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II. Provisions of the Proposed Regulations

In this proposed rule, we propose our policies for the GLOBE Model,
including the general framework for implementing and evaluating the
GLOBE Model and model-specific parameters, requirements, and
definitions. We note that section 1115A(b) of the Act gives the
Secretary discretion in the design of models. In accordance with
section 1115A(a)(3) of the Act, through this proposed rule, CMS seeks
input from interested parties and welcomes comments on the proposed
GLOBE Model.
The proposed model-specific parameters, requirements, and
definitions are described in subsections of this section of this
proposed rule and we propose to codify them at proposed 42 CFR 513. In
addition, for purposes of this proposed rule and the proposed GLOBE
Model, we propose that the following terms would have the same meaning
as set forth for the Medicare Part B Drug Inflation Rebate Program in
42 CFR 427.20: allowed charges, applicable calendar quarter, average
sales price, billing and payment code, billing unit, biosimilar
biological product, final action claim, inflation-adjusted payment
amount, manufacturer, National Drug Code (NDC), Not Otherwise
Classified (NOC) code, Part B rebatable drug, single source drug,
specified amount, and unit (with respect to a Part B rebatable drug).
We propose that the following terms would have the same meaning as set
forth in 42 CFR 427.400: currently in shortage, drug shortage or
shortage, natural disaster, other unique or unexpected event, plasma-
derived product, and severe supply chain disruption.

A. Proposed Model Test Period

In proposed 42 CFR 513.1(c), we propose that the GLOBE Model would
have a 7-year test period consisting of 5 performance years, beginning
October 1, 2026 and ending September 30, 2031, during which the GLOBE
Model beneficiary coinsurance and adjusted payments to providers and
suppliers would apply (as applicable) and monitoring activities would
occur, and 7 payment years during which CMS would calculate, invoice,
collect, and reconcile the GLOBE Model rebates for a performance year,
unless sooner terminated in accordance with proposed 42 CFR
513.100(d)). It is necessary to include 2 payment years after the end
of the final performance year to allow for

[[Page 60252]]

rebate invoicing and reconciliation activities, as CMS delivers the
information defined in 1847A(i)(1)of the Act no later than 6 months
after the close of the calendar quarter, and, as codified in 42 CFR
427.501(d), CMS would perform reconciliation of the rebate amount in
specified scenarios, including one regular reconciliation of the rebate
amount within 12 months of the date of the receipt of the Rebate Report
for each applicable calendar quarter. As such, CMS proposes a 7-year
test period to include 7 payment years in order for rebate invoicing
and reconciliation processes to take place for all of the applicable
calendar quarters in the model performance period. The proposed model
test period is illustrated in Figure 1.
In 42 CFR 513.20, we propose to define ``performance year'' (PY) as
a 12-month period beginning on October 1 and ending on September 30
during the first 5 years of the GLOBE Model test period. As such, we
propose to define ``GLOBE Model performance period'' as a 5-year period
of time beginning on October 1, 2026, through September 30, 2031. We
propose to define ``payment year'' as a 12-month period beginning on
October 1 and ending on September 30 during the GLOBE Model test
period. As such, we propose to define ``GLOBE Model payment period'' as
the 7-year period of time beginning on October 1, 2026, through
September 30, 2033.
We propose to test the GLOBE Model to capture all applicable
billing units (as discussed in section II.G.4. of this proposed rule)
for all Medicare Part B FFS claims for GLOBE Model drugs that are
furnished to Medicare beneficiaries who are in the model cohort on the
date of service during the model performance period and that are paid
under the GLOBE Model. This means that, given the length of time during
and after the end of an applicable calendar quarter that is necessary
to conduct the proposed GLOBE Model processes for claims processing,
data collection, rebate invoicing, manufacturer payment of GLOBE Model
rebates, reconciliation, and model evaluation, model-related activities
would continue into calendar year 2033, through September 30, 2033, as
applicable, as codified in 42 CFR 513.1(c).
---------------------------------------------------------------------------

\79\ Payment Years 6 and 7 are for rebate invoicing and
reconciliation for Performance Years 4 and 5.
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Figure 1: Illustration of the Proposed Globe Model Test Period
79
[GRAPHIC] [TIFF OMITTED] TP23DE25.025

B. Proposed GLOBE Model Drugs

The proposed GLOBE Model would include, as GLOBE Model drugs, a set
of Part B rebatable drugs (single source drugs and sole source
biological products) that are used to treat beneficiaries with
conditions where access barriers like high costs likely contribute to
deficits in care leading to poor clinical outcomes and high program
expenditures which may be avoidable. Analysis of historical Medicare
Part B FFS drug spending and non-U.S. OECD spending for similar drugs
and biological products has highlighted U.S. originator drugs without
generic \80\ or biosimilar biological product \81\ competition (called
``single source drug'' and ``sole source biological'' for purposes of
this proposed rule and the GLOBE Model) as the main contributor to high
drug spending within Medicare Part B FFS and globally.
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\80\ Part B drugs approved under an Abbreviated New Drug
Application (ANDA) submitted under section 505(j) of the FD&C Act.
\81\ Biosimilar biological product is defined in section
1847A(c)(6)(H) of the Act as ``biological product approved under an
abbreviated application for a license of a biological product that
relies in part on data or information in an application for another
biological product licensed under section 351 of the Public Health
Service Act.'' See <a href="https://www.ssa.gov/OP_Home/ssact/title18/1847A.htm">https://www.ssa.gov/OP_Home/ssact/title18/1847A.htm</a>.

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[[Page 60253]]

The majority of Medicare Part B FFS drug spending is also
concentrated in a select number of drugs and biological products. For
example, and as illustrated in Table 2, spending for the top 50
Medicare Part B FFS drugs and biological products in 2024 was
concentrated in the therapeutic areas of oncology (39 percent),
immunology (19 percent), skin substitutes (13 percent), ophthalmology
(12 percent), endocrinology (9 percent), and rheumatology (5 percent).
Per 42 CFR 427.101(b), skin substitutes are an excluded product
category for Part B rebatable drugs.
[GRAPHIC] [TIFF OMITTED] TP23DE25.026

In addition, studies have shown notable spending growth in cancer,
endocrinology, immunology, rheumatology, and ophthalmology. Increased
drug costs limits access to care and treatment for beneficiaries with
conditions in these categories increasing their risk for deficits of
care and worse health outcomes. According to an ASPE report, between
2008 and 2021, the average annual payment for Medicare Part B drugs
grew by 8.8 percent.\82\ In contrast, Medicare Part B program payments
in the therapeutic areas of oncology, immunology, endocrinology, and
rheumatology grew by an average of 10.8 percent annually,\83\
suggesting that these therapeutic areas experienced faster spending
growth. The same ASPE report also found that ophthalmologists \84\ had
the highest average annual Medicare Part B payment increase at 15
percent, 1.7 times higher than the overall average annual payment
growth for all Medicare Part B drugs. These therapeutic types and
physician specialties use drugs and biological products to treat
conditions related to cancer, endocrinology, immunology, rheumatology,
and ophthalmology. CMS identified the categories for the top 50
Medicare Part B drugs using the standardized United States Pharmacopeia
(USP) Drug Classification (DC) criteria paired with internal clinical
knowledge and FDA label review. These therapeutic areas are associated
with the following USP DC categories listed in Table 3.
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\82\ Calculated from the ``All'' Category from Exhibit 5 of an
ASPE 2023 Report (Nguyen, N., Olsen, A., Sheingold, S., and De Lew,
N. Medicare Part B Drugs: Trends in Spending and Utilization, 2008-
2021. Washington, DC: Office of the Assistant Secretary for Planning
and Evaluation, U.S. Department of Health and Human Services, June
2023. Available at: <a href="https://www.ncbi.nlm.nih.gov/books/NBK605978/pdf/Bookshelf_NBK605978.pdf">https://www.ncbi.nlm.nih.gov/books/NBK605978/pdf/Bookshelf_NBK605978.pdf</a>).
\83\ Calculated by combining therapeutic types of Cancer,
Immunosuppressive, Intravenous Immuno-globulin (IVIG), Rheumatoid
Arthritis, Oral Cancer, and Osteoporosis from Exhibit 5 of an ASPE
2023 Report (Nguyen, N., Olsen, A., Sheingold, S., and De Lew, N.
Medicare Part B Drugs: Trends in Spending and Utilization, 2008-
2021. Washington, DC: Office of the Assistant Secretary for Planning
and Evaluation, U.S. Department of Health and Human Services, June
2023. Available at: <a href="https://www.ncbi.nlm.nih.gov/books/NBK605978/pdf/Bookshelf_NBK605978.pdf">https://www.ncbi.nlm.nih.gov/books/NBK605978/pdf/Bookshelf_NBK605978.pdf</a>).
\84\ Ophthalmologists are more likely to have prescribed or used
drugs in the ophthalmic agents category.
[GRAPHIC] [TIFF OMITTED] TP23DE25.027

While higher drug costs are not the only contributor to Medicare
Part B spending growth, it may lead to increased financial burden for
some beneficiaries. Previous studies have found that high costs can
increase the

[[Page 60254]]

likelihood of nonadherence to medications leading to potentially worse
health status.85 86 87 Thus, CMS is proposing to scope the
GLOBE Model to target potential deficits of care in specific USP DC
categories as shown in Table 3 and defined in 42 CFR 513.130.
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\85\ Nekui F, Galbraith AA, Briesacher BA, Zhang F, Soumerai SB,
Ross-Degnan D, Gurwitz JH, Madden JM. Cost-related Medication
Nonadherence and Its Risk Factors Among Medicare Beneficiaries.
Medical Care. 2021;59(1):13-21. <a href="https://doi.org/10.1097/MLR.0000000000001458">https://doi.org/10.1097/MLR.0000000000001458</a>.
\86\ Arnold Ventures, Commonwealth Fund, and PerryUndem. Drug
Costs and Their Impact on Care. February 10, 2025. Available at:
<a href="https://www.arnoldventures.org/stories/drug-costs-and-their-impact-on-care">https://www.arnoldventures.org/stories/drug-costs-and-their-impact-on-care</a>.
\87\ Fusco, N., et al. (2023). ``Cost-sharing and adherence,
clinical outcomes, health care utilization, and costs: A systematic
literature review.'' Journal of Managed Care & Specialty Pharmacy.
[GRAPHIC] [TIFF OMITTED] TP23DE25.028

Previous analyses have also shown that U.S. originator drugs are,
on average, about 422 percent more expensive in the U.S. than in non-
U.S. OECD countries. Other studies indicate that growth in Medicare
Part B drug spending has largely been driven by single source drugs and
sole source biologics. As such, we propose to scope this model to focus
on testing drugs and biological products where program expenditures are
most likely to arise.
To meet this GLOBE Model intent, we also propose to identify the
single source drugs and sole source biological products in the selected
drug categories in Table 3 that would be GLOBE Model drugs for an
applicable calendar quarter by applying a set of criteria (as further
described in section II.B.1. of this proposed rule) in advance of the
applicable calendar quarter using information available to CMS (as
determined by CMS). By applying the proposed criteria to identify GLOBE
Model drugs for an applicable calendar quarter, CMS would use a
consistent methodology to identify a set of Part B rebatable drugs that
are used to treat beneficiaries with conditions where deficits in care
and high program expenditures are potentially avoidable and a
representative subset of Part B rebatable drugs that account for a
substantial portion of annual Medicare Part B FFS spending for Part B
rebatable drugs. By excluding Part B rebatable drugs that are not sole
source biological products, the GLOBE Model would also avoid including
drugs with biosimilar biological product approvals in the U.S. which
may be subject to unique market dynamics that would confound the model
test. We note by definition that Part B rebatable drugs includes single
source drugs and have chosen to re-iterate the term ``single source
drugs'' for clarity and completeness.
Using Part B rebatable drugs as the basis for identifying GLOBE
Model drugs that are single source drugs and sole source biological
products and meet the USP DC categories in Table 3 is necessary to
allow CMS to test an alternative Part B inflation rebate amount
calculation methodology. Limiting inclusion in the model test to a set
of Part B rebatable drugs that meet the proposed inclusion criteria is
necessary to focus the model test where model impacts related to
expected high program expenditures may be observed within the study
population over the course of the model evaluation (as described in
section II.F. of this proposed rule). As further described in section
II.B.1. of this proposed rule, CMS would identify GLOBE Model drugs and
add them to the GLOBE Model Drug List that would be made available on
the GLOBE Model web page at <a href="https://www.cms.gov/priorities/innovation/innovation-models/globe">https://www.cms.gov/priorities/innovation/innovation-models/globe</a>. The GLOBE Model Drug List would be maintained
quarterly to add and remove drugs as appropriate in accordance with the
inclusion criteria. We propose to identify a GLOBE Model drug using the
same applicable billing and payment code (that is, Healthcare Common
Procedure Coding System (HCPCS) Level II code) that is identified for
the Part B rebatable drug pursuant to 42 CFR 427.101(a)(1)(ii) for the
Medicare Part B Drug Inflation Rebate Program.
Further, for the purposes of the GLOBE Model test, we propose to
treat biosimilar biological products and their reference biological
products as ``multi-source'' products instead of sole source biological
products when certain conditions are met due to the unique market
dynamics of these products within the U.S and because qualifying
biosimilar biological products are not Part B rebatable drugs.
We note that qualifying biosimilar biological products (as defined
under section 1847A(b)(8)(iii) of the Act) are not included in the Part
B rebatable drug definition at 42 CFR 427.20 and therefore, would not
be a GLOBE Model drug regardless of whether the criteria for exclusion
in proposed 42 CFR 513.130(c) were met. We also note that the Medicare
Part B Drug Inflation Rebate Program includes non-qualifying biosimilar
biological products and their reference biological products.
We believe there are observable differences in pricing dynamics of
sole source and multi-source biological products that lead to unique
market dynamics. For example, when there is no competing biological
product licensed under section 351(k) of the Public Health Service
(PHS) Act to a U.S. originator drug, manufacturers are less likely to
provide price concessions and rebates. Compared with sole source
biological products, when reference biological products and their
biosimilar biological products that are licensed

[[Page 60255]]

under section 351(k) of the PHS Act are sold, manufacturers of multi-
source biological products may provide higher price concessions and
discounts to be competitive. These market differences result in varying
manufacturer-to-provider incentives. In markets with competing
biosimilar biological products, manufacturers may provide discounts to
providers through price concessions and rebates that impact Medicare
spending. Manufacturers may change these discount strategies depending
on how many patients are within a GLOBE Model due to geographic
location. As such, manufacturers may provide lower discounts to clinics
with more patients in the GLOBE Model geographic region than to clinics
with less patients. This difference in incentives may lead to providers
switching between biosimilar biological products to their reference
biological products, reference biological products to their biosimilar
biological products, or from one biosimilar biological product to
another.
We recognize that if the reference biological product for a
biosimilar biological product that is licensed under 351(k) of the PHS
Act were included in the GLOBE Model and the biosimilar biological
product was not included, beneficiaries could face higher cost sharing
amounts for biosimilar biological products than reference biological
products. The discussion in section II.B.1. of this proposed rule
further describes our proposed approach to exclude biosimilar
biological products and their reference biological products.
1. Proposed GLOBE Model Drug Inclusion Criteria
We propose to apply the following criteria to identify GLOBE Model
drugs for an applicable calendar quarter during the GLOBE Model
performance period. In advance of each applicable calendar quarter, in
42 CFR 513.130, we propose that CMS would identify the GLOBE Model
drugs for that applicable calendar quarter by applying these criteria
to Part B rebatable drugs (as identified by CMS as set forth in 42 CFR
427.101): (1) are listed as antigout agents, antineoplastics, blood
products and modifiers, central nervous system agents, immunological
agents, metabolic bone disease agents, or ophthalmic agents as
specified in the USP DC; (2) are single source drugs or sole source
biological products as set forth in proposed 42 CFR 513.130; (3) have
Medicare Part B FFS spending greater than $100 million over a 12-month
period (as further specified in proposed 42 CFR 513.130(d)); and (4)
are drug or biological products that are not excluded from the GLOBE
Model under proposed 42 CFR 513.130(c). A Part B rebatable drug would
have to meet all the four criteria to be included as a GLOBE Model
drug.
To identify GLOBE Model drugs for the first criterion for the first
applicable calendar quarter of the GLOBE Model performance period, we
propose to use the USP Drug Classification 2025 (USP DC 2025) \88\ to
identify all Part B rebatable drugs that meet the categories listed in
Table 3 using their scientific or nonproprietary name(s), brand name,
and/or NDC. The publicly available USP DC system has four tiers, of
which we propose to use the highest-level tier, USP DC category. CMS
believes the drug category level is sufficient to identify therapeutic
areas that may have deficits of care, while allowing for differences in
mechanism of action and biological or molecular targets for products
that treat the same therapeutic area. We recognize that a drug or
biological product may be listed in more than one USP DC category. As
such, as long as one of the categories listed in Table 3 applies to the
drug or biological product, it would be considered to have met this
criterion. We also recognize that drug and biological products may be
added to the Part B rebatable drug list after the GLOBE Model's start
and may not appear in USP DC 2025. As such, we propose that for Part B
rebatable drugs that were not previously assigned a USP DC category,
CMS would use the most recently published USP DC to identify the
category for such Part B rebatable drug to determine whether it meets
the first criterion. We also propose that once CMS has identified the
USP DC category for a GLOBE Model drug or biological product, it would
remain in that category for the entire model duration. Accordingly,
drugs or biological products included in the initial GLOBE Model Drug
List would retain their USP DC 2025 category, while newly added drugs
and biological products to the GLOBE Model Drug List would retain the
category assigned at the time of their identification, based on the
most recently published USP DC available then. We also propose that,
when posted on the GLOBE Model website, the GLOBE Model Drug List would
include the USP DC category for each HCPCS Level II code. Table 4 shows
the associated USP DC category for an illustrative list of HCPCS Level
II codes. The USP DC 2025 has 50 categories of which Medicare Part B
rebatable drugs during 2024 are listed in at least 34 of them. Our
proposal to include 7 categories represents 21 percent of the 34
possible Medicare Part B rebatable drug categories. Analysis of 2024
Medicare Part B FFS spending data indicates that these 7 USP DC
categories were responsible for most Medicare Part B spending (91
percent), with antineoplastics having the highest proportion of any
single category at approximately 47 percent.
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\88\ The USP Drug Classification 2025 file can be found here:
<a href="https://www.usp.org/health-quality-safety/usp-drug-classification-system">https://www.usp.org/health-quality-safety/usp-drug-classification-system</a>.
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We are also proposing that if USP creates a new drug category that
stems from the drug categories set forth in 42 CFR 513.130(b)(1), then
such newly created drug categories would be incorporated into the GLOBE
Model drug inclusion criterion. We propose that CMS would make this
determination based on a review of USP revision bulletins, revision
histories, and corresponding change log information published by USP.
For the second criterion, CMS would focus the GLOBE Model test on a
subset of Part B rebatable drugs that are single source drugs or sole
source biological products. We recognize by definition, only single
source drugs are Part B rebatable drugs and are proposing to use the
same definition of single source drug as defined in section
1847A(c)(6)(D) of the Act, which is not a multiple source drug and
which is produced or distributed under a new drug application approved
by the FDA, including a drug product marketed by any cross-licensed
producers or distributors operating under the new drug application. A
multiple source drug, as defined in section 1847A(c)(6)(C) of the Act,
means, for a calendar quarter, a drug for which there are 2 or more
drug products which: (1) are rated as therapeutically equivalent (under
the FDA's most recent publication of ``Approved Drug Products with
Therapeutic Equivalence Evaluations''); (2) except as provided in
section 1847(A)(6)(E) of the Act, are pharmaceutically equivalent and
bioequivalent, as determined under section 1847(A)(6)(F) of the Act and
as determined by the FDA, and (3) are sold or marketed in the United
States during the quarter.
We also propose to define ``sole source biological'' in 42 CFR
513.20 for the purposes of the GLOBE Model as a biological product
licensed by the FDA in under a biologics license application (BLA)
under section 351(a) of the PHS Act and that, at time of evaluating for
inclusion into the GLOBE Model for each applicable ASP calendar
quarter, is not the reference biological product, as defined in section
1847A(c)(6)(I) of the Act, for a biosimilar biological product

[[Page 60256]]

licensed by the FDA in a BLA under section 351(k) of the PHS Act. The
biosimilar biological product must be recognized in the FDA's Purple
Book and be identified as sold or marketed in FDA's NDC Directory. We
note that the proposed definition for sole source biological is
different than the definition for single source biological, as defined
in section 1847A(c)(6)(D) of the Act. As the proposed definition of a
sole source biological is based on a 351(a) licensure and not being the
reference biological product for a biosimilar biological product sold
or marketed, any biological product that meets this definition--even if
marketed by any cross-licensed producers or distributors operating
under the BLA--qualifies as such sole source biological product. The
counterpart to a sole source biological product is a multi-source
biological product, and the difference is that they have a reference
biological product and a biosimilar biological product that is
recognized in the FDA's Purple Book and identified as sold or marketed.
We also propose to use the definition for ``sold or marketed''
established in 42 CFR 427.20 which would mean the marketing data as
listed in either the ASP data reported to CMS by a manufacturer or an
NDC directory list a start marketing date for the biosimilar biological
product prior to the applicable calendar quarter and when one of the
following criteria is met: (1) the NDC has units reported for the
rebate quarter; (2) the end marketing date is during the rebate
quarter; (3) the end marketing date is after the rebate quarter; or (4)
the end marketing date is missing.
To apply this criterion, we propose, at the time of evaluating
inclusion in the GLOBE Model for each applicable ASP calendar quarter,
CMS would use the FDA's NDC Directory, including historical information
from NDC Directory files such as discontinued, delisted, and expired
listings, provided by the FDA or published on the FDA website to
determine the marketing status of a biosimilar biological product. We
propose that, if a biosimilar biological product is marketed, as
determined by CMS for purposes of the GLOBE Model as of the beginning
of an applicable calendar quarter, the biosimilar biological product,
and reference biological product \89\ for such biosimilar biological
product would not be included as a GLOBE Model drug for the applicable
calendar quarter. We propose that for an applicable calendar quarter
CMS would conduct this analysis as of the beginning of the applicable
calendar quarter to update the GLOBE Model Drug List.
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\89\ Reference product is defined in section 1847A(c)(6)(l) of
the Act as ``biological product licensed under section 351 of the
PHS Act that is referred to in application described in subparagraph
(H) of the biosimilar biological product.'' See <a href="https://www.ssa.gov/OP_Home/ssact/title18/1847A.htm">https://www.ssa.gov/OP_Home/ssact/title18/1847A.htm</a>.
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We recognize for the GLOBE Model that authorized generics and
unbranded biological products share the same new drug application
approved by the FDA or 351(a) licensure as the original drug and
biological product and therefore meet the proposed definition of single
source drug and sole source biologicals. As such, authorized generics
and unbranded biological products could potentially be GLOBE Model
drugs. Authorized generics are drugs sold without their brand name by
the original manufacturer or a third party under the NDA of the
original drug. Unbranded biological products are biological products
sold without their brand name by the original manufacturer or a third
party licensed by the BLA 351(a) of the original biological product.
Since both authorized generics and unbranded biological products, are
directly or indirectly, sponsored by the original pharmaceutical drug
manufacturer, we believe that if an authorized generic or unbranded
biological product is included in the Medicare Part B Drug Inflation
Rebate Program, then, subject to the exclusions described in the next
section of this proposed rule, it would be included in the GLOBE Model.
In other words, an authorized generic or unbranded biological product
could meet the definition of a single source drug or sole source
biological product if approved under section 505(c) of the FD&C Act or
licensed under section 351(a) of the PHS Act.
For the third criterion, we propose to identify the Part B
rebatable drugs with total Medicare Part B FFS allowed charges greater
than $100 million over a 12-month period using separately payable final
action claims (spend threshold). As specified in 42 CFR 513.130(d), we
propose that CMS would identify Medicare Part B FFS final action claims
with dates of service within the consecutive 12-month period ending 6
months prior to the start of the applicable calendar quarter that have
separately payable allowed charges greater than $0 for any billing and
payment code used to describe the GLOBE Model drug, and sum the allowed
charges. For example, if the applicable calendar quarter is Q1 2027,
all separately payable final action claims with Medicare Part B FFS
allowed charges greater than $0 for any billing and payment code used
to describe the Part B rebatable drug with a date of service from July
1, 2025 to June 30, 2026 would be summed together to determine if the
spend threshold is met. By applying a minimum total annual Medicare
Part B FFS spend as an inclusion criteria, CMS intends that the GLOBE
Model would be focused on Part B rebatable drugs that account for a
significant portion of annual Medicare Part B FFS drug spending and on
drugs that would be expected to account for approximately a minimum of
$8 million in allowed charges per month under the model. We also
propose Part B rebatable drugs would need to meet the spend threshold
at least one time during the duration of the GLOBE Model to meet this
criterion for the applicable ASP calendar quarter and subsequent
applicable ASP calendar quarters. For example, if Drug I meets the $100
million threshold for performance year 1 over a 12-month period for Q3
2026 but not for Q4 2026, Drug I is still considered to have met this
criterion for Q4 2026 and the subsequent GLOBE Model ASP calendar
quarters and would retain inclusion in the GLOBE Model.
Historical analysis of Medicare Part B FFS drug spending has shown
that the majority of spending is focused on a select number of drugs. A
threshold of $100 million in total annual Medicare Part B FFS spending
applied to Part B rebatable drugs for the consecutive 12-month period
ending on December 31, 2024 would encompass 90 percent of the total
2024 Medicare Part B FFS spending on Part B rebatable drugs and account
for 21 percent of Part B rebatable drugs (by HCPCS Level II code). This
analysis highlights that a small number of Part B rebatable drugs
represent the majority of Medicare Part B FFS drug spending. A
threshold of $100 million would therefore focus the GLOBE Model on a
majority of Medicare Part B drug spending to enable detection of
expected savings for the GLOBE Model test while reducing the burden of
studying the impacts of the GLOBE Model on all Part B rebatable drugs.
2. Proposed Exclusion of Certain Part B Rebatable Drugs
To avoid interactions with other initiatives and programs that
focus on manufacturers of drugs payable under Medicare Part B, in 42
CFR 513.130(c)(1)(ii), we propose to exclude from the GLOBE Model a
Part B rebatable drug from the GLOBE Model for which a maximum fair
price (MFP) (as defined in section 1191(c)(3) of the Act) under the
Medicare Drug Price Negotiation Program is in effect. This proposal
would mean that drugs that

[[Page 60257]]

have been selected for Medicare Drug Price Negotiation (under section
1192 of the Act), for which a MFP has been agreed upon, and for which
the manufacturer of such drug is required to provide access to the MFP,
would be excluded from the GLOBE Model for appliable calendar quarters
in which the MFP is in effect.\90\ \91\ For example, if a GLOBE Model
drug is selected for negotiation in 2027 for initial price
applicability year 2029, the manufacturer and CMS agree upon a MFP for
the drug during 2027, and the MFP would go into effect on January 1,
2029, the GLOBE Model drug would exit the GLOBE Model on December 31,
2028. We note that the earliest date for which a MFP would apply for a
drug payable under Medicare Part B is January 1, 2028, per section
1192(a)(3) of the Act. Because we are proposing to begin the GLOBE
Model on October 1, 2026, we note that there would be no Part B
rebatable drugs that could be a GLOBE Model drug for which the
manufacturer is required to provide access to the MFP at model start.
We propose that this exclusion from the GLOBE Model would end when the
Medicare Part B payment limit for a Part B rebatable drug that would
otherwise be eligible to be a GLOBE Model drug is no longer based on
the MFP. We believe that excluding drugs when the Medicare Part B
payment limit is based on a MFP is appropriate because these drugs are
subject to different market dynamics within the U.S., and we believe
that including them could confound the model test and impact our
ability to evaluate the impacts of the model.
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\90\ CMS. Medicare Drug Price Negotiation Program: Final
Guidance, Implementation of sections 1191 through 1198 of the Act
for Initial Price Applicability Year 2028 and Manufacturer
Effectuation of the Maximum Fair Price in 2026, 2027, and 2028.
September 30, 2025. Available at: <a href="https://edit.cms.gov/files/document/ipay-2028-final-guidance.pdf">https://edit.cms.gov/files/document/ipay-2028-final-guidance.pdf</a>.
\91\ In accordance with the IRA, CMS engages in good-faith
negotiations with participating companies and uses statutory factors
listed at section 1194(e) of the Act as the basis for negotiation an
MFP. A Primary Manufacturer with a selected drug is required to
ensure that the negotiated price, the MFP, is made available to MFP-
eligible individuals and to pharmacies, mail order services, and
other dispensing entities with respect to such MFP-eligible
individuals who are dispensed such drug, and to hospitals,
physicians, and other providers of services and suppliers with
respect to such MFP-eligible individuals to whom they furnish or
administer such drug. The MFP applies to a selected drug during its
price applicability period.
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In addition, we propose, in 42 CFR 513.130(c)(1)(i), that a Part B
rebatable drug would not be a GLOBE Model drug for applicable calendar
quarters prior to the first applicable calendar quarter for which CMS
identifies a specified amount pursuant to 42 CFR 427.302(b) for such
drug. This proposal would ensure that the GLOBE Model and the Medicare
Part B Drug Inflation Rebate Program would treat a subsequently
approved drug (that is, a drug first approved or licensed by the FDA
after December 1, 2020) in a similar manner. In other words, until a
specified amount is established by CMS for a subsequently approved Part
B rebatable drug, that drug would not be considered for the GLOBE
Model. We note that, given the proposed GLOBE Model drug inclusion
criteria in 42 CFR 513.130(b), this exclusion would only be applied to
drugs that meet all the proposed inclusion criteria (that is, single
source drugs or sole source biological products that are Part B
rebatable drugs that are in the USP DC categories shown in Table 3 with
total annual Medicare Part B FFS allowed charges greater than the $100
million during the consecutive 12-month period that ends 6 months
before the applicable calendar quarter).
We note that during the duration of the GLOBE Model, certain drugs
or biological products may no longer be Part B rebatable drugs. As
such, in 42 CFR 513.130(c)(1)(iii) we propose that if a GLOBE Model
drug is no longer a Part B rebatable drug for an applicable calendar
quarter, it would be excluded from the GLOBE Model for that applicable
calendar quarter and any other subsequent quarters in which it is no
longer rebatable.
3. Summary of GLOBE Model Drug Inclusion and Exclusion
To summarize, GLOBE Model drugs as defined in 42 CFR 513.130 would
be a subset of Part B rebatable drugs that: (1) have the listed USP DC
categories in Table 3; (2) are single source drugs or sole source
biological products; (3) have a HCPCS Level II code with Medicare Part
B FFS spending greater than $100 million over a 12-month period; and
(4) are not excluded from the GLOBE Model as proposed in 42 CFR
513.130(c).
In addition, once a drug or biological product has been identified
as meeting the criterion for inclusion in the GLOBE Model, they would
remain in the GLOBE Model unless the drug or biological product becomes
multi-source (no longer a single source drug or sole source biological
product) or meets the exclusions proposed in 42 CFR 513.130(c).
The drugs or biological products that meet the proposed definition
of GLOBE Model drugs are frequently prescribed and administered by
various providers in settings such as a physician's office or hospital
outpatient department to Medicare beneficiaries with various medical
conditions and would have had a minimum of $100 million in Medicare
Part B FFS allowed charges over a 12-month period. Examples include
drugs used to treat cancer and related conditions, rheumatoid arthritis
and other immune mediated conditions, and macular degeneration and
other serious eye conditions. Medicare Part B FFS beneficiaries who
receive such drugs, often on a recurring basis, face substantial cost-
sharing liability directly related to each drug administration in the
form of monthly Medicare Part B premiums, the Medicare Part B annual
deductible and coinsurance, and premiums and coinsurance through their
supplemental insurance. The proposed approach for identifying GLOBE
Model drugs could encompass approximately 55 percent \92\ of annual
Medicare Part B FFS drug spending for separately payable Medicare Part
B drugs based on an analysis of all 2024 Medicare Part B FFS claims.
This proposed approach also focuses the model test on single source
drugs and sole source biological products with high Medicare Part B
program expenditures that could have beneficiaries with deficits of
care due to high costs.
---------------------------------------------------------------------------

\92\ This statistic is based on an evaluation of all 2024
Medicare Part B FFS claims that would meet the GLOBE Model inclusion
and exclusion criteria and does not account for any geography
distinctions. Refer to section II.F. of this proposed rule for
discussion on proposed GLOBE Model geographies.
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Table 4, Illustrative GLOBE Model Drug HCPCS Level II Code List, in
section II.B.6. of this proposed rule shows an illustrative list of how
the GLOBE Model could apply to Part B drugs by HCPCS Level II code
using available claims information from calendar year (CY) 2024 after
applying the proposed drug inclusion and exclusions as discussed in
this section of this proposed rule. This illustrative list may not
fully capture all relevant HCPCS Level II codes for potential GLOBE
Model drugs and may include HCPCS Level II codes for drugs that may not
meet the inclusion criteria and exclusion criteria that would be
specified in a final rule establishing the GLOBE Model.
4. Alternatives Considered
We considered including all Part B rebatable drugs in the GLOBE
Model. However, Medicare Part B FFS drug spending is concentrated among
high expenditure drugs, with 50 drugs (by HCPCS Level II code)
accounting for 64 percent of 2024 Medicare Part B FFS

[[Page 60258]]

drug spending. We also noted that many Medicare Part B rebatable drugs
have average monthly total Medicare Part B FFS allowed charges of less
than $10 million. For example, using separately payable claims, 302
Medicare Part B rebatable drugs had less than $100 million in total
2024 Medicare Part B FFS drug spending each, representing 7 percent of
total 2024 Medicare Part B FFS drug spending. Similarly, 266 Medicare
Part B rebatable drugs had less than $50 million in total 2024 Medicare
Part B FFS drug spending each, accounting for 3 percent of total 2024
Medicare Part B FFS drug spending. These lower spend drugs could have
approximately $8 million or less in allowed charges per month paid
under the GLOBE Model, based on our proposed model design described in
section II.B of this proposed rule. However, the approximately 80 Part
B rebatable drugs with greater than $100 million in 2024 Medicare Part
B FFS allowed charges accounted for 61 percent of 2024 Medicare Part B
FFS drug spending. As such, it may be too burdensome for the
operational and administrative efforts to include Part B rebatable
drugs with less than $100 million in total Medicare Part B FFS allowed
charges during a consecutive 12-month period in the model test at this
time in order to detect potential changes in Medicare spending or
beneficiaries' quality of care. We believe that the model test and
evaluation could be efficiently focused on Medicare Part B rebatable
drugs with over $100 million in total annual Medicare Part B FFS
spending without sacrificing the potential for meaningful model
findings and learning. Therefore, we are not proposing to include all
Part B rebatable drugs in the GLOBE Model and instead are proposing to
focus the model on a subset of drugs that would be anticipated to have
a meaningful amount of Medicare spending under the model test and
address deficits of care for beneficiaries.
In addition, we considered the alternative of including all Part B
rebatable drugs in the GLOBE Model, which would introduce multi-source
biological products (biosimilar biological products and their reference
biological products) into the model. Most of the biosimilar biological
products that are available now and are separately payable under
Medicare Part B are qualifying biosimilar biological products, which
are excluded from the definition of Part B rebatable drugs, and as such
could be excluded from being a Part B rebatable drug for some portion
of the model performance period. We recognize the list of qualifying
biosimilar biological products may also change quarterly when the ASP
of the biosimilar biological product exceeds the ASP of the reference
biological product or when the applicable 5-year period for a temporary
payment add-on has elapsed. Therefore, if biosimilar biological
products that are not qualifying biosimilar biological products for an
applicable calendar quarter were included as GLOBE Model drugs, there
could be operational challenges related to monitoring, potential for
beneficiary and healthcare provider confusion related to beneficiary
coinsurance changes during the GLOBE Model performance years, and
increased complexity and potential challenges in operating the model
evaluation. As such and to meet our model intent, we propose to exclude
biosimilar biological products licensed under 351(k) of the PHS Act and
their reference biological products as proposed in 42 CFR 513.130(b).
We considered an alternate exclusion process for reference
biological products by requiring the manufacturers of the reference
biological product to submit an attestation of when a competing
biosimilar biological product would be sold in the U.S. However,
assessing whether market competition exists after a biosimilar
biological product has been licensed by the FDA under section 351(k) of
the PHS Act would likely require substantial investigation to verify a
specific date of first sale. There would be insufficient time for CMS
to review requests by a manufacturer of a reference biological product
for GLOBE Model exclusion before the manufacturer submits ASP
information for the applicable calendar quarter and prior to
determination of the GLOBE Model beneficiary coinsurance for included
drugs. Further, manufacturers of reference biological products may not
have an accurate estimation of when sales of a biosimilar biological
product would be first sold in the U.S. Therefore, our proposed
approach to use the sold or marketed definition established in 42 CFR
427.20 and FDA's NDC Directory to identify biosimilar biological
products that are marketed would likely be a faster and more efficient
way than verifying reference biological product manufacturer
attestations to identify when a biosimilar biological product and its
reference biological product would be excluded from the GLOBE Model
drug list of an applicable calendar quarter to support our goal of
focusing the model test on single source drugs and sole source
biological products.
We also considered including additional USP DC categories such as
antimyasthenic agents, cardiovascular agents, dermatological agents;
genetic, enzyme, or protein disorder: replacement, modifiers,
treatment; and respiratory tract/pulmonary agents, which are also
categories represented in Part B rebatable drugs with Medicare Part B
FFS spending over $100 million in 2024. However, we believe starting
the model with the high expenditure therapeutic areas and their USP DC
categories shown in Table 3 would help focus the model test on patients
with related conditions that are likely exposed to higher financial
burden and greater deficits of care. We may explore a future expansion
to other high spend USP DC categories outside of the therapeutic areas
listed in Table 3 after we have made operational and administrative
progress with respect to the model. We also considered reviewing the
latest published USP DC at the beginning of each applicable calendar
quarter to determine if a drug or biological product has changed
categories. However, we believe using the 2025 USP DC for the GLOBE
Model drug list, except in the case of drugs and biological products
added after model start, would maintain data standardization.
Similarly, we also believe keeping the same category for each drug and
biological product once identified also maintains data standardization
and allows CMS to test and evaluate an alternative Part B inflation
rebate amount calculation. In addition, we considered categorizing the
drugs or biological products by therapeutic areas such as
endocrinology, immunology, rheumatology, oncology, or ophthalmology or
for CMS to develop a classification method. However, we believe using a
publicly available drug classification list such as the USP DC provides
for a more transparent and straightforward method for identifying GLOBE
Model drugs.
We considered other alternatives to the proposed subset of Part B
rebatable drugs included as GLOBE Model Drugs such as including only a
certain number of Part B rebatable drugs; only including drugs with
high utilization among the Medicare population, for example, drugs
furnished to more than 20,000 Medicare Part B FFS beneficiaries during
a specified period; \93\ and

[[Page 60259]]

including drugs based on high annual per beneficiary coinsurance
liability, for example, drugs with an average per beneficiary
coinsurance amount greater than $200 during a consecutive 12-month
period (assuming a coinsurance percentage of 20 percent, this
alternative would focus on drugs with approximately $1,000 or more in
average per beneficiary Medicare Part B allowed charges during a
consecutive 12-month period). We also considered phasing in the
inclusion of Part B rebatable drugs in the GLOBE Model over time, for
example, starting the model with 50 drugs and adding drugs at the
beginning of each performance year until all Part B rebatable drugs
that would not be specifically excluded would be included in the model.
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\93\ The minimum number of beneficiaries for a drug selected for
the Medicare Drug Price Negotiation Program for the Initial Price
Applicability Year 2026 is 20,000 (Imbruvica). Based on internal CMS
analysis, if this was used as a threshold, then approximately 17
percent of all HCPCS Level II codes billed under Medicare Part B in
2024 would have met this criterion.
---------------------------------------------------------------------------

We are also considering if the spend threshold (total Medicare Part
B FFS allowed charges greater than $100 million over a 12-month period)
would be adjusted for each subsequent performance year by the
percentage increase or decrease in the CPI-U for the previous
performance year. This would mean that for each subsequent performance
year, the GLOBE Model spend threshold would adjust to account for
inflation. We welcome comments on whether CMS should update the spend
threshold based on inflation.
We considered these alternative approaches and believe that
focusing the model on higher spend drugs that impact beneficiaries who
likely have a deficit of care allows a transparent, consistent, and
clear approach that would provide sufficient opportunity to observe the
impacts of the model test on a sufficient number of Medicare FFS
beneficiaries who may receive a Part B rebatable drug. Our proposed
approach would minimize complexity within the model implementation and
evaluation and improve CMS' ability to understand the findings from
model monitoring and evaluation activities by focusing on a subset of
beneficiaries. We believe the benefits of including the higher spend
drugs for specific USP DC categories of Part B rebatable drugs in the
GLOBE Model with limited exclusions as discussed in this section of
this proposed rule enable the model to encompass a large number of Part
B rebatable drugs without increasing complexity and burden that may
occur with a larger set of Part B rebatable drugs.
We welcome comments on our process for identifying the USP DC
categories, our method for identifying and excluding certain drugs, and
the alternatives we considered. We also welcome comments on CMS'
proposed process for when a reference biological product would be
excluded from the list of GLOBE Model drugs for an applicable calendar
quarter. Specifically, we seek feedback on ways CMS could structure the
exclusion process to minimize the potential for excluding a reference
biological product for a biosimilar biological product that is marketed
under a license under 351(k) of the PHS Act but not sold during an
applicable calendar quarter.
5. Considerations Related to Cell and Gene Therapies and Plasma-Derived
Products
We are also considering excluding cell and gene therapies (CGTs)
from the GLOBE Model. CGTs include cellular immunotherapies, cancer
vaccines and other products aimed to treat or prevent certain diseases
including cancer, genetic diseases, and infectious diseases. We seek
comments on the merits of excluding CGTs based on supply chain
criteria, or if there are other factors that warrant their inclusion or
exclusion. We similarly welcome comments on whether the GLOBE Model
would exclude plasma-derived products, particularly because these
products may be more likely to experience shortages and the rebate
amount for these products may be reduced as discussed in section II.G.
of this proposed rule.
6. Illustrative List of Proposed Performance Year 1 GLOBE Model Drugs
and Model Participants
To create an illustrative GLOBE Model Drug HCPCS Level II Code
List, we identified the 2024 Part B rebatable drugs by HCPCS Level II
code, applied the proposed GLOBE Model drug inclusion criteria and
exclusions as discussed in sections II.B.1. and II.B.2. of this
proposed rule. Using this approach, an illustrative GLOBE Model Drug
HCPCS Level II Code List is shown in Table 4 and includes drugs and
biological products that met the proposed criteria for at least one
applicable calendar quarter in 2024. Table 4 is an illustrative list of
how the GLOBE Model might apply to Part B rebatable drugs and is not
intended as a list of GLOBE Model drugs or Part B rebatable drugs that
would be applicable for a quarter in a performance year. Further, this
illustrative list is based on CMS' initial analyses and proposals
discussed in this proposed rule and is provided for informational
purposes only. Readers should note that the illustrative list may not
reflect the final model design and does not indicate that these drugs
or biological products would owe a GLOBE Model rebate.
BILLING CODE 4120-01-P

[[Page 60260]]

[GRAPHIC] [TIFF OMITTED] TP23DE25.029

[[Page 60261]]

[GRAPHIC] [TIFF OMITTED] TP23DE25.030

BILLING CODE 4120-01-C

C. Proposed Defined Population

For the GLOBE Model design, we considered ways to identify the
Medicare beneficiaries who would be eligible for inclusion in either
the intervention or comparison groups. After considering a number of
factors, we propose to use a geographically randomized design such that
the defined population for the GLOBE Model would be a set of CMS-
selected Medicare Part B FFS beneficiaries who are identified as
eligible for inclusion in the model cohort as set forth in 42 CFR
513.120 and receive a GLOBE Model drug (as set forth in 42 CFR 513.130)
during the model performance period for which separate Medicare Part B
payment is made under the GLOBE Model. The Medicare Part B FFS
beneficiaries who are identified as eligible for inclusion in the model
cohort would be included in the model cohort as a GLOBE Model
beneficiary as of the date they are furnished a GLOBE Model drug for
which separate Medicare Part B payment is made during the model
performance period. GLOBE Model beneficiaries would be eligible for the
GLOBE Model adjusted beneficiary coinsurance for GLOBE Model drugs, if
applicable, and would remain in the model cohort unless they no longer
meet the criteria for inclusion. A GLOBE Model beneficiary may receive
one or more GLOBE Model drugs.
Specifically, we propose that, prior to the model start, CMS would
randomly identify the model geographic areas (based on ZIP Code
Tabulation Areas as discussed in section II.F.2. of this proposed
rule). We also propose that, prior to model start and periodically
thereafter, but no more frequently than weekly, CMS would identify
eligible Medicare FFS beneficiaries (as set forth in 42 CFR 513.120)
and update the GLOBE Model Eligible Beneficiary List, which would be
effective when the Medicare claims processing system are updated with
the GLOBE Model Eligible Beneficiary List information. We propose that
the identification of eligible beneficiaries and the timing of such
identification and updating of the GLOBE Model Eligible Beneficiary
List and the Medicare claims processing systems, as well as the
identification of Medicare FFS beneficiaries who are eligible for
inclusion in the comparison group, would be performed by CMS and would
not be subject to review. In 42 CFR 513.120, we propose how CMS would
identify the Medicare beneficiaries who would be eligible for inclusion
in the model cohort and comparison group. In 42 CFR 513.20, we propose
to define the term ``GLOBE Model eligible beneficiary'' as a Medicare
beneficiary who has been identified by CMS for potential inclusion in
the model and added to the GLOBE Model Eligible Beneficiary List for
some or a portion of the GLOBE Model performance period as set forth in
42 CFR 513.120. Specifically, in 42 CFR 513.120(b), we propose that,
approximately 30 days prior to model start using available Medicare
program administrative information as determined by CMS, CMS would
identify Medicare beneficiaries who are enrolled in Medicare Part B,
have Traditional Medicare Part B as their primary payer, and have an
address of record within the GLOBE Model geographic areas selected for
inclusion in the model at model start (as identified by CMS under 42
CFR 513.110(c)), as determined by CMS. These beneficiaries would
encompass the Medicare FFS beneficiaries who would be eligible for
inclusion in the GLOBE Model at model start. CMS would add such
beneficiaries to the GLOBE Model Eligible Beneficiary List and update
the Medicare claims processing systems with such list for the first
applicable calendar quarter of performance year one.
Similarly, in 42 CFR 513.120(b)(2), we propose that, approximately
30 days prior to model start using available Medicare program
administrative information as determined by CMS, we would identify
Medicare beneficiaries who are enrolled in Medicare Part B, have
Traditional Medicare Part B as their primary payer, and do not have an
address of record within the GLOBE Model geographic areas selected for
inclusion in the model at model start (as identified by CMS under 42
CFR 513.110(c)), as determined by CMS. These beneficiaries would be
assigned as being eligible for inclusion in the comparison group. For a
discussion on the evaluation, see section II.P. of this proposed rule.
To maintain a clear record of which beneficiaries are eligible for
inclusion in the model cohort, in 42 CFR 513.120(c), we propose that,
CMS would update the GLOBE Model Eligible Beneficiary List
periodically, but not more frequently than weekly, using available
Medicare program administrative information as determined by CMS, to:
(1) identify the Medicare beneficiaries who are enrolled in Medicare
Part B, have Traditional Medicare Part B as their primary payer, and
have an address of record within the GLOBE Model geographic areas
selected for inclusion (as identified by CMS under 42 CFR 513.110(c)),
are not yet included on the GLOBE Model Eligible Beneficiary List, are
not assigned as eligible for the comparison group, and adds such
beneficiaries to the GLOBE Model Eligible Beneficiary List at the next
update; and (2) identify beneficiaries on the GLOBE Model Eligible
Beneficiary List that no longer meet the criteria for a GLOBE Model
eligible beneficiary and removes such beneficiaries from the GLOBE
Model Eligible Beneficiary List at the next update. CMS would not
routinely reevaluate the eligibility of beneficiaries who were
identified as eligible for the comparison group. That is, beneficiaries

[[Page 60262]]

who are identified as eligible for inclusion in the comparison group
prior to model start would remain eligible for inclusion in the
comparison group and model monitoring and analyses as determined by
CMS.
In 42 CFR 513.120(d), we propose beneficiary exclusions for clarity
regarding the beneficiaries who would not be eligible for assignment to
the GLOBE Model Eligible Beneficiary List or comparison group, as
applicable: beneficiaries who do not have Medicare Part B FFS as their
primary payer, and beneficiaries who are enrolled in a Medicare
Advantage plan, section 1876 of the Act cost plan, section 1833 of the
Act healthcare prepayment plans, or who have other group health
coverage that is a primary payer (such as employer-sponsored health
insurance). In addition, 42 CFR 513.120(d)(3) clarifies that
beneficiaries who are identified by CMS as eligible for inclusion in
the comparison group prior to model start remain eligible for the
comparison group as determined by CMS.
We propose that, for purposes of identifying a beneficiary's
address and determining if the beneficiary's address is within the
GLOBE Model geographic areas, we would use the beneficiary's address as
recorded in CMS' Medicare Beneficiary Database (MBD), System No. 09-70-
0536, at the time CMS identifies beneficiaries for inclusion in the
model. We also propose to define in 42 CFR 513.20 the term ``GLOBE
Model geographic areas'' as the set of ZIP Codes in the U.S., excluding
U.S. territories identified as set forth in 42 CFR 513.110 (as
discussed in section II.F. of this proposed rule).
Under our proposed approach for identifying the defined population,
beneficiaries who are identified by CMS as a GLOBE Model eligible
beneficiary, at the start of the model or subsequently, would be added
to the GLOBE Model Eligible Beneficiary List and remain on the list
until the model ends or the beneficiary is no longer enrolled in
Medicare FFS or is otherwise ineligible for inclusion. For example, if
a beneficiary is identified for inclusion on the GLOBE Model Eligible
Beneficiary List based on the beneficiary's address as recorded in CMS'
Medicare Beneficiary Database (MBD) being within the selected model
geographic areas and then subsequently the beneficiary's address
recorded in CMS' MBD changes such that the beneficiary no longer has an
address within the GLOBE model geographic areas, the beneficiary would
continue to be assigned as a GLOBE Model eligible beneficiary unless
the beneficiary is no longer enrolled in Medicare FFS or is otherwise
ineligible for inclusion. Beneficiaries who become newly enrolled in
Medicare FFS due to becoming newly eligible for Medicare FFS after the
model begins and are identified by CMS as a GLOBE Model eligible
beneficiary (because all criteria are met) would be added to the GLOBE
Model Eligible Beneficiary List from the time CMS next updates the list
and remain on the list unless the beneficiary is no longer enrolled in
Medicare FFS or is ineligible for inclusion. Beneficiaries for whom
Medicare Part B FFS switches from being a secondary payer to being the
primary payer and who are identified by CMS as a GLOBE Model eligible
beneficiary (because all criteria are met) would be added to the GLOBE
Model Eligible Beneficiary List when CMS next updates the list and
remain on the list unless the beneficiary is no longer enrolled in
Medicare FFS or is ineligible for inclusion. No other beneficiaries
would be added to the GLOBE Model Eligible Beneficiary List. For
example, the following changes would not enable beneficiary inclusion
on the GLOBE Model Eligible Beneficiary List after the model starts:
(1) beneficiaries who were enrolled in Medicare Part B at the time CMS
creates the initial GLOBE Model Eligible Beneficiary List prior to the
start of the model and had an address within CMS' MBD that was not
selected as a GLOBE Model geographic area then had an address change to
a GLOBE Model geographic area; and (2) newly enrolled Medicare Part B
FFS beneficiaries with an address with a new ZIP Code that did not
exist at the time that the GLOBE Model geographic areas were
identified. In addition, beneficiaries who were identified by CMS as
being eligible for the comparison group would not be eligible for the
model cohort.
Testing the GLOBE Model in this population would allow the GLOBE
Model alternative rebate test to apply to a broad set of conditions,
clinical settings, localities, and manufacturers rather than having the
model test focus on a limited set of conditions, drugs (for example,
only including drugs approved under section 505 of the FD&C Act) or a
single type of clinical setting (for example, only including GLOBE
Model drugs that are furnished in a physician's office). Defining the
population broadly and in a manner that fosters a stable and consistent
model cohort and comparison group would allow CMS to observe the
implications of an alternative approach to determining the net Medicare
payment for GLOBE Model drugs across a broad set of providers and
suppliers and beneficiaries, as well as a large set of manufacturers.

D. Proposed Scale for Inclusion of GLOBE Model Beneficiaries

Section 1115A(b) of the Act gives the Secretary discretion in the
design of models, including the geographic reach of models. Section
1115A(a)(5) of the Act states that the Secretary may elect to limit
testing of a model to certain geographic areas. Testing a model in
randomly selected geographic areas facilitates identification of the
intervention and comparison groups for model implementation. We have
considered the variation in cost and use in the Medicare population of
proposed GLOBE Model drugs along with other aspects of the proposed
model design and determined that a sufficient allocation between
intervention and comparison groups for achieving precise estimates in
tests is approximately 25 percent of Medicare FFS beneficiaries. To
determine the geographic areas that CMS would use to identify
approximately 25 percent of Medicare FFS beneficiaries as GLOBE Model
eligible beneficiaries, we propose that CMS would select geographic
regions to represent 25 percent of Medicare FFS beneficiaries (as
described in section II.F.2. of this proposed rule).

E. Proposed Model Participants

1. Proposed Mandatory Participation of Manufacturers of GLOBE Model
Drugs
We propose that model participation would be mandatory for all
manufacturers of GLOBE Model drugs (as described in section II.B. of
this proposed rule) that are furnished to a GLOBE Model beneficiary
during the GLOBE Model performance period. We propose that, for
purposes of the GLOBE Model, ``manufacturer'' would have the same
meaning as that term is defined and used in section 1847A(c)(6)(A) of
the Act and 42 CFR 427.20. We note that this is consistent with how CMS
defines ``manufacturer'' for purposes of the Medicare Part B Drug
Inflation Rebate Program. We also note that the proposed GLOBE Model
drugs, as single source drugs and sole source biological products,
usually have one manufacturer. However, there could be GLOBE Model
drugs for which multiple manufacturers report ASP data to CMS, for
example, when there is a repackager or relabeler or when more than one
manufacturer markets a single source drug or sole source biological
product within the U.S. In such cases, we propose that all
manufacturers of a GLOBE Model drug would each be

[[Page 60263]]

required to participate in the GLOBE Model.
We propose to define ``GLOBE Model participant'' as a manufacturer
of a GLOBE Model drug that is required to participate in the GLOBE
Model in accordance with proposed 42 CFR 513.100. We propose that there
would be no specific enrollment activities for GLOBE Model
participants; rather, their participation would be effectuated by the
requirements under the Medicare Part B Drug Inflation Rebate Program,
and where applicable, the application of the proposed GLOBE Model
calculation for the GLOBE Model rebate amount. Mandatory participation
can enhance the generalizability of model results, as mandatory model
participants may be more broadly representative of all entity types
that could be affected by a model. Requiring manufacturer participation
in the GLOBE Model would allow us to observe the experiences of
manufacturers of drugs with diverse characteristics. Further, we
believe mandatory participation in the GLOBE Model would be essential
to the model test because we believe that, despite the potential for
the GLOBE Model to lower beneficiaries' financial liability for a
manufacturer's Part B rebatable drug and reduce financial barriers to
access such drugs which could increase utilization of such drugs,
manufacturers of proposed GLOBE Model drugs would likely not volunteer
to participate in this model.
In the proposed 42 CFR 513.100(a), we propose to codify that model
participation would be mandatory for all manufacturers of GLOBE Model
drugs.
We considered excluding manufacturers where the U.S. manufacturer
may not be the same entity that is responsible for sales in other
countries. Another option we considered was to except manufacturers
that had existing sales or licensing agreements with other entities
outside of the U.S. to sell GLOBE Model drugs prior to the publication
of this NPRM. However, we were concerned about the possibility of
manufacturers transferring responsibilities to other entities to avoid
model participation. We also considered an application process through
which a manufacturer could qualify for a model exemption given their
lack of responsibility for sales of drugs outside of the U.S. However,
given the complex nature of manufacturer relationships outside of the
U.S., such an exclusion might potentially being too broad, diluting
CMS' ability to rigorously evaluate the model's impact on costs and
quality. Having considered these alternatives, CMS is not proposing
such exclusions. We also seek comment on other factors, for example,
manufacturer size, that CMS could consider exempting certain
manufacturers while maintaining sufficient model participation and a
robust model test.
We seek comments on our proposal for mandatory participation in the
GLOBE Model by all manufacturers that may be subject to the model (that
is, manufacturers of Part B rebatable drugs that could be designated as
GLOBE Model drugs pursuant to the criteria in proposed 42 CFR 513.130).
We also seek feedback on whether manufacturers of proposed GLOBE Model
drugs would voluntarily participate in the proposed GLOBE Model absent
a mandatory participation requirement and feedback on evidence that
could support a voluntary participation approach which would ensure
sufficient model participation for a robust model test and evaluation
during performance year 1 and thereafter.
2. Proposed Model Participation Requirements
In 42 CFR 513.100, we propose to codify GLOBE Model participant
requirements during the GLOBE Model test period. During the GLOBE Model
test period described in proposed 42 CFR 513.100(b), we propose that
GLOBE Model participants must--
<bullet> Adhere to the proposed GLOBE Model rebate payment
instructions as proposed in 42 CFR 513.740 and established by CMS and
its contractors responsible for providing rebate reports containing
GLOBE Model rebate amounts and processing payments, including without
limitation those described in proposed 42 CFR 513.500, to ensure
appropriate and accurate GLOBE Model rebate payments; and
<bullet> Participate in GLOBE Model monitoring and evaluation
activities in accordance with 42 CFR 403.1110(b), including collecting
and reporting of information as the Secretary determines is necessary
to monitor and evaluate the GLOBE Model.
<bullet> If electing to submit international drug net pricing data,
adhere to the requirements set forth in proposed 42 CFR 513.610 and the
GLOBE Model data agreement.
In addition, for GLOBE Model participants that elect to submit
international drug net pricing data for the applicable ASP calendar
quarter beginning April 1, 2025, we propose that such GLOBE Model
participants would be required to adhere to the requirements set forth
in proposed 42 CFR 513.620 and the GLOBE Model data agreement prior to
the start of performance year 1.
We seek comments on our proposal for model participation
requirements from potential GLOBE Model participants.
We refer readers to section II.G.6. of this proposed rule for a
discussion of the option for eligible manufacturers of separately
payable Part B single source drugs and sole source biological products
determined to be GLOBE Model drugs to voluntarily submit manufacturer
international net drug pricing information to CMS for purposes of
identifying a per unit Method II GLOBE Model benchmark which could
potentially lower the total GLOBE Model rebate amount that a GLOBE
Model participant would be responsible for. If electing to submit
international drug net pricing data, we propose that the manufacturer
must adhere to the requirements set forth in proposed 42 CFR 513.610
and in the proposed GLOBE Model data agreement as described in proposed
42 CFR 513.620.
3. Standard Provisions
We propose that the Standard Provisions for Innovation Center
Models, originally established in 42 CFR part 512, subpart A and
applicable to certain Innovation Center models, would not apply to the
GLOBE Model. Given the unique characteristics and operational framework
of the GLOBE Model, we believe it differs substantially from most
mandatory Innovation Center models. Therefore, rather than applying the
Standard Provisions, we propose implementing GLOBE-specific
requirements that would provide the necessary regulatory specificity
and flexibility to effectively test and evaluate the GLOBE Model's
innovative approach.
We propose specific audit, record access, and retention
requirements for manufacturers participating in the GLOBE Model. These
provisions are essential to ensure program integrity, enable proper
oversight of the model's implementation, and protect the interests of
Medicare beneficiaries and the Federal government. Given the unique
structure and operational characteristics of the GLOBE Model, we
believe it is necessary to establish clear audit rights, record access
requirements, and retention standards that are specifically tailored to
this model's framework.
We propose at Sec. 513.100(d)(1) to establish explicit Federal
audit rights to ensure that CMS, HHS, the Comptroller General, and
their designees maintain comprehensive oversight authority over GLOBE
Model implementation. This provision is necessary to verify compliance
with model requirements,

[[Page 60264]]

assess program effectiveness, and identify potential areas for
improvement or corrective action.
We propose at Sec. 513.100(d)(2) record access requirements would
ensure that manufacturers maintain and provide access to all
documentation necessary for effective oversight. This includes, but is
not limited to, records supporting the accuracy of voluntarily-
submitted data and documentation related to CMS identified program
integrity issues. Such access is critical for validating manufacturer-
reported information and ensuring the model operates as intended.
We propose at Sec. 513.100(d)(3) a six-year retention period for
GLOBE Model-related records, with extensions under specific
circumstances. This timeframe aligns with standard Federal audit and
investigation cycles while providing flexibility for situations
involving disputes, fraud allegations, or special retention needs
identified by CMS. The proposed retention requirements balance the need
for thorough oversight with reasonable administrative burden on
participating manufacturers.
We propose at Sec. 513.100(d)(4) that in the event we terminate
the GLOBE Model, we would provide written notice to GLOBE Model
participants specifying the grounds for termination and the effective
date of such termination. As provided by section 1115A(d)(2) of the Act
termination of the model under section 1115A(b)(3)(B) of the Act would
not be subject to administrative or judicial review.
We seek comment on our proposed requirements for audit, record
access, and record retention, and model termination parameters for
GLOBE Model manufacturers.

F. Proposed GLOBE Model Test Design and Geographic Areas

1. Proposed Model Test Design
In 42 CFR 513.110, for the model test design, we propose a
randomized design in which the GLOBE Model geographic reach would be
determined by selection of geographic areas where approximately 25
percent of Medicare Part B FFS beneficiaries have an address of record
within CMS' MBD (as determined by CMS as set forth in 42 CFR 513.120)
and CMS would identify the selected geographic areas for the model
start. Model test geographic areas would be randomly selected to
balance the Medicare beneficiary population and Medicare expenditures
nationwide. We also propose that after CMS finalizes a rule
establishing the GLOBE Model, no later than 30 calendar days in advance
of model start, CMS would provide a table on the GLOBE Model website
that lists the GLOBE Model geographic areas by ZIP Code. CMS may
include other information such as total Medicare beneficiary statistics
and total Medicare Part A and Medicare Part B FFS expenditures. This
table would identify the GLOBE Model geographic areas for model start.
CMS would not change the list of GLOBE Model geographic areas by ZIP
Code after the initial random selection of the model geographic areas.
For example, during the model performance period, if a ZIP Code that is
within the GLOBE Model geographic areas is split or redesignated, that
ZIP Code would not get reassigned to a GLOBE Model geographic area.
2. Proposed Unit of Analysis
In developing the proposed GLOBE Model, CMS determined that
conducting the proposed GLOBE Model test in the population of Medicare
FFS beneficiaries who may receive Part B rebatable drugs that are
included in the model (as discussed in section II.C. of this proposed
rule) would provide the best means for testing an innovative payment
model using the alternative rebate calculation. Defining the population
in this manner would allow CMS to assess if the GLOBE Model payment
test reduced Medicare costs while preserving or enhancing quality of
care, in line with section 1115A(b)(2) of the Act across a broad set of
providers and suppliers and beneficiaries, as well as a broad set of
manufacturers. Learnings from the GLOBE Model would inform CMS and
other interested parties about the effect of applying the proposed
innovative rebate approach to a broad set of drugs on a diverse set of
beneficiaries and to the Medicare program.
3. Proposed Method for Identification of GLOBE Model Geographic Areas
a. Proposed Geographic Unit of Randomization
We considered establishing the unit of geography CMS would use for
randomization and for evaluation of model impacts based on existing
well-defined geographic units that were sufficiently numerous to
support statistical analysis. Based on CMS' review of existing defined
geographic units that are suitable for statistical purposes, CMS, after
consideration of alternatives, identified that ZIP Code Tabulation
Areas (ZCTAs) would be an appropriate geographic unit for a limited
scope model and for the proposed GLOBE Model specifically. ZIP Code
Tabulation Areas (ZCTAs) are approximate area representations of USPS
five-digit ZIP Code service routes that the Census Bureau creates using
whole blocks to present statistical data from censuses and surveys. A
change in site of service due to a difference in incentives between the
intervention and comparison group could bias statistical analyses.
Given that beneficiary address would be the basis for their geographic
assignment as eligible for the model test or comparison group, the site
of service for the administration of a GLOBE Model drug would not bias
statistical analyses. As a result, the smallest practical geographic
area is preferred to allow for a simpler randomized design, that would
involve fewer strata or weights. A simple random selection of small
geographic units would achieve the desired balance for both observable
and unobservable characteristics between the model test and comparison
groups. In particular, it would allow us to achieve our intended
geographic scope in terms of approximate share of beneficiaries and
Medicare spending.
Therefore, we are proposing to identify the GLOBE Model geographic
areas through a simple random selection of 25 percent of all ZIP Code
Tabulation Areas (ZCTAs) in the U.S., excluding the U.S. territories.
Specifically, in 42 CFR 513.110(a), we propose that the GLOBE Model
geographic areas would be identified by ZIP Codes that are aligned with
ZCTAs that are randomly selected by CMS no later than 60 calendar days
prior to the start of the model performance period. During the model
performance period, if a ZIP Code that is within the GLOBE Model
geographic areas is split or redesignated, that ZIP Code is not
reassigned to a GLOBE Model geographic area.
b. Alternatives Considered
We also considered the suitability of the following as the
geographic unit from which the GLOBE Model geographic areas would be
identified: (1) ZIP Codes; (2) counties; (3) states; (4) Census-defined
Core Based Statistical Areas (CBSAs) or Combined Statistical Areas
(CSAs); and (5) Medicare Administrative Contractor (MAC) regions. ZIP
Codes were considered because they are part of the beneficiary data
that is maintained in Medicare beneficiary records and are the proposed
basis for identifying GLOBE Model beneficiaries. However, ZIP Codes,
unlike ZCTAs are not technically geographic areas, but represent U.S.
postal delivery routes. ZIP Codes are useful identifiers to link a
beneficiary record to a specific geographic area but are not geographic
areas. Counties, states and CBSAs were determined to be too
heterogeneous in their size and

[[Page 60265]]

population to achieve balance between selected and not selected regions
for measured and unmeasured factors that may be linked to the outcomes
for the proposed model design. The Medicare Administrative Contractor
(MAC) regions were considered to reduce operational complexity but also
were determined to be too large in size and heterogeneous.\94\
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\94\ Centers for Medicare & Medicaid Services. What's a MAC.
Available at: <a href="https://www.cms.gov/medicare/coding-billing/medicare-administrative-contractors-macs/whats-mac">https://www.cms.gov/medicare/coding-billing/medicare-administrative-contractors-macs/whats-mac</a>.
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We also considered selecting the entire country as the model
geographic area. However, we concluded that limiting geographies would
facilitate the identification of a representative comparison group,
which would improve CMS' ability to identify a suitable counterfactual
for evaluating the impact of the GLOBE Model test.
We also considered starting the model with a greater number of
geographic areas to include up to approximately 50 percent of Medicare
Part B FFS beneficiaries in the model eligible beneficiary cohort
instead of our proposal to test the model in geographic areas with
approximately 25 percent of Medicare Part B FFS beneficiaries. We also
considered an approach of initially testing the model in geographic
areas with approximately 25 percent of Medicare Part B FFS
beneficiaries and then, after initial monitoring observations were
assessed, increasing the model beneficiary cohort to include up to
approximately 50 percent of Medicare Part B FFS beneficiaries by
including additional geographic areas. Under an approach where the
number of included geographic areas would increase during the model
performance period, we considered that CMS could update the table
provided on the GLOBE Model website to include the complete list of
GLOBE Model geographic areas by ZIP Code over time. We note that these
alternatives would likely necessitate selection of the initial and
potentially additional geographic areas at the same point, prior to
model start and processes for including additional geographic areas.
These approaches would have the benefit of enhancing the model
evaluation as a random selection of approximately 50 percent of the
Medicare FFS population would enable a 1:1 allocation of the treatment
to comparison group.
We considered including the ZCTAs of U.S. territories among the
geographic regions from which the randomly selected model geographic
area would be selected.
We welcome comment on our proposal to use ZCTAs as the basis for
the model geographic areas, exclude U.S. territories, and select the
geographic area. We welcome comment on our proposal to test the model
with geographic areas that would include approximately 25 percent of
Medicare Part B FFS beneficiaries in the model beneficiary cohort and
on whether CMS should test the model with an alternative approach that
would include additional geographic areas and beneficiaries in the
model as well as the processes that CMS should consider for such an
approach.

G. Proposed Model Payment Test for GLOBE Model Drugs

In accordance with section 1847A(i) of the Act as codified in 42
CFR 427, CMS determines the rebate amount that manufacturers of Part B
rebatable drugs owe to the Federal Supplementary Medical Insurance
Trust Fund and computes adjusted beneficiary coinsurance and adjusted
Medicare payment for Part B rebatable drugs as applicable. Under the
GLOBE Model, we propose to test an alternative rebate calculation and
an alternative calculation to adjust the beneficiary coinsurance and
Medicare Part B payment for GLOBE Model drugs that are furnished to
GLOBE Model beneficiaries. The alternative calculation would expand
upon the current methodology by incorporating additional drug pricing
information while ensuring that beneficiary coinsurance and net
Medicare payment for a service would not exceed what they would be
absent the model test.
We propose to base the alternative calculation on a per unit GLOBE
Model benchmark that is described in section II.G.2. of this proposed
rule. To test two methods for identifying a per unit GLOBE Model
benchmark using different data sources, we propose that the per unit
GLOBE Model benchmark for a GLOBE Model drug would be, subject to
available information as determined by CMS (as described in section
II.G.1. of this proposed rule), based on the greater of a per unit
Method I GLOBE Model benchmark that reflects the lowest country-level
price among a set of reference countries,\95\ (as discussed in section
II.G.2.a. of this proposed rule) or a per unit Method II GLOBE Model
benchmark that reflects the volume-weighted average of the
manufacturer's net pricing for sales within a set of reference
countries based on data voluntarily reported by the manufacturer (as
discussed in section II.G.2.b. of this proposed rule), after applying
an economic adjustment under each method.\96\ In section II.G.1.e. of
this proposed rule, we propose the criteria that would be applied to
identify the set of reference countries for purposes of identifying the
information that would be used, as available, by CMS to determine the
per unit Method I GLOBE Model benchmark and the per unit Method II
GLOBE Model benchmark. To the benchmark that is greater, in section
II.G.3.a. and II.G.3.b. of this proposed rule, we propose to apply an
``applicable threshold percentage'' and an amount, ``add-on percentage
amount'', that would, in general, equal any add-on percentage included
in the Medicare Part B payment limit under section 1847A(b) of the Act
(which would, in general, be the same as the ``specified amount'' (as
determined under 42 CFR 427.302(b))) to calculate a per unit GLOBE
Model benchmark amount and then determine if a GLOBE Model rebate
amount would apply. The alternative calculation would be structured
such that the GLOBE Model rebate amount would not be less than the
rebate amount (if any) determined under the Medicare Part B Drug
Inflation Rebate Program as codified in 42 CFR part 427.
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\95\ Individual countries differ in the regulatory processes and
standards governing approval of drugs and biologicals. Use of
international drug pricing information in the proposed GLOBE Model
should not be interpreted to connote FDA approval or to otherwise
describe any scientific or regulatory relationship between U.S.-
approved and non-U.S.-approved products.
\96\ The economic adjustment would be based on differences in
gross domestic product and purchasing power between the U.S. and
reference countries.
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As discussed in section II.G.4.a. of this proposed rule, we propose
that the per unit GLOBE Model rebate amount for an applicable calendar
quarter would reflect the result of the alternative rebate calculation.
That is, for a GLOBE Model drug, for an applicable calendar quarter, we
propose that the per unit GLOBE model rebate amount would be the
greater of: (1) the difference between the specified amount, as
determined under 42 CFR 427.302(b), and the per unit GLOBE Model
benchmark amount, as determined under 42 CFR 513.400(c); or (2) the
difference between the specified amount determined under 42 CFR
427.302(b), and the inflation-adjusted payment amount determined under
42 CFR 427.302(g). In section II.G.4.b. of this proposed rule, we
propose a methodology for identifying the included billing units of a
GLOBE Model drug in the total GLOBE Model rebate amount calculation. In
section

[[Page 60266]]

II.G.4.c. of this proposed rule, we propose that the total GLOBE Model
rebate amount for a GLOBE Model drug during an applicable calendar
quarter would be the product of the per unit GLOBE Model rebate amount
of such drug, as determined under 42 CFR 513.510(a), and the total
number of GLOBE Model billing units, as identified by CMS as set forth
in 42 CFR 513.520 To facilitate the model test, we propose that the
incremental GLOBE Model rebate amount for a GLOBE Model drug for an
applicable calendar quarter would be the product of the incremental per
unit GLOBE Model rebate amount of such drug, as determined under 42 CFR
513.510(b), and the total number of GLOBE Model billing units, as
identified by CMS as set forth in 42 CFR 513.520. The incremental per
unit GLOBE Model rebate amount would be the amount in excess of the per
unit rebate amount calculated as set forth in 42 CFR 427.302. That is,
as determined in 42 CFR 513.510(b) and discussed in section II.G.4.c.
of this proposed rule, the incremental per unit GLOBE Model rebate
amount would be an `incremental amount' that taken together with the
per unit rebate amount calculated as set forth in 42 CFR 427.302 would
represent the per unit GLOBE Model rebate amount. To determine GLOBE
Model billing units, in 42 CFR 513.520, CMS proposes to identify the
number of billing units in accordance with 42 CFR 427.303(b) where, on
the date of service, the beneficiary was identified by CMS as a GLOBE
Model eligible beneficiary and for which Medicare Part B FFS made
separate payment. We also propose, in section II.G.4.d. of this
proposed rule, that the incremental GLOBE Model rebate amount may be
reduced or adjusted in the same manner as described in 42 CFR 427
subparts E and F, if applicable, when a drug is currently in shortage
or when there is a severe supply chain disruption, and/or through the
reconciliation or suggestion of error process.
In section II.G.8. of this proposed rule, we present two
alternative proposals, a combined approach and an incremental approach,
for how CMS would provide rebate reports and reconciliation rebate
reports to GLOBE Model participants, and a process for suggestion of
error when GLOBE Model rebates are owed. Under the combined approach,
CMS would delay Medicare Part B Drug Inflation Rebate Program invoicing
for all manufacturers by up to two months and would provide a combined
report (invoice) to all manufacturers of Part B rebatable drugs for
both the Medicare Part B Drug Inflation Rebate Program and the GLOBE
Model. Under the incremental approach, CMS would use a separate
invoicing process that would run approximately a month after the
Medicare Part B Drug Inflation Rebate Program reports and would invoice
manufacturers of GLOBE Model drugs for the total GLOBE Model rebate
amount using the incremental GLOBE Model rebate amount and reconciling
the portion of the total GLOBE Model rebate amount invoiced through the
Medicare Part B Drug Inflation Rebate Program processes. We seek
comment on these alternative approaches for reporting, invoicing, and
reconciliation and intend to adopt only one approach for the model.
CMS' intent is to establish an efficient approach that closely aligns
with processes currently used by the Medicare Part B Drug Inflation
Rebate Program and would be familiar to manufacturers of Part B
rebatable drugs. Under these alternative approaches, we propose that
GLOBE Model participants would have access to reports, submit a
Suggestion of Error to CMS, and pay GLOBE Model rebate amounts based on
the GLOBE Model's alternative calculation in the same manner, or
substantially similar manner, as set forth in 42 CFR 427.504 with
respect to the Medicare Part B Drug Inflation Rebate Program. In
addition, in 42 CFR 513.740, we propose that the provisions for the
deadline and process for payment of the rebate amount in 42 CFR 427.505
would apply to GLOBE Model rebate amounts in the same manner as they do
to Part B drug rebate amounts that are calculated under 42 CFR 427.301.
However, to align GLOBE Model rebate processes closely with the
Medicare Part B Drug Inflation Rebate Program, we have identified the
need to adjust the timing for providing reports and are proposing to
use the Innovation Center's waiver authority to do so as discussed in
section II.G.8. of this proposed rule.
We also propose that, in addition to other applicable authorities,
the provisions for enforcement of manufacturer payment of rebate
amounts of the Medicare Part B Drug Inflation Rebate Program and the
implementing regulations at 42 CFR 427.600, regarding civil money
penalties would apply to manufacturers of GLOBE Model drugs with
respect to GLOBE Model rebate amounts.
The proposed GLOBE Model would also test alternative calculations
to adjust the beneficiary coinsurance and Medicare Part B payment for
separately payable units of GLOBE Model drugs that are furnished to
GLOBE Model beneficiaries (that is, beneficiaries who are on the GLOBE
Model Eligible Beneficiary List as discussed in section II.C. of this
proposed rule). As discussed in section II.G.7. of this proposed rule,
we propose to use the alternative calculation for identifying the per
unit GLOBE Model benchmark amount to identify the GLOBE Model
beneficiary coinsurance that would be applied as a percent to the
payment amount for a GLOBE Model drug for an applicable calendar
quarter. To ensure that beneficiary financial liability for coinsurance
amounts for GLOBE Model drugs under the GLOBE Model would not be more
than it would be absent the model test, for a calendar quarter, we
propose that CMS would compare a per unit GLOBE Model benchmark amount
(that would be calculated in advance of the calendar quarter, with
limited exceptions in cases of error, as determined by CMS, to the
applicable inflation-adjusted payment amount as determined under 42 CFR
427.302(g) and the lesser of those amounts would be used in the
computation of the GLOBE Model beneficiary coinsurance percentage and
the GLOBE Model Medicare Part B FFS payment amount for separately
payable units of the GLOBE Model drug furnished to GLOBE Model
beneficiaries during the applicable calendar quarter. The GLOBE Model
beneficiary coinsurance would only be applicable to separately payable
units of GLOBE Model drugs that are furnished to the Medicare Part B
FFS beneficiaries who are, for the date of service, on the GLOBE Model
Eligible Beneficiary List in use by the Medicare claims processing
systems on the date a claim was processed, as determined by CMS. When
the GLOBE Model reduced beneficiary coinsurance applies to units of
GLOBE Model drugs furnished to Medicare Part B FFS beneficiaries who
are included in the GLOBE Model beneficiary cohort, the provider or
supplier would reduce the amount of coinsurance charged to the
beneficiary and the portion of the Medicare Part B allowed amount that
would be payable by Medicare Part B would be adjusted upwards.
For a discussion on the proposed approach for the GLOBE Model
monitoring and evaluation, we refer readers to sections II.L. and II.P.
of this proposed rule, respectively.
1. Proposed International Drug Pricing Information Data Sources
This section of this proposed rule discusses the proposed
international drug pricing information data sources and the
international drug pricing information that CMS proposes to use, if
available, to identify the per unit

[[Page 60267]]

Method I GLOBE Model benchmark, based on available data from existing
data sources (as described in section II.G.2.a. of this proposed rule).
This section of this proposed rule also discusses the proposed data and
information that eligible manufacturers would have the option to
voluntarily submit to CMS, which would, if submitted and determined to
meet completeness criteria, be used to identify the per unit Method II
GLOBE Model benchmark (as described in section II.G.2.b. of this
proposed rule). We propose that the availability of data and
information, its completeness, and use for purposes of the GLOBE Model
would be determined solely by CMS. In section II.G.2.e. we discuss the
proposed criteria and process CMS would use to identify the non-U.S.
countries that would be included in the set of reference countries for
the GLOBE Model for purposes of identifying international drug pricing
information available in existing data sources and calculating the per
unit Method I GLOBE Model benchmark (as described in section II.G.2.a.
of this proposed rule) and the per unit Method II GLOBE Model benchmark
(as described in section II.G.2.b. of this proposed rule).
a. Existing Data Sources for International Drug Pricing Information
To identify the per unit Method I GLOBE Model benchmark (as
described in section II.G.2.a. of this proposed rule), we propose to
rely on existing data sources available to CMS that contain
international drug pricing information, including pricing information,
sales, and/or volume data (for example, package size, and number of
items or packages sold), as available, in order to optimize operational
efficiency and inform the identification of the per unit GLOBE Model
benchmark amount including in the absence of voluntarily submitted
manufacturer net pricing data and information (which we propose to use
to inform the identification of the per unit Method II GLOBE Model
benchmark as described in section II.G.2.b. of this proposed rule).
Within available data sources, sales and list prices may be based on
ex-manufacturer prices (sometimes referred to as ex-factory price),
that represent actual or calculated prices paid to the manufacturer by
wholesalers and other distributors, retail prices, prices for other
distribution channels, or a combination thereof. Data sources have
proprietary collection, and projection methodologies to harmonize data
across countries. For example, data sources may use proprietary
adjustment factors to facilitate comparison of different pricing level
information or apply proprietary projection methodology to estimate
data available for a sample of distribution channels to obtain a
projected value for the entire country. Confidential manufacturer
rebates would not likely be accounted for within these available data
sources; therefore, existing sources for international drug sales data
may overstate actual prices realized by manufacturers. On balance, we
believe existing data sources are adequate for purposes of identifying
country-level prices and a per unit Method I GLOBE Model benchmark (as
described in section II.G.2.a. of this proposed rule), particularly
because we are proposing that eligible manufacturers would have the
option to voluntarily submit international drug net pricing data to CMS
that could potentially be used instead to identify the per unit GLOBE
Model benchmark.
We have assessed several existing data sources to determine the
availability and sufficiency of international drug pricing information.
These data sources include those made available by private companies,
which may include data reported by manufacturers or data obtained
through a review of publicly filed material by manufacturers in other
countries or in the U.S. Specifically, we reviewed proprietary global
pharmaceutical pricing data sources that include drug pricing data for
a large diverse set of pharmaceutical products (that are the types of
pharmaceutical products that could be covered under Medicare Part B)
for more than 30 countries. These data sources vary with respect to the
scope (such as products, manufacturer level, market level data,
countries), and periodicity of updates (such as daily, monthly,
quarterly). For example, IQVIA MIDAS[supreg] \97\ is an IQVIA
proprietary information service which integrates IQVIA's national
audits into a globally consistent view of the pharmaceutical market,
and provides estimated product volumes of registered medicines, trends
and market share through retail and non-retail channels. IQVIA MIDAS
\98\ includes detailed drug product information, such as drug name,
molecule, strength, dosage form, pack size, manufacturer, generic
product classification (such as non-generic or generic), biologic
classification (such as biosimilar or reference biological products),
market information (such as country, distribution channel, the
Anatomical Therapeutic Chemical (ATC) classification,\99\ sales data,
standard units, extended units, number of packs), pricing information
(such as price per pack, price per unit, derived average list price),
temporal information (such as month, quarter, year of sale), and other
information.\100\ IQVIA MIDAS is updated monthly and retains extensive
historical data for 33 countries.
---------------------------------------------------------------------------

\97\ The statements, findings, conclusions, views, and opinions
contained and expressed in this proposed rule are based in part on
data obtained under license from the following IQVIA information
service(s): IQVIA MIDAS[supreg]. Copyright IQVIA. All Rights
Reserved. The statements, findings, conclusions, views and opinions
contained and expressed herein are not necessarily those of IQVIA or
any of its affiliated or subsidiary entities.
\98\ IQVIA MIDAS Overview. Available at: <a href="https://www.iqvia.com/solutions/commercialization/data-and-information-management/midas">https://www.iqvia.com/solutions/commercialization/data-and-information-management/midas</a>.
\99\ For information about The World Health Organization's
Anatomical Therapeutic Chemical classification see: https://
www.who.int/tools/atc-ddd-toolkit/atc-
classification#:~:text=In%20the%20Anatomical%20Therapeutic%20Chemical
,groups%20at%20five%20different%20levels.
\100\ IQVIA national audits and IQVIA MIDAS reflect local
industry standard source of pack prices, which may be list price or
average invoice price, depending upon the country and the available
information; they do not take into account rebates or clawbacks,
details of which are normally confidential, and therefore these
estimated prices do not reflect net prices realized by the
manufacturers. Sales values reflected in these IQVIA audits are
calculated by applying such relevant pricing to the product volume
data collected for, and reflected in, such audits. In addition, to
allow the national audit sales values to be viewed at a common sales
level, MIDAS applies a single average industry margin to the locally
reported values. Prices derived from MIDAS data are therefore
estimates, and IQVIA cautions against using prices in MIDAS data as
metrics in their own right.
---------------------------------------------------------------------------

Another potential data source we assessed is GlobalData
Pharmaceutical Prices (POLI) \101\ which includes three price levels
(ex-manufacturer, wholesalers, and retail) for at least 80 countries at
the pack level (pharmaceutical name, generic name, dosage form,
strength and number of units). POLI includes drug product information
(such as drug descriptor, molecule type, dosage form, strength,
classification as brand or generic), and market information (such as
ATC classification, therapy area, and geography). POLI is updated
monthly and provides historic data since 2016. Eversana NAVLIN's Price
& Access database,\102\ includes pricing data for more than 100
countries, as well as tools to compare international pricing
information (specifically, pricing across

[[Page 60268]]

countries), and is another potential data source.
---------------------------------------------------------------------------

\101\ GlobalData. Data Lake-Pharmaceutical Prices (POLI)
Available at: <a href="https://marketaccess.globaldata.com/product-solutions/data-lake-pharmaceutical-prices-poli/">https://marketaccess.globaldata.com/product-solutions/data-lake-pharmaceutical-prices-poli/</a>.
\102\ NAVLIN by Eversana. Available at: <a href="https://www.navlin.com/products/navlin-price-access-data">https://www.navlin.com/products/navlin-price-access-data</a>.
---------------------------------------------------------------------------

These data sources, if available, would likely provide adequate
information to inform CMS' identification of a Method I GLOBE Model
benchmark for the vast majority of proposed GLOBE Model drugs (as
discussed in section II.G.2.a. of this proposed rule).
Another data source option we considered would be for CMS to
construct price comparisons from public sources of each country.
However, we believe this would be cumbersome and we may not have all
the information necessary for CMS to routinely identify a Method I
GLOBE Model benchmark for a broad set of proposed GLOBE Model drugs.
In 42 CFR 513.310(c), we propose to use one or more existing data
sources for international drug pricing available to CMS to identify the
per unit Method I GLOBE Model benchmark for a GLOBE Model drug.
Specifically, we propose to use one or more data sources available to
CMS at least 60 business days prior to the start of the first
applicable calendar quarter for which the drug is a GLOBE Model drug to
identify if the per unit Method I GLOBE Model benchmark is available.
As proposed in 42 CFR 513.310(c)(1)(ii), such data sources would
utilize a standardized method for identifying drugs across countries
within the data source, such as using an internationally recognized
method for identifying scientific and nonproprietary product names and
a standard method for identifying dosage form, route of administration
such as using an internationally recognized nomenclature for
pharmaceutical forms like the New Form Code classification (that, at a
minimum, distinguishes among injectable, oral, and other forms of a
drug), and strength. For example, the data source might use the
International Nonproprietary Names (INN), as applicable.\103\ We are
proposing that the data source must use a standardized method for
identifying drug names, dosage forms, and route of administration
because the process that CMS proposes to use to identify the country-
level prices to identify the per unit Method I GLOBE Model benchmark
requires mapping between the data source's method for identifying drug
names, dosage forms and route of administration to the HCPCS Level II
codes that are associated with GLOBE Model drugs. We are proposing that
the data source must use a standardized method for identifying strength
because this could be used to identify the quantity of drug and the
billing units. Further, we propose that the one or more data sources
that we would use would contain international drug pricing information
and the corresponding volume data (for example, number of items,
packages, or units sold) or data sources with only pricing information,
where applicable. We propose that the pricing information in the data
sources would include sales data (which may be based on ex-manufacturer
prices, sometimes referred to as ex-factory prices) that represent
actual or calculated prices paid to the manufacturer by wholesalers and
other distributors, or retail prices that represent actual or
calculated sales for retail purchasers, or prices paid by other
purchasers in the distribution channels (such pricing information must
be expressed in U.S. currency. We also propose the data source would
use a standard method based on regulatory approval pathways to identify
U.S. originator drugs and international originator drugs (such as brand
name products, reference listed drug, or reference products), and U.S.
non-originator drugs and international non-originator drugs \104\ (such
as generics, biosimilars, biocomparable products, reference product
equivalents, or off-patent products). In addition, we propose that the
one or more data sources we would use must have mechanisms in place to
maintain, update, and correct, if necessary, the data source on at
least a quarterly basis. Further, we propose that the data sources we
would use must be maintained by organizations that seek to limit the
lag inherent in data to no more than 90 days from the end of the
calendar quarter for which drug pricing information is compiled to the
time that the organization makes such updates available to users of the
data source. Based on CMS assessment of the available data sources, the
current lag may be up to 90 days. We believe the limit of no more than
90 days provides sufficient time for organizations to collect data,
perform data checks, and update their data sources, and for CMS to
obtain and use the most current, timely available data for the purposes
of the GLOBE Model.
---------------------------------------------------------------------------

\103\ World Health Organization. International Nonproprietary
Names Programme and Classification of Medical Products.
International Nonproprietary Names (INN). Available at: <a href="https://www.who.int/teams/health-product-and-policy-standards/inn">https://www.who.int/teams/health-product-and-policy-standards/inn</a>.
\104\ Individual countries differ in the regulatory processes
and standards governing approval of drugs and biologicals. Use of
international drug pricing information in the proposed GLOBE Model
should not be interpreted to connote FDA approval or to otherwise
describe any scientific or regulatory relationship between U.S.-
approved and non-U.S.-approved products.
---------------------------------------------------------------------------

Whenever possible, to identify the per unit Method I GLOBE Model
benchmark for a GLOBE Model drug, we propose to use international drug
pricing information from two calendar quarters prior to the first
applicable calendar quarter to which the total GLOBE Model rebate
amount would apply since the ASP payment limits that apply to that
calendar quarter (and are generally the basis for the specified amount
set forth in 42 CFR 427.302(b)) are based on manufacturers' U.S. sales
from two calendar quarters prior. For GLOBE Model drugs to be included
on the GLOBE Model drug list for the first calendar quarter of
performance year 1 (that is, the calendar quarter beginning October 1,
2026), as proposed in 42 CFR 513.130, CMS would use international drug
pricing information from the second calendar quarter of 2026 (that is,
the ASP calendar quarter beginning on April 1, 2026). In addition,
except for extracted data used by CMS to identify the most recent per
unit Method GLOBE Model benchmark from January 1, 2024 to December 31,
2024, we propose to use international drug pricing information from no
earlier than the second calendar quarter of 2025 (that is, the ASP
calendar quarter beginning on April 1, 2025) to minimize the
possibility of having no international drug pricing information to
calculate the per unit Method I GLOBE Model benchmark while limiting
the possibility that historical data would not reasonably approximate
international drug pricing information for the applicable ASP calendar
quarter and mitigating the potential effect of manufacturers' limiting
the availability of international drug pricing information during the
GLOBE Model performance period. If international drug pricing
information from two calendar quarters prior to the first applicable
calendar quarter to which the total GLOBE Model rebate amount would
apply are not used, we propose that CMS would use international drug
pricing information from the most recent ASP calendar quarter for which
data are available.
b. Proposed Hierarchy for Using Existing Data Sources
To identify available data sources for purposes of identifying the
per unit Method I GLOBE Model benchmark for each GLOBE Model drug, we
propose that CMS would use the following hierarchy that we propose to
codify in 42 CFR 513.310(c)(2):
<bullet> A data source with drug specific sales and volume data for
the applicable

[[Page 60269]]

ASP calendar quarter from at least one country that is included in the
set of reference countries identified by CMS in accordance with 42 CFR
513.310(b).
<bullet> Except for extracted data used by CMS to identify the most
recent per unit Method GLOBE Model benchmark from January 1, 2024 to
December 31, 2024, a data source with drug specific sales and volume
data for any prior ASP calendar quarter beginning on or after April 1,
2025 from at least one country that is included in the set of reference
countries identified by CMS in accordance with 42 CFR 513.310(b) when
drug specific sales and volume data are not available for the
applicable ASP calendar quarter from at least one country that is
included in the set of reference countries identified by CMS in
accordance with 42 CFR 513.310(b).
<bullet> The extracted data used by CMS to identify the most recent
per unit Method I GLOBE Model benchmark available in a document posted
on the GLOBE Model website. We note that could include a data source
with drug specific sales and volume data from January 1, 2024, to
December 31, 2024, from at least one country that is included in the
set of reference countries identified by CMS in accordance with 42 CFR
513.310(b).
<bullet> A data source with drug specific ex-manufacturer price
(sometimes referred to as ex-factory price) data for the applicable ASP
calendar quarter from at least one country that is included in the set
of reference countries identified by CMS in accordance with 42 CFR
513.310(b).
<bullet> A data source with drug specific list price data (for
example, the price made available to wholesalers) for the applicable
ASP calendar quarter from at least one country that is included in the
set of reference countries identified by CMS in accordance with 42 CFR
513.310(b).
In cases when there is more than one data source meeting the
requirements in 42 CFR 513.310(c)(2) for a GLOBE Model drug for a
reference country, we propose to use the data source at the highest
level of the hierarchy that contains information from the highest
number of countries, and, if available, incorporates discounts,
rebates, or other price concessions into its drug pricing information.
Our proposed approach for using existing data sources would allow CMS
to use different data sources for different GLOBE Model drugs over
different quarters. We propose that CMS would select a data source and
extract the data as available from that data source, and we would not
make adjustments to account for differences between the data source
selected and other available data sources. For example, for GLOBE Model
drug X, suppose we identify Data Source 1 that meets the requirements
of 42 CFR 510.310(c)(2) where Data Source 1 contains sales and volume
data for GLOBE Model drug X for the applicable ASP calendar quarter
from 7 out of a total of 19 reference countries, Data Source 2 contains
sales and volume data for GLOBE Model drug X for the applicable ASP
calendar quarter from 8 reference countries, Data Source 3 contains
sales and volume data from one quarter prior to the applicable ASP
calendar quarter for GLOBE Model drug X from 9 reference countries, and
Data Source 4 contains list price information for the applicable ASP
calendar quarter from all included countries. In this scenario, in
accordance with our proposed approach, we would use information solely
from Data Source 2, and we would not use Data Sources 1, 3, or 4 for
that applicable calendar quarter.
We note that in that scenario, if CMS were unable to identify a
data source for international drug pricing information for GLOBE Model
drug X for a reference country, the lowest per unit country-level price
would be identified using the information available. That is, a
country-level price for each of the reference countries would not be
required and CMS would solely use the available information for as many
reference countries as possible. Further, we would not combine data
from different data sources to identify international drug pricing
information for GLOBE Model drug X across countries.
c. Alternatives Considered for Using Existing Data Sources
In cases when there is more than one data source meeting the
requirements in proposed 42 CFR 513.310(c)(3) for a GLOBE Model drug,
or in cases when there is more than one data source meeting the
requirements in proposed 42 CFR 513.310(c)(3) for a GLOBE Model drug
and for the same number of countries, we considered two alternatives.
Under one alternative, we would first identify the data source at the
highest level of the data source hierarchy that has the most pricing
information available and use the lowest value of the pricing
information available within that data source even if international
drug pricing information is available from other reference countries
within another data source. We also considered using all the available
data sources for a drug and calculating the average of the pricing
information available across all the data sources. Because these
alternative approaches could result in cases where available
international drug pricing information for a drug from a reference
country would not be used or cases where different types of pricing
information for a drug from a reference country would be combined, we
are not proposing them at this time and may reconsider the potential
value of these approaches based on feedback from interested parties and
further information gathering. We also seek comments on these
alternatives and how CMS could use the most comprehensive international
pricing information available.
We are interested in better understanding the existing data sources
for international drug pricing information that may be available to CMS
and steps we could follow to best use such data sources for the GLOBE
Model payment test. We welcome comments on the methods or processes CMS
could consider when more than one existing data source is available at
the highest level of the hierarchy to determine which data source is
more comprehensive, as well as on how CMS might refine the hierarchy
for potential use of more than one data source for a GLOBE Model drug
or to incorporate new data sources that may become available during the
GLOBE Model performance period.
d. Proposed Voluntary Submission of International Drug Net Pricing Data
Under the GLOBE Model, if a manufacturer elects to submit
international drug net pricing data for a GLOBE Model drug, to be
considered by CMS for identifying the per unit Method II GLOBE
benchmark, we propose that the manufacturer would be required to
execute a data agreement that must be effective prior to the
manufacturer's first submission of voluntary international drug net
pricing data. The data agreement would establish terms, conditions, and
requirements, including data completeness and validity requirements,
and compliance responsibilities. In 42 CFR 513.620(b), we propose that,
once the data agreement is effective, it would remain applicable for
the duration of the GLOBE Model unless either the manufacturer or CMS
terminates the agreement. We considered having data agreements that
were effective for a shorter duration such as one performance year or
for one quarter of a performance year. However, we were concerned that
allowing manufacturers to opt in and out of reporting for each quarter
would potentially result in manufacturers choosing to report only if

[[Page 60270]]

the Method II benchmark would be higher than the Method I benchmark.
Additionally, given the operational complexity associated with
conducting reporting on a quarterly basis, CMS believes it would be
less burdensome for CMS and manufacturers to enter one data agreement
for the duration of the GLOBE model. Under the data agreement,
manufacturers may make submissions for one or more GLOBE Model drugs
for any applicable ASP calendar quarter. For each submission, we
propose that the manufacturer must include ``applicable international
analog'', defined in 42 CFR 513.600 as a non-US analog whose scientific
or nonproprietary name, dosage form, and route of administration (if
applicable) align with a GLOBE Model drug and that are sold in one or
more reference countries identified in 42 CFR 513.310(b) during the
applicable ASP calendar quarter, excluding those identified in their
respective country as a generic or biosimilar biological product
according to the country's own regulations.\105\ We propose that
manufacturers would use data that (1) represents the price of the
international originator drugs; (2) have complete package size
information; (3) have a strength; and (4) represents a dosage form that
could be described by the GLOBE Model drug's HCPCS Level II code
descriptor, including route of administration (if applicable). For
example, if the HCPCS Level II code descriptor includes the word
injection, manufacturers would provide applicable international analog
net pricing data for products that are administered by injection (for
example, data for liquid and dry powder for injection products would be
submitted whereas data for tablets that are administered orally would
not be submitted). Further information on the manufacturer voluntary
submission is described in section II.G.6. of this proposed rule. We
also propose that manufacturers who elect the option to submit
international drug net pricing data for an applicable calendar quarter
during the GLOBE Model performance period would submit data that
corresponds to the applicable ASP calendar quarter for that applicable
calendar quarter. The applicable ASP calendar quarter is the calendar
quarter two quarters prior to the applicable calendar quarter. For
example, for the proposed first applicable calendar quarter of model
performance year 1 that would begin on October 1, 2026, the applicable
ASP calendar quarter would be April 1, 2026, to June 30, 2026. We
propose that submission of the data must occur no later than 30 days
after the end of the applicable ASP calendar quarter. For example, for
the proposed first applicable calendar quarter of performance year 1,
manufacturers would have to submit data to CMS no later than July 30,
2026, for it to be considered submitted timely and, if determined to be
acceptable by CMS, be considered by CMS for purposes of identifying the
per unit Method II GLOBE Model benchmark. The manufacturer submitted
data would include data for the entire applicable ASP calendar quarter
(April 1, 2026 to June 30, 2026). This would mean manufacturers would
have to establish an effective data agreement no later than July 30,
2026.
---------------------------------------------------------------------------

\105\ Individual countries differ in the regulatory processes
and standards governing approval of drugs and biologicals. Use of
international drug pricing information in the proposed GLOBE Model
should not be interpreted to connote FDA approval or to otherwise
describe any scientific or regulatory relationship between U.S.-
approved and non-U.S.-approved products.
---------------------------------------------------------------------------

We propose that CMS would conduct a verification review for
validity to determine whether the manufacturer's submission meets the
submission requirements as proposed in 42 CFR 513.610, which is
necessary for CMS to determine whether the submission represents an
``applicable submission'' to identify a per unit Method II GLOBE Model
benchmark. To conduct the verification review, CMS would--(1) review
the data for completeness to ensure all required data elements are
present; (2) verify the validity of the data, including verifying that
the submitted sales and volume data and calculated international net
pricing values are greater than zero and adhere to data format
requirements (for example, values are numeric and are rounded at the
third decimal place); and (3) as part of verifying the validity of the
data, CMS will assess the extent to which the submission reflects
international drug net pricing in the reference countries using all
available data sources and information, including data sources used to
identify the per unit Method I GLOBE Model benchmark and previous
submissions by the manufacturer for the same GLOBE Model drug (as
determined by CMS). For example, existing data shows U.S. ex-
manufacturer prices are, on average, 278 percent higher than prices in
other OECD countries, with U.S. originator drugs exhibiting an even
greater difference of 422 percent. Therefore, we expect, on average,
that reported international net prices for applicable international
analogs would be, in general, on average, less than the average sales
price that is reported to CMS and below or similar to prices contained
within existing international drug pricing information data sources. We
also expect that manufacturer submitted international drug net pricing
data for the applicable ASP calendar quarter would be within a
reasonable margin of previous submissions by the manufacturer for the
same set of applicable international analogs (if data exists), meaning
we do not expect manufacturer submitted internati

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