Home/Federal/Federal Register/2026-20281

Rule2026-20281

Global Benchmark for Efficient Drug Pricing (GLOBE) Model

Primary source

Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.

Published

October 2, 2026

Effective

November 30, 2026

Issuing agencies

Health and Human Services DepartmentCenters for Medicare & Medicaid Services

Abstract

This final rule implements the Global Benchmark for Efficient Drug Pricing Model (GLOBE Model), a new mandatory Medicare payment model under section 1115A of the Social Security Act. The GLOBE Model will test whether a payment model that uses an alternative method for calculating Medicare Part B drug inflation rebate amounts for certain separately payable Medicare Part B drugs and biological products reduces costs for Original Medicare (OM) beneficiaries and the Medicare program while preserving quality of care. The term OM has the same meaning as Medicare fee-for-service and the traditional Medicare program.

Full Text

<html>
<head>
<title>Federal Register, Volume 91 Issue 190 (Friday, October 2, 2026)</title>
</head>
<body><pre>
[Federal Register Volume 91, Number 190 (Friday, October 2, 2026)]
[Rules and Regulations]
[Pages 62936-63116]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-20281]

[[Page 62935]]

Vol. 91

Friday,

No. 190

October 2, 2026

Part IV

Department of Health and Human Services

-----------------------------------------------------------------------

Centers for Medicare & Medicaid Services

-----------------------------------------------------------------------

42 CFR Part 513

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

Federal Register / Vol. 91 , No. 190 / Friday, October 2, 2026 /
Rules and Regulations

[[Page 62936]]

-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 513

[CMS-5545-F]
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: Final rule.

-----------------------------------------------------------------------

SUMMARY: This final rule implements the Global Benchmark for Efficient
Drug Pricing Model (GLOBE Model), a new mandatory Medicare payment
model under section 1115A of the Social Security Act. The GLOBE Model
will test whether a payment model that uses an alternative method for
calculating Medicare Part B drug inflation rebate amounts for certain
separately payable Medicare Part B drugs and biological products
reduces costs for Original Medicare (OM) beneficiaries and the Medicare
program while preserving quality of care. The term OM has the same
meaning as Medicare fee-for-service and the traditional Medicare
program.

DATES: These regulations are effective on November 30, 2026.

FOR FURTHER INFORMATION CONTACT: Nicholas Minter, (410) 786-8914 or
<a href="/cdn-cgi/l/email-protection#85c2c9cac7c0e8eae1e0e9c5e6e8f6abededf6abe2eaf3">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

I. Executive Summary and Background

A. Background Overview

The high cost of healthcare continues to impact many Americans'
lives. According to the West Health-Gallup Affordability Index, only 61
percent of adults over age 65 in the United States (U.S.) are
considered ``Cost Secure,'' where a person has ``access to quality,
affordable care and ha[s] been able to pay for visits and prescriptions
in recent months.'' \1\ Simultaneously, health insurance costs continue
increasing. Challenges related to the affordability of prescription
drugs adversely affect taxpayers by diverting funds that could be used
to improve health.
---------------------------------------------------------------------------

\1\ Ellyn Maese, Gallup. U.S. Adults' Ability to Afford
Healthcare at a Five-Year Low, June 17, 2026. Available at: <a href="https://news.gallup.com/poll/710942/adults-ability-afford-healthcare-five-year-low.aspx">https://news.gallup.com/poll/710942/adults-ability-afford-healthcare-five-year-low.aspx</a>.
---------------------------------------------------------------------------

Medicare Part B funding comes from two sources: beneficiary
premiums and general Federal revenues. Total Medicare Part B
beneficiary premium amounts increased by $39 billion, or 53 percent,
from 2016 to 2021.\2\ While this increase may be due to the total
number of Medicare beneficiaries increasing from 52 million to 58
million in that period, the premium amount per enrollee also increased
from $1,423 in 2016 to $1,942 in 2021.\3\ Concurrently, the annual
Federal revenue contribution has also increased from $235.6 billion in
2016 to $386.0 billion in 2024, illustrating increased burdens across
all financing mechanisms in Medicare Part B.\4\
---------------------------------------------------------------------------

\2\ Centers for Medicare & Medicaid Services. CMS Program
Statistics--Medicare Premiums, 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>.
\3\ These enrollment numbers include total Medicare Part B
beneficiaries in OM Part B, Medicare Advantage plans, section 1876
cost plans, and section 1833 healthcare prepayment plans. OM Part B
enrollment for 2016 and 2021 was 34 million and 31 million,
respectively.
\4\ Centers for Medicare & Medicaid Services, Office of the
Actuary. 2025 Annual Report of the Boards of Trustees of the Federal
Hospital Insurance and Federal Supplementary Medical Insurance Trust
Funds, June 2025. Available at: <a href="https://www.cms.gov/oact/tr/2025">https://www.cms.gov/oact/tr/2025</a>.
---------------------------------------------------------------------------

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.5 6 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.\7\ 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.\8\ Financial toxicity, or the
negative impact that the monetary burden of medical care can have on
patients' well-being, fiscal security, and overall health,\9\ can be
most pronounced among the elderly population and among patients with
low income and for whom the cost of treatment can be high. 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.\10\ A separately conducted survey 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.<INF>11 12</INF> 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).<INF>13 14 15</INF> One study has theorized Medicare
beneficiaries without supplemental insurance are limited in accessing

[[Page 62937]]

immune checkpoint inhibitors (ICIs) due to the high cost of
coinsurance.\16\
---------------------------------------------------------------------------

\5\ Piette, J., Langa, K., Kabeto, M., Vijan, S., Rosen, A.,
Choi, H., & Heisler, M. (2010). Hospitalizations and Deaths Among
Adults With Cardiovascular Disease Who Underuse Medications Because
of Cost: A Longitudinal Analysis. Medical Care, 48(2), 87-94.
<a href="https://doi.org/10.1097/MLR.0b013e3181c12e53">https://doi.org/10.1097/MLR.0b013e3181c12e53</a>.
\6\ Blanchard J, Madden JM, Ross-Degnan D, Gresenz CR, Soumerai
SB. The relationship between emergency department use and cost-
related medication nonadherence among Medicare beneficiaries. Ann
Emerg Med. 2013 Nov;62(5):475-485. doi: 10.1016/
j.annemergmed.2013.04.013. Epub 2013 May 28. PMID: 23726522; PMCID:
PMC3812390.
\7\ 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>.
\8\ 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>.
\9\ 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.
\10\ 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>.
\11\ 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>.
\12\ 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>.
\13\ Nekhlyudov, L., Madden, J., Graves, A. J., Zhang, F.,
Soumerai, S. B., & Ross-degnan, D. (2011). Cost-related medication
nonadherence and cost-saving strategies used by elderly Medicare
cancer survivors. Journal of Cancer Survivorship, 5(4), 395-404.
doi: 10.1007/s11764-011-0188-4
\14\ 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.
\15\ 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.
\16\ Horn, D., Alpert, A., Duggan, M., Jacobson, M. The impact
of immunotherapy on reductions in cancer mortality: Evidence from
Medicare. Journal of Health Economics, 2026, 106. doi: 10.1016/
j.jhealeco.2026.103115.
---------------------------------------------------------------------------

Studies have also shown that the impact 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, finding 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.\17\ 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.\18\ Similarly,
research has also found an increased risk of mortality among patients
with certain types of cancer who filed for bankruptcy, compared with
those who did not file.\19\
---------------------------------------------------------------------------

\17\ 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.
\18\ 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>.
\19\ Ramsey, Scott D., et al. Financial Insolvency as a Risk
Factor for Early Mortality Among Patients With Cancer. Journal of
Clinical Oncology, 2016, 34(9): 980-986. doi: 10.1200/
JCO.2015.64.6620.
---------------------------------------------------------------------------

Research conducted by the Assistant Secretary for Planning and
Evaluation (ASPE) and the RAND Corporation reveals a substantial and
growing disparity between U.S. prescription drug prices and those of
peer nations across the Organisation for Economic Co-operation and
Development (OECD). An ASPE-funded study originally published in July
2022--using 2018 pricing data--found that U.S. drug prices with
available pricing information exceeded the combined average of non-U.S.
OECD countries by 256 percent.\20\ A subsequent 2024 update
incorporating 2022 pricing data demonstrated that this gap had widened
further to 278 percent.\21\ The disparity is most pronounced for
originator (brand-name) drugs, where U.S. prices surpass the non-U.S.
OECD average by 422 percent, with G7 country comparisons ranging from
324 percent above Canada to 464 percent above Japan.\22\ A separate
ASPE analysis focused on the top 50 Medicare Part B drugs--which
collectively accounted for 80 percent of total 2018 Medicare Part B
drug expenditures--found that U.S. prices were, on average, 211 percent
higher than those in comparable OECD nations, with G7 country
differentials ranging from 148 percent above Japan to 225 percent above
France.\23\
---------------------------------------------------------------------------

\20\ Ratios from this study are not adjusted for differences in
purchasing power-adjusted GDP per capita. See Andrew W. Mulcahy,
Christopher M. Whaley, Mahlet G. Tebeka, 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>.
\21\ 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>.
\22\ The G7 countries are Canada, France, Germany, Italy, Japan,
the United Kingdom, and the U.S.
\23\ Office of the Assistant Secretary for Planning and
Evaluation. Medicare FFS Part B and International Drug Prices: A
Comparison of the Top 50 Drugs, 2020. 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>.
---------------------------------------------------------------------------

B. Purpose

Prices for prescription drugs in the U.S.--including drugs covered
under Medicare Part B--remain high, contributing to increased program
expenditures. To address this challenge, this final rule implements a
new mandatory payment model: the Global Benchmark for Efficient Drug
Pricing (GLOBE) Model. The GLOBE Model is established under section
1115A of the Social Security Act (the Act), which authorizes CMS's
Center for Medicare and Medicaid Innovation (hereinafter, ``the CMS
Innovation Center'') to test innovative payment and service delivery
models to evaluate whether they reduce Medicare, Medicaid, and
Children's Health Insurance Program (CHIP) expenditures while
preserving or enhancing the quality of care for beneficiaries of such
programs. The Inflation Reduction Act of 2022 (Pub. L. 117-169, enacted
August 16, 2022) (IRA) established the Medicare Part B Drug Inflation
Rebate Program, which requires drug manufacturers to pay a rebate when
they raise prices for certain drugs faster than the rate of inflation.
CMS calculates and invoices these rebates, which are deposited into the
Medicare Prescription Drug Account within the Federal Supplementary
Medical Insurance Trust Fund. Building on this framework, the CMS
Innovation Center is finalizing the GLOBE Model to test an alternative
approach to calculating Medicare Part B drug inflation rebates for
certain Part B drugs and biological products. The model's purpose is to
evaluate whether this alternative approach will reduce program
expenditures while maintaining or enhancing quality of care for
beneficiaries. The GLOBE Model will begin on January 1, 2027 with the
collection of voluntary manufacturer-submitted international drug net
pricing data, and will be tested over 5 performance years, running from
April 1, 2027 through March 31, 2032. The associated payment period
will run from April 1, 2027 through March 31, 2034.

C. Summary of Major Provisions

The GLOBE Model will test changes to the Medicare Part B Drug
Inflation Rebate Program, specifically testing whether an alternative
calculation for the Medicare Part B drug inflation rebate for certain
drugs and biological products will reduce program spending for Medicare
and taxpayers while preserving or enhancing the quality of care
furnished to Medicare beneficiaries. We are finalizing the GLOBE Model
to include the following major provisions.
1. Model Performance and Test Period
The GLOBE Model will begin on January 1, 2027, with the collection
of voluntary manufacturer-submitted international drug net pricing
data. The model will include 5 performance years, which will begin on
April 1, 2027 and will end on March 31, 2032, during which the GLOBE
Model beneficiary coinsurance and adjusted payments to providers and
suppliers would apply and monitoring activities will occur. The model
will also include a 7-year payment period, which will begin on April 1,
2027 and will end on March 31, 2034, during which CMS will calculate,
invoice, collect, and reconcile the GLOBE Model rebates for a
performance year. The model evaluation will reflect the entire GLOBE
Model test period--which includes the voluntary manufacturer submission
period and the 7-year payment period.
2. GLOBE Model Drugs
The GLOBE Model will focus on a set of Part B rebatable drugs that
are single source drugs and sole source biological products and that
are furnished to a cohort of beneficiaries in the OM program. The set
of included drugs, as described in section II.B. of this final

[[Page 62938]]

rule, will include certain Part B rebatable drugs as identified in 42
Code of Federal Regulations (CFR) 427.101 for the purpose of the
Medicare Part B Drug Inflation Rebate Program and that meet the
definition of GLOBE Model drugs in Sec. 513.130. Specifically, the
GLOBE Model will include a subset of Part B rebatable drugs that have
the following United States Pharmacopeia (USP) Drug Classification (DC)
categories: Antigout Agents, Antineoplastics, Blood Products and
Modifiers, Central Nervous System Agents, Immunological Agents,
Metabolic Bone Disease Agents, and Ophthalmic Agents. These drugs must
have a Healthcare Common Procedure Coding System (HCPCS) Level II code
with OM Part B spending greater than $100 million over a 12-month
period ending 6 months prior to the start of the applicable calendar
quarter (as further specified in Sec. 513.130(b)(3) and Sec.
513.130(d)) and must not be excluded from the GLOBE Model as set forth
in Sec. 513.130(c).
The following drugs and biological products are excluded from the
GLOBE Model as set forth in Sec. 513.130(c): (1) a Part B rebatable
drug for applicable calendar quarters prior to the first applicable
calendar quarter for which CMS identifies a specified amount under 42
CFR 427.302(b); (2) a Part B rebatable drug for which a maximum fair
price under the Medicare Drug Price Negotiation Program is in effect;
(3) a drug or biological product which is no longer a Part B rebatable
drug; (4) a Part B rebatable drug that is designated as a drug for one
or more rare diseases or conditions under section 526 of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 360bb) and for which the only
approved indication (or indications) is for one or more such rare
disease or conditions; (5) a Part B rebatable drug that is a product
listed on the FDA Approved Cellular and Gene Therapy Products website;
and (6) a Part B rebatable drug that is a plasma-derived product as set
forth in 42 CFR 427.400. Items (4), (5), and (6) were added to Sec.
513.130(c) in response to public comments received during the comment
period for the GLOBE Model proposed rule (90 FR 60244 through 60336).
Drug selection (and removal, if applicable) for the model test will be
determined by CMS based on the eligibility criteria and will not be
subject to appeal, pursuant to section 1115A(d)(2) of the Act.
3. Defined Population and Intervention
The model cohort, as described in section II.C of this final rule,
will be identified by CMS from approximately 25 percent of
beneficiaries who are enrolled in OM Part B, have OM Part B as their
primary payer (as defined by a beneficiary being enrolled in OM), and
are not enrolled in a Medicare Advantage (MA) plan, section 1876 cost
plan,\24\ or section 1833 healthcare prepayment plan.\25\ Beneficiaries
must not have other group health coverage that is a primary payer (such
as employer-sponsored health insurance). The GLOBE Model geographic
areas will be determined through a random selection of ZIP Code
Tabulation Areas (ZCTAs). Prior to the model performance period, and no
more frequently than monthly thereafter, CMS will identify
beneficiaries for inclusion in the model cohort by determining whether
the beneficiary's address of record falls within the GLOBE Model
geographic areas. To be eligible for inclusion in the model cohort, a
beneficiary must not be identified by CMS for inclusion in the
comparison group and must otherwise meet the eligibility criteria for
inclusion. Medicare beneficiaries who are in the model cohort, or
``GLOBE Model beneficiaries,'' will not be model participants \26\ but
will benefit from reduced coinsurance, as applicable, when they receive
a separately payable GLOBE Model drug as described in section II.G.7.
of this final 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 GLOBE Model
drug will be eligible for GLOBE Model reduced coinsurance and included
in the calculation of GLOBE Model billing units, as applicable, as
described in section II.G.4. of this final rule. To identify the GLOBE
Model beneficiary coinsurance amount for GLOBE Model drugs and 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, CMS will compare the per unit GLOBE Model
benchmark amount as set forth in Sec. 513.400(c)(4) 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. Beneficiary selection
for the model cohort and comparison group (and removal, if applicable)
will be solely determined by CMS and will not be subject to appeal
pursuant to section 1115A(d)(2) of the Act. Providers and suppliers who
furnish GLOBE Model drugs to GLOBE Model beneficiaries who are in the
model cohort will not be model participants and will 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, and other pharmacies (in
certain situations). When the reduced beneficiary coinsurance applies
to units of GLOBE Model drugs furnished to a GLOBE Model beneficiary,
the provider or supplier will reduce the amount of coinsurance charged
to the beneficiary and the portion of the Medicare Part B allowed
amount that will be payable by Medicare Part B will be adjusted
upwards, as applicable. For example, if the Medicare Part B allowed
amount for a GLOBE Model drug 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 will be adjusted upward and will be $90
(instead of the usual $80) and the beneficiary coinsurance financial
responsibility will be $10 (instead of the usual $20).
---------------------------------------------------------------------------

\24\ As established in section 1876 of the Act (42 U.S.C.
1395mm).
\25\ As established in section 1833 of the Act (42 U.S.C.
1395l).
\26\ As discussed in section II.E. of this final rule,
manufacturers of GLOBE Model drugs will be model participants.
---------------------------------------------------------------------------

4. Manufacturer Participation
The GLOBE Model will require mandatory participation for all
manufacturers (as defined in 42 CFR 427.20) of Part B rebatable drugs
that are GLOBE Model drugs. When Part B rebatable drugs subject to the
GLOBE Model are furnished to OM beneficiaries who are in the model
cohort, manufacturers that are GLOBE Model participants will 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 will be based on available
international drug pricing information (as described in section II.G.
of this final rule). This amount will not be less than any rebates owed
under the Medicare Part B Drug Inflation Rebate Program and will be
invoiced using an incremental approach (as described in section II.G.8.
of this final rule). The GLOBE Model rebate amount will only apply to
certain units of the GLOBE Model drugs (as specified in Sec. 513.520)
and will be solely

[[Page 62939]]

determined by CMS and will not be subject to appeal, pursuant to
section 1115A(d)(2) of the Act. Manufacturers may submit a Suggestion
of Error (SOE) if they believe that a mathematical error exists and
requires a correction.
5. Model Alternative Rebate Amount Calculation and Rebate Payment
As described in section II.G.2. of this final rule, the GLOBE Model
will incorporate two approaches for establishing a benchmark amount for
the alternative rebate amount calculation, each using differently
sourced international drug pricing information and distinct calculation
methodologies. The model evaluation will assess the impact of testing
these two approaches. The first approach, Method I, as described in
section II.G.2.a. of this final rule, will use existing, commercially
available international drug pricing information to establish a
benchmark based on an estimate of the lowest country-level price among
the set of reference countries, as set forth in Sec. 513.310, at a
baseline. This pricing data may represent drug-specific sales data,
list prices, ex-manufacturer prices, retail prices, other prices, or a
combination of such pricing information, as available to CMS in
commercially available data sources.
The second approach, Method II, as described in section II.G.2.b.
of this final rule, will use voluntary manufacturer-submitted
international drug net pricing data to establish a benchmark based on
an average international price among the set of countries. This
benchmark will reflect net prices realized by a manufacturer.
Manufacturer submission of international drug net pricing data is
discussed in section II.G.6. of this final rule.
CMS is finalizing that the set of reference countries for Method I
and Method II benchmarks, as set forth in Sec. 513.310(b), will
include Australia, Austria, Belgium, Canada, Czech Republic, Denmark,
France, Germany, Ireland, Israel, Italy, Japan, Netherlands, Norway,
South Korea, Spain, Sweden, Switzerland, and the United Kingdom.
The GLOBE Model is designed to capture all applicable billing units
for separately payable OM Part B claims for GLOBE Model drugs that are:
(1) furnished to OM Part B beneficiaries in the model cohort on the
date of service; (2) paid under the GLOBE Model for dates of service
during a performance year; and (3) could be subject to the GLOBE Model
beneficiary coinsurance and adjusted payments to providers and
suppliers. For purposes of calculating the total and incremental GLOBE
Model rebate amount for a GLOBE Model drug that a manufacturer would
owe, CMS will identify applicable billing units several months after
the end of a calendar quarter, as described in section II.G. of this
final rule. Additional time is required for the calculation of these
rebate amounts and the preparation of invoices. As a result, GLOBE
Model operational processes--including claims processing, data
collection, invoicing, payment of GLOBE Model rebates, and
reconciliation--will occur concurrently with, and continue after the
end of each performance year, including after the conclusion of the
last performance year. In addition, CMS will use an incremental
invoicing approach for these GLOBE Model operational processes which is
described in section II.G.8. of this final rule.
6. Model Waivers
CMS has determined that it will 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, as described in 1115A(b) of the Act.
Specifically, as further described in section II.O. of this final rule,
pursuant to the CMS Innovation Center's waiver authority under section
1115A(d)(1) of the Act, CMS will waive provisions of sections 1847A(i),
1833(a), and 1833(t) of the Act, as well as associated regulatory
provisions at 42 CFR 410.152(m), 419.41(e), 489.30(b)(1), and
489.30(b)(6), to the extent necessary to permit the testing of an
alternative rebate amount calculation for certain units of GLOBE Model
drugs, the collection of GLOBE Model rebate amounts, GLOBE Model
reduced coinsurance, and adjusted Medicare payment.
In this final rule, CMS is codifying the requirements of the GLOBE
Model at 42 CFR part 513. Section 513.1(d) provides that should any
provision of part 513 be held invalid or unenforceable--whether by its
terms, or as applied to any person or circumstance--such provision will
be severable from the remainder of part 513, and the invalidity or
unenforceability of that provision will not affect the remainder of the
provisions of part 513.
7. Enforcement of Manufacturer Payment of Rebate
Consistent with the enforcement framework of the Medicare Part B
Drug Inflation Rebate Program, manufacturers of a GLOBE Model drug that
have failed to timely pay the incremental GLOBE Model rebate amount may
be subject to a civil money penalty (CMP). Further details on the
enforcement of manufacturer payment of rebates are provided in section
II.H. of this final rule.
8. Quality and Monitoring Strategy
CMS has finalized a quality and monitoring strategy for the GLOBE
Model. CMS will monitor and evaluate whether the alternative Medicare
Part B drug inflation rebate calculation under the GLOBE Model reduces
Medicare spending while preserving or enhancing the quality of care for
beneficiaries. Consistent with section 1115A(b)(4) of the Act, CMS will
conduct ongoing monitoring and evaluation activities throughout the
model performance period to identify potential changes in beneficiary
access to GLOBE Model drugs, utilization and prescribing patterns,
beneficiary out-of-pocket costs, continuity and site of care,
downstream healthcare utilization, drug availability and distribution
patterns, and other unintended consequences. CMS will rely primarily on
claims-based measures and existing data sources and may use targeted,
voluntary surveys or other supplemental data collection, as
appropriate, while seeking to minimize additional burden. Further
details on the GLOBE Model quality, monitoring, and evaluation strategy
are provided in sections II.J., II.L., and II.P. of this final rule.
9. Beneficiary Protections
CMS has finalized beneficiary protections activities for the GLOBE
Model. CMS will not require direct beneficiary notification or
establish a beneficiary opt-out because inclusion in the model does not
require beneficiaries to enroll or take any action and does not change
Medicare coverage or provider choice. CMS will coordinate, to the
extent feasible, with 1-800-MEDICARE, the Medicare Ombudsman, and the
CMS Office of Program Operations and Local Engagement (OPOLE) and will
make a GLOBE Model helpdesk available so beneficiaries, providers, and
other stakeholders can report model-related concerns. CMS will post
accessible technical documentation, user-friendly fact sheets, FAQs,
the GLOBE Model Drug HCPCS Level II Code List, and the model geographic
areas on the GLOBE Model website to support beneficiary and provider
awareness. Further details on beneficiary protections are provided in
section II.K. of this final rule.
10. Interaction and Coordination With Other Models and Programs
CMS reviewed potential interactions between the GLOBE Model and
other models and programs to ensure that the

[[Page 62940]]

evaluation of model impact is not compromised by issues of model
overlap. The GLOBE Model has been designed to function alongside and in
addition to the Medicare Part B Drug Inflation Rebate Program. Further
details on CMS's approach to overlap of the GLOBE Model with other CMS
Innovation Center Models and interaction with other Federal programs
are provided in sections II.M. and II.N. of this final rule,
respectively. Existing CMS Innovation Center Models may utilize waiver
authority to waive the requirement of mandatory participation of
manufacturers of GLOBE Model drugs is further discussed in section
II.M. of this final rule.
11. Evaluation Methods
The GLOBE Model evaluation will employ a design to provide evidence
that the proposed intervention would reduce Medicare expenditures and
would preserve or enhance the quality of care for Medicare
beneficiaries. The evaluation would include the collection of
representative information from manufacturers of GLOBE Model drugs,
drug purchasers, providers, and beneficiaries. The collection and
analysis of these data would inform how the GLOBE Model might function
if it were certified and expanded nationally. Consistent with the
purpose of section 1115A of the Act, the collection and analysis of
these data would also generate evidence on the effects of an
international benchmark-based rebate methodology on Medicare
expenditures, and quality of care that could inform future legislative
action relating to such policies. Further details on the evaluation
methodology, including data collection methods, key evaluation research
questions, and the evaluation period and anticipated reports, are
provided in section II.P. of this final rule.

D. Summary of Costs and Benefits

In section IV. of this final rule, we set forth a detailed analysis
of the regulatory and Federalism impacts that the GLOBE Model may have
on affected entities and beneficiaries. Tables 13, 14, and 15 in
section IV.D. of this final rule display the estimated overall impact
of the GLOBE Model on the Medicare and Medicaid programs.
We estimate that the GLOBE Model will result in overall savings of
$440 million \27\ in Medicare Part B net spending during the 7-year
payment period, inclusive of $298 million in OM Part B benefit savings,
$288 million in MA payment savings, and $147 million in premium offset
impacts. In this estimate, we assume manufacturer behavioral changes
and beneficiary utilization changes, as described in section IV. of
this final rule. We estimate savings for the MA program of $288 million
due to the way CMS calculates MA rates based on OM claims, which will
include claims paid under the GLOBE Model beginning with rate setting
for 2028. We also estimate savings for the Medicaid program of $39
million, of which roughly $17 million will be Federal premium savings,
$6 million will be Federal cost sharing savings, $10 million will be
state premium savings, and $5 million will be state cost sharing
savings.\28\ When annualized over the 7-year payment period, we
estimate that the GLOBE Model will result in overall cost savings in
Medicare Part B net spending of approximately $80 million at either the
3 percent or 7 percent rates of discount.
---------------------------------------------------------------------------

\27\ Overall Medicare Part B net spending savings are calculated
by adding OM Part B benefit savings and MA payment savings and then
subtracting the premium offset. Totals do not add up due to
rounding. See section IV. of this final rule for the Final
Regulatory Impact Analysis.
\28\ Note: Totals do not add up due to rounding. See section IV.
of this final rule for the Final Regulatory Impact Analysis.
---------------------------------------------------------------------------

E. Background

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
U.S. and that most of these categories have shown notable growth
between 2023 and 2024.\29\ This trend is also observed in Part B
rebatable drugs, where these five therapeutic classes represent at
least $42 billion (or 60 percent) in OM Part B drug allowed charges in
2024.30 31
---------------------------------------------------------------------------

\29\ 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>.
\30\ Dickson, S.R., and James, K.E. Medicare Part B Spending on
Macular Degeneration Treatments Associated with Manufacturer
Payments to Ophthalmologists. JAMA Health Forum, 2023, 4 (9):
e232951. doi:10.1001/jamahealthforum.2023.2951.
\31\ 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.
---------------------------------------------------------------------------

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 IRA 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.
OM Part B drug spending \32\ has also grown by 85.8 percent ($18.7
billion) \33\ from 2014 to 2021 with the standard monthly Medicare Part
B premium for beneficiaries increasing by 41.5 percent ($104.90 \34\ to
$148.50 \35\). Based on the increasing OM Part B and beneficiary drug
spending, we proposed, and are finalizing, to test a model to reduce OM
Part B drug spending and beneficiary coinsurance amounts using
international drug pricing information as a benchmark for an
alternative Medicare Part B inflation rebate amount calculation for
certain single source drugs and sole source biological products while
preserving or enhancing quality of care.
---------------------------------------------------------------------------

\32\ Measured by drug allowed charges.
\33\ Assistant Secretary for Planning and Evaluation. Medicare
Part B Drug Pricing, 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>.
\34\ Centers for Medicare & Medicaid Services. 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>.
\35\ Centers for Medicare & Medicaid Services. 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>.
---------------------------------------------------------------------------

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 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 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, and certain other outpatient settings, such as ambulatory

[[Page 62941]]

surgery centers. When Medicare allows separate payment for these drugs,
the payment limit is typically based on the methodology described in
section 1847A of the Act, with certain exceptions, such as the
methodology described in section 1833(t)(14)(A)(iii) 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, the Hospital Outpatient
Prospective Payment System, 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 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
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 IRA requires a temporary, 5-year increase
for qualifying biosimilar biological products (as defined in section
1847A(b)(8)(B)(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)(B)(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 payment limit for a HCPCS Level II code is
calculated quarterly by CMS using manufacturer-submitted ASP data on
sales to all purchasers (with limited exceptions as articulated in
section 1847A(c)(2) of the Act,\36\ such as sales at nominal charge and
sales exempt from Medicaid best price) \37\ 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). As a general matter, the ASP-based payment limit that
Medicare pays for a separately payable OM Part B 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 a MedPAC
report,\38\ 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.
---------------------------------------------------------------------------

\36\ OMB Control Number 0938-0921, Centers for Medicare &
Medicaid Services.
\37\ Best price is defined in section 1927(c)(1)(C) of the Act.
\38\ MedPAC. Medicare Part B Drug Payment Policy Issues, June
2017, Available at: <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>.
---------------------------------------------------------------------------

Currently, under Medicare Part B, beneficiary cost-sharing \39\ is
generally 20 percent of the Medicare-allowed amount. The term
``Medicare-allowed amount'' means the maximum amount that a provider or
supplier will 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.\40\ Medicare pays for the remaining
portion of the Medicare allowed amount.\41\
---------------------------------------------------------------------------

\39\ Not including the annual deductible.
\40\ 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.
\41\ 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>.
---------------------------------------------------------------------------

b. Medicare Part B Drug Inflation Rebate Program
Section 11101 of the IRA established requirements under which drug
manufacturers must pay Medicare 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, which may change
pursuant to changes in CFR 427.101,\42\ include: (1) qualifying
biosimilar biological products; \43\ (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 per year per individual under the applicable
threshold; (7) certain vaccines and other products; \44\ and (8)
generic drugs.\45\ 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

[[Page 62942]]

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.\46\
---------------------------------------------------------------------------

\42\ In the CY 2027 PFS Proposed Rule (91 FR 44006), CMS
proposed that skin substitute products licensed as a drug or
biological product under section 351 of the PHS Act would be
rebatable.
\43\ 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.
\44\ This includes influenza, pneumococcal, hepatitis B, and
COVID-19 vaccines, and monoclonal antibodies used for treatment or
post-exposure prophylaxis of COVID-19.
\45\ Drugs submitted in an Abbreviated New Drug Application
(ANDA) and approved under section 505(j) of the FD&C Act.
\46\ 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.
---------------------------------------------------------------------------

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. To implement section 11101 of the
IRA, in the CY 2025 PFS final rule (89 FR 98228 through 98313) \47\ 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),\48\ CMS adopted certain limited modifications to the policies
for the Medicare Part B Drug Inflation Rebate Program set forth in part
427 under title 42, chapter IV of the CFR for Part B. For example, 42
CFR 427.302(c)(5) described how CMS identifies the payment amount
benchmark quarter in certain instances and the calculation for the
Medicare Part B drug inflation rebate amount in such instances. In the
CY 2027 PFS proposed rule (91 FR 43842 through 44557),\49\ CMS proposed
additional limited modifications to the policies for the Medicare Part
B Drug Inflation Rebate Program, including the treatment of skin
substitutes approved as a drug or biological product under section 351
of the PHS Act as rebatable products, and identification of the CPI-U
in the event CPI-U data are unavailable.
---------------------------------------------------------------------------

\47\ ``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 through 98313 (December 9, 2024).
\48\ ``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 through 50481 (November 5, 2025).
\49\ ``Medicare and Medicaid Programs; CY 2027 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,'' 91 FR
43842 through 44557 (July 16, 2026).
---------------------------------------------------------------------------

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) \50\ 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 or renegotiation beginning with initial price applicability
year 2028.
---------------------------------------------------------------------------

\50\ 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.
---------------------------------------------------------------------------

2. Medicare and Beneficiary Spending
a. Historical Trending
An issue brief from ASPE evaluated Medicare Part B total spending
and OM drug allowed charges from 2014 to 2021.\51\ OM Part B drug
allowed charges increased from $21.8 billion in 2014 to $40.5 billion
in 2021, an increase of $18.7 billion. While total spending and drug
allowed charges have both increased significantly, OM Part B drug
allowed charges have seen higher spending growth. In 2014, OM Part B
drug allowed charges represented about 12.1 percent of OM Part B
spending but grew to 20 percent in 2021.\52\
---------------------------------------------------------------------------

\51\ Assistant Secretary for Planning and Evaluation. Medicare
Part B Drug Pricing, 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>.
\52\ Assistant Secretary for Planning and Evaluation. Medicare
Part B Drug Pricing, Exhibit 3 Part B FFS drugs' share of Part B FFS
spending, 2014 to 2021, 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>.
---------------------------------------------------------------------------

The same report also found that between 2014 and 2021, OM Part B
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). OM Part B 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-biological products, biological
products accounted for 89 percent of the OM Part B drug spending growth
between 2008 and 2021 and 79 percent of OM Part B drug spending in
2021. When reviewing OM Part B spending on multi-source drugs and
biological products in 2021, generic drugs \53\ accounted for only 2
percent of spending, and only 3 of the top 20 drugs by spend \54\ (all
biological products) were multi-source. Therefore, the majority of OM
Part B drug expenditures in 2021 were attributable to single source
drugs and sole source biological products.
---------------------------------------------------------------------------

\53\ 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.
\54\ 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).
---------------------------------------------------------------------------

An ASPE report evaluating OM Part B 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.\55\ 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.
---------------------------------------------------------------------------

\55\ Assistant Secretary for Planning and Evaluation. Medicare
Part B Enrollee Use and Spending on Biosimilars, 2018-2023, 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>.
---------------------------------------------------------------------------

It is also important to note that the number of enrollees for OM
Part B has decreased (8.8 percent) between 2016 to

[[Page 62943]]

2021 (34 million to 31 million),\56\ while OM Part B drug allowed
charges has increased (47 percent) for the same time period.\57\
Therefore, this increase in OM Part B spending for drugs during this
period is likely explained more by increases in the prices of drugs,
introduction of new drugs,\58\ 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.\59\
---------------------------------------------------------------------------

\56\ 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>.
\57\ Assistant Secretary for Planning and Evaluation. Medicare
Part B Drug Pricing, Exhibit 3 Part B FFS drugs' share of Part B FFS
spending, 2014 to 2021, 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>.
\58\ 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>.
\59\ 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.
---------------------------------------------------------------------------

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 billion.\60\ While this increase in
total Medicare Part B premiums is partially attributable to the
increase in all Medicare beneficiaries from 52 million to 58
million,\61\ 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 in OM and MA.\62\ 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.63 64 65
---------------------------------------------------------------------------

\60\ Centers for Medicare & Medicaid Services. CMS Program
Statistics--Medicare Premiums, 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>.
\61\ 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.
\62\ 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>.
\63\ Centers for Medicare & Medicaid Services. 2025 Medicare
Parts A & B Premiums and Deductibles, 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>.
\64\ 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>.
\65\ Congressional Research Service. Medicare Part B: Enrollment
and Premiums, 2021. CRS Report R40082. 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>.
---------------------------------------------------------------------------

In addition to a monthly premium, OM Part B beneficiaries typically
need to cover 20 percent of the cost of a Medicare Part B drug once
their Medicare Part B deductible is met. OM Part B 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 OM Part B spending has
increased. As previously discussed, this increase is likely driven by
high overall prices and the introduction of new drugs.66 67
---------------------------------------------------------------------------

\66\ 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.
\67\ Assistant Secretary for Planning and Evaluation. Changes in
the List Prices of Prescription Drugs, 2017 to 2023, 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>.
---------------------------------------------------------------------------

Further, as discussed earlier in section I.A., 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 32.4 percent ($136.2 billion) between 2019 to 2024.\68\
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 Medicare patients without low-income
subsidies,\69\ while another showed that 7 percent of adults 65 and
older skipped or did not take their medications as prescribed because
of cost.70 71 Research has also found multiple indications
of worse health status were associated with a higher likelihood of
cost-related nonadherence to medications.\72\
---------------------------------------------------------------------------

\68\ The 32.4 percent and $136.2 billion was calculated using
NHE Table 3: National Health Expenditures, by Source of Funds for
out of pockets costs for years 2019 and 2024. 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>.
\69\ Beneficiaries with a full low-income subsidy, which is
applicable to the Part D program only, see a 95% reduction in out-
of-pocket spending, compared to beneficiaries without low-income
subsidies. Shoemaker JS, Davidoff AJ, Stuart B, Zuckerman IH, et al.
Eligibility and Take-up of the Medicare Part D Low-Income Subsidy.
Inquiry 49, no. 3 (2012): 214-230. <a href="https://doi.org/10.5034/inquiryjrnl_49.03.04">https://doi.org/10.5034/inquiryjrnl_49.03.04</a>.
\70\ 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>.
\71\ 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>.
\72\ 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>.
---------------------------------------------------------------------------

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.\73\ 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.\74\
---------------------------------------------------------------------------

\73\ 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>.
\74\ Centers for Medicare & Medicaid Services, Office of the
Actuary. 2025 Annual Report of the Boards of Trustees of the Federal
Hospital Insurance and Federal Supplementary Medical Insurance Trust
Funds, June 2025. Available at: <a href="https://www.cms.gov/oact/tr/2025">https://www.cms.gov/oact/tr/2025</a>.
---------------------------------------------------------------------------

c. Relative High Price of Medicare Part B Drugs
Research from ASPE and RAND provides comparative data on U.S.

[[Page 62944]]

prescription drug prices relative to 32 other OECD countries.\75\ 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.
---------------------------------------------------------------------------

\75\ 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.
---------------------------------------------------------------------------

ASPE funded research published in July 2022 indicated that U.S.
prescription drug prices exceeded those of non-U.S. OECD countries
combined by 256 percent \76\ using 2018 data.\77\ In 2024, the 2022
ASPE funded 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.\78\ When comparing the U.S. against individual G7
countries, the price differential ranged from 229 percent higher than
Canada to 347 percent higher than Japan.
---------------------------------------------------------------------------

\76\ Mulcahey et al. calculated price indexes using U.S. volume
weights to account for differences in volume and mix of drugs across
countries.
\77\ Ratios from this study are not adjusted for differences in
purchasing power-adjusted GDP per capita. See Andrew W. Mulcahy,
Christopher M. Whaley, Mahlet G. Tebeka, 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>.
\78\ 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>.
---------------------------------------------------------------------------

This analysis reveals even larger pricing differences when
examining 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.\79\
---------------------------------------------------------------------------

\79\ 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(a) 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.
---------------------------------------------------------------------------

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 Medicare Part B drugs against non-
U.S. OECD countries using 2018 drug spending data.\80\ 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.\81\ 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.\82\
---------------------------------------------------------------------------

\80\ Assistant Secretary for Planning and Evaluation. Medicare
FFS Part B and International Drug Prices: A Comparison of the Top 50
Drugs, 2020. 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>.
\81\ 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
was 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.
\82\ 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.
---------------------------------------------------------------------------

The research findings indicate that U.S. prices used to calculate
ASP rates for OM Part B 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.\83\
---------------------------------------------------------------------------

\83\ Young, C.L., Frank, R.G., & Sachs, R. Brookings
Institution. International reference pricing for prescription drugs,
2025. 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>.
---------------------------------------------------------------------------

The data show that U.S. prescription drug prices, particularly for
U.S. originator drugs,\84\ 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 OM Part B and
Medicare Part B beneficiaries on single source drugs and sole source
biological products, in this final rule, we finalized the GLOBE Model
to test the impact of using international drug pricing information as a
benchmark for an alternative Medicare Part B inflation rebate amount
calculation for a subset of Medicare Part B rebatable drugs (certain
single source drugs and sole source biological products that meet the
criteria defined in Sec. 513.130) on Medicare program expenditures and
quality of care.
---------------------------------------------------------------------------

\84\ U.S. originator drugs are the original biologics and drugs
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.
---------------------------------------------------------------------------

F. Issuance of the Proposed Rule

On December 23, 2025, CMS published in the Federal Register (90 FR
60244) a proposed rule titled ``Global Benchmark for Efficient Drug
Pricing (GLOBE) Model'' (hereinafter referred to as the ``GLOBE Model
proposed rule''). We solicited public comment on our proposals and on
any alternatives considered (90 FR 60244). In response to the final
rule, we received 20,168 pieces of correspondence, of which 157 were
unique, timely correspondence from a variety of commenters, including,
but not limited to, academia, consumer/patient advocacy organizations,
consulting groups,

[[Page 62945]]

distributors, health plans, health care companies or providers,
professional associations, pharmaceutical manufacturers, and
individuals. The other 20,011 pieces of correspondence were duplicative
correspondence submitted by the same entity.
In the sections of this final rule that follow, we present our
proposals, summaries of the comments received, and responses to the
comments within scope of the proposed rule. Some of the public comments
received in response to the GLOBE Model proposed rule were outside of
the scope of the proposed rule and are not addressed in this final
rule.

II. Provisions of the Proposed Rule and Analysis of and Responses to
Public Comments

In this final rule, we summarize our proposals and final policies
for the GLOBE Model, including the general framework for implementing
and evaluating the GLOBE Model, model-specific parameters,
requirements, and definitions. We note that section 1115A(b) of the Act
gives the Secretary discretion in the design of models. Through the
GLOBE Model proposed rule (90 FR 60244 through 60336), published on
December 23, 2025, CMS sought input from interested parties and
welcomed comments on the proposed GLOBE Model. The proposed model-
specific parameters, requirements, and definitions are described in
sections of the GLOBE Model proposed rule and this final rule. We
proposed to codify them at 42 CFR part 513.
For purposes of the GLOBE Model, we proposed 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 (ASP), 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 also proposed 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.
We did not receive comments on these proposed definitions;
therefore, CMS is finalizing these definitions as proposed with non-
substantive technical corrections, except for severe supply chain
disruption. To align with our proposed definitions, we have added the
definitions for NDC and NOC Codes in Sec. 513.20 which have the same
meaning as set forth in 42 CFR 427.20. As discussed in section
II.G.4.d. of this final rule, CMS is not finalizing our proposal at
Sec. 513.500(e), to reduce the incremental GLOBE Model rebate amount
for a GLOBE Model drug that is a biosimilar biological product when
there is a severe supply chain disruption due to the finalization of
the provision excluding Part B rebatable drugs that are biosimilar
biological products from the GLOBE Model. Therefore, we are removing
and not finalizing a definition for ``severe supply chain disruption''
at Sec. 513.20. Additionally, as the term, Original Medicare or OM,
has the same meaning as Medicare fee-for-service and the traditional
Medicare program, we have made minor terminology updates to reflect
this in 42 CFR part 513.
We received many comments that discuss the overall model, the CMS
Innovation Center's authority to carry out the model, and broad legal
concerns. Below are summaries of these comments and our responses:
Comment: Multiple commenters believed that the GLOBE Model exceeds
the statutory authority granted to the CMS Innovation Center under
section 1115A of the Act. Commenters stated that: (1) section 1115A of
the Act requires that models be expected to preserve or enhance quality
of care as a threshold condition--not merely reduce expenditures; (2)
the statute does not authorize ``savings-first'' experimentation that
may compromise patient outcomes; and (3) CMS should not use
demonstration authority to achieve outcomes, such as de facto price
controls or restructuring of Medicare Part B, that Congress has not
explicitly authorized. Other commenters further remarked that CMS has
not demonstrated how the GLOBE Model would benefit patients.
Accordingly, commenters recommended the GLOBE Model be withdrawn.
Response: We agree with commenters that section 1115A of the Act
directs CMS to test innovative payment and care delivery models that
preserve or enhance quality of care. Under section 1115A of the Act,
Congress has granted CMS broad authority to test payment and service
delivery models that aim to reduce program expenditures while
preserving or enhancing quality of care furnished to beneficiaries. We
believe the GLOBE Model is consistent with the statutory language, as
it tests whether changes to payment incentives and reduced beneficiary
coinsurance for certain Part B drugs can maintain or improve quality of
care outcomes, for example, by alleviating affordability-related
barriers to care and support continued access to needed treatment,
while reducing program expenditures.
Previous studies--mentioned in the background section of the GLOBE
Model proposed rule (90 FR 60247)--have shown that high drug costs can
create barriers to care by limiting access to treatment, leading to
poorer health outcomes and deficits of care. Consistent with these
findings, financial distress has been identified as a risk factor for
mortality following cancer diagnosis, and high coinsurance amounts may
limit the utilization of certain cancer treatments.85 86 For
beneficiaries who rely on high-cost Part B drugs, financial barriers
and disruptions in access may adversely affect treatment continuity
and, in turn, health outcomes. To address cost-related barriers to
care, GLOBE Model beneficiaries are expected to receive a coinsurance
reduction. As discussed in section II.G.7. of this final rule, using
illustrative 2024 data for drugs identified in Table 4, 94 percent of
illustrative GLOBE Model drugs would have a beneficiary coinsurance
percentage between 2 and 12 percent--well below the standard 20 percent
coinsurance. While beneficiaries with supplemental insurance may not
directly benefit from the coinsurance reduction, this reduction has the
potential to meaningfully increase access for OM Part B beneficiaries
who bear the full cost of the coinsurance directly. Additionally, all
OM Part B beneficiaries may see reduced Part B premiums regardless of
supplemental coverage. As discussed in section IV.D. of this final
rule, the GLOBE Model is expected to generate $177 million in total
out-of-pocket savings, benefiting a substantial number of OM Part B
beneficiaries. As such, we disagree with the assertion that CMS has not
stated how the GLOBE Model would benefit patients.
---------------------------------------------------------------------------

\85\ Ramsey, Scott D., et al. Financial Insolvency as a Risk
Factor for Early Mortality Among Patients With Cancer. Journal of
Clinical Oncology, 2016, 34(9): 980-986. doi: 10.1200/
JCO.2015.64.6620.
\86\ Horn, D., Alpert, A., Duggan, M., Jacobson, M. The impact
of immunotherapy on reductions in cancer mortality: Evidence from
Medicare. Journal of Health Economics, 2026, 106. doi: 10.1016/
j.jhealeco.2026.103115.
---------------------------------------------------------------------------

As discussed in section II.J. of this final rule, CMS will assess
the model's effects on quality through a comprehensive monitoring and
evaluation framework that includes measurable, patient-level indicators
such as: beneficiary financial liability;

[[Page 62946]]

utilization and prescribing patterns; access to Part B drugs;
continuity of care; site of care; and downstream health care
utilization. This framework will enable CMS to evaluate whether the
model preserves or enhances quality of care and to identify and address
any unintended consequences. Further, quality preservation or
improvement is a co-equal, not secondary, objective of the GLOBE Model,
and the monitoring framework is designed to ensure this standard is met
throughout the GLOBE Model performance period.
Further, the GLOBE Model does not mandate or restrict how
manufacturers respond to the model. Manufacturers retain full
discretion in how they choose to respond to the model. CMS notes that
manufacturers retain the operational flexibility to set pricing and to
implement targeted pricing or contracting.
For these reasons, CMS disagrees that the GLOBE Model exceeds the
statutory authority granted to the CMS Innovation Center under section
1115A of the Act and declines to withdraw the model on this basis.
Comment: Many commenters stated the GLOBE Model is not a payment
and service delivery model under section 1115A of the Act because it
changes manufacturer-to-government rebate obligations rather than
Medicare payments or care delivery. Commenters stated that the GLOBE
Model rebate payments are not considered a ``payment'' under section
1115A of the Act because the payment methodology does not alter
Medicare payments to plans and providers, and the rebate obligation
arises later than the underlying drug payment.
Commenters further stated the GLOBE Model seeks to impose a ``fine
or sanction (via) rebate when manufacturers' domestic prices exceed
foreign reference prices'' or that the mandatory rebates are ``taxes
levied on manufacturers.'' Commenters stated that ``service delivery''
implies a change in how care or payment is conveyed and structured, not
merely the payment amount, and that the GLOBE Model satisfies neither
prong. Commenters further stated that the GLOBE Model does not change
how care or drugs are furnished, coordinated, prescribed, dispensed, or
managed, so it fails the ``payment and service delivery'' requirement
under section 1115A of the Act. Commenters believed that the enumerated
examples under section 1115A of the Act include both ``payment and
service delivery'' elements and therefore, reflect Congress's intent
that models include both components. For these reasons, commenters
recommend the GLOBE Model be withdrawn.
Response: CMS disagrees with commenters that the GLOBE Model is not
an appropriate model for testing under section 1115A of the Act. In
section 1115A of the Act, ``payment and service delivery'' is a
categorical descriptor for the types of models CMS may test; it is not
a requirement mandating that every model include both payment and
service delivery components simultaneously. We further disagree with
the characterization that CMS's model selection authority must be
understood only considering the expressly enumerated model types. While
section 1115A of the Act enumerates 27 model types for testing, the
statute, by its own terms, does not limit CMS's authority to those
listed types. Examples of CMS Innovation Center models that did not
include both payment and service delivery elements include models such
as the Bundled Payments for Care Improvement (BPCI) Model \87\ and the
Part D Senior Savings Model.\88\
---------------------------------------------------------------------------

\87\ Centers for Medicare & Medicaid Services. Bundled Payments
for Care Improvement (BPCI) Initiative: General Information.
Available at: <a href="https://www.cms.gov/priorities/innovation/innovation-models/bundled-payments">https://www.cms.gov/priorities/innovation/innovation-models/bundled-payments</a>. Under the BPCI, organizations entered into
payment agreements that included financial and performance
accountability for episodes of care.
\88\ Centers for Medicare & Medicaid Services. Part D Senior
Savings Model. Available at: <a href="https://www.cms.gov/priorities/innovation/innovation-models/part-d-savings-model">https://www.cms.gov/priorities/innovation/innovation-models/part-d-savings-model</a>. This model tested
the impact of enhanced alternative Part D plan options that offered
lower out-of-pocket costs for insulin as supplemental benefits.
---------------------------------------------------------------------------

CMS acknowledges that the GLOBE Model represents a novel
application of CMS Innovation Center authority under section 1115A of
the Act. However, we disagree that the GLOBE Model rebates are not a
``payment'' under section 1115A of the Act. The GLOBE Model is not the
only model in which manufacturers' obligations include rebates using
authority under section 1115A of the Act. In the CGT Access Model,
manufacturers that participate are required to provide states that
participate in the model with supplemental rebates that reflect model-
negotiated terms.89 90 Under the CGT Access Model, if a
Medicaid beneficiary who receives a covered therapy does not benefit
from it, the state Medicaid program will be entitled to a rebate from
the manufacturer equal to a portion of the therapy's cost. Congress
enacted section 1115A of the Act to encourage the CMS Innovation Center
to test approaches that have not yet been tried, not to replicate
existing programs and approaches.
---------------------------------------------------------------------------

\89\ Centers for Medicare & Medicaid Services. 2024 Report to
Congress. Available at: <a href="https://www.cms.gov/priorities/innovation/data-and-reports/2024/rtc-2024">https://www.cms.gov/priorities/innovation/data-and-reports/2024/rtc-2024</a>.
\90\ Centers for Medicare & Medicaid Services. CGT Model.
Available at: <a href="https://www.cms.gov/priorities/innovation/innovation-models/cgt">https://www.cms.gov/priorities/innovation/innovation-models/cgt</a>.
---------------------------------------------------------------------------

CMS also disagrees with the commenters' suggestion that the GLOBE
Model is not a payment model or that it imposes a sanction or tax on
manufacturers because it changes manufacturer rebate obligations, which
commenters do not view as payments. Section 1115A of the Act directs
the CMS Innovation Center to test payment and service delivery models
for the purpose of reducing program expenditures and improving quality.
CMS notes that the Medicare Part B Drug Inflation Rebate Program
reduces the net cost of payable drugs for Medicare, and the GLOBE Model
tests a change to the rebate amount calculation. The GLOBE Model rebate
is tied directly to a pricing benchmark and functions as an adjustment
to a mandatory monetary obligation. The fact that the rebate is
invoiced and paid subsequent to the underlying drug transaction does
not diminish its character as a ``payment'' under Medicare. Moreover,
we note that Congress has treated rebates as a payment-related topic.
For example, in enacting statutory language requiring Part B rebates,
Congress chose to house its language in section 1847A of the Act,
entitled ``Use of average sales price payment methodology.'' The same
is true of the Medicaid drug rebate program created by section 1927 of
the Act, entitled ``Payment for covered outpatient drugs.'' In
addition, CMS notes that numerous Medicare payment mechanisms,
including retrospective reconciliation payments, shared savings
distributions, and quality-based adjustments, are similarly calculated
and remitted after the point of care. For example, Accountable Care
Organizations (ACOs) in ACO REACH and the Medicare Shared Savings
Program may owe payment to CMS if their spending exceeds the benchmark.
These examples show payment systems that involve downside risk
inherently involve a repayment or reconciliation made back to the
government rather than affirmative payments to participants from CMS.
Furthermore, section 1115A of the Act does not restrict ``payment''
to transactions involving healthcare providers or plans. To the
contrary, the statute's broad reference to ``program expenditures'' and
``program costs'' supports an interpretation that encompasses any
mandatory monetary obligation that affects what Medicare ultimately
pays for covered items and

[[Page 62947]]

services--including manufacturer rebates.
For these reasons, CMS concludes that the GLOBE Model constitutes a
payment model within the meaning of section 1115A of the Act, and that
manufacturer rebate obligations under the model represent ``payments''
that directly affect Medicare's net expenditures for covered drugs. As
such, CMS declines to withdraw the model.
Comment: A commenter stated that the GLOBE Model rule ignored the
spirit of the Regulatory Bill of Rights, referring to a set of
principles set forth in section 6 of Executive Order 13924.\91\
---------------------------------------------------------------------------

\91\ Regulatory Relief to Support Economic Recovery, Exec. Order
No. 13924, 85 FR 31353 (May 22, 2020).
---------------------------------------------------------------------------

Response: CMS acknowledges the commenter's reference to the
Regulatory Bill of Rights.
CMS notes that the principles reflected in the Regulatory Bill of
Rights--including transparency, regulatory clarity, and meaningful
opportunity for public participation--are consistent with the
administrative process CMS followed in developing the GLOBE Model. At
all points in the process, CMS has complied with the requirements of
the Administrative Procedure Act and section 1871 of the Act: CMS
published a proposed rule (90 FR 60244), accepted public comments over
a 60-day comment period, and considered and responded to those comments
in this final rule. As described herein, we have made modifications to
certain proposals in this final rule based on our consideration of
public comments including, for example, the addition in the final GLOBE
Model regulations of exclusions for orphan-only drugs,\92\ plasma-
derived products as set forth in 42 CFR 427.400, and drugs listed by
FDA as Approved Cellular and Gene Therapy products. The GLOBE Model's
terms, drug selection criteria, rebate calculation methodology, and
applicable exclusions are set forth in detail in this final rule,
providing manufacturers and other stakeholders with clear notice of
their obligations.
---------------------------------------------------------------------------

\92\ Orphan-only drug means a drug that is designated as a drug
for only one or more rare diseases or conditions under section 526
of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360bb) and
for which the only approved indication (or indications) is for one
or more such rare diseases or conditions. Refer to Sec. 513.130(c)
for the GLOBE Model drug exclusion criteria.
---------------------------------------------------------------------------

For these reasons, CMS disagrees that the GLOBE Model ignored the
spirit of the principles the commenter identifies and CMS declines to
withdraw the model on this basis.
Comment: A few commenters stated that the GLOBE Model raises
separation of powers and nondelegation doctrine concerns under the
premise that the model effectively amends or supplants congressionally
enacted drug-pricing frameworks. The commenters specifically cited FCC
v. Consumers' Research, 606 U.S. 656 (2025), in which the court stated
that Congress is required to ``set out an intelligible principle to
guide what it has given the agency to do.'' These commenters
specifically stated that section 1115A of the Act does not permit CMS
to implement sweeping Most Favored Nation (MFN)-style rebates through a
CMS Innovation Center model test.
Response: We disagree with these comments. The GLOBE Model does not
violate the separation of powers or the nondelegation doctrine of the
Constitution, and it does not amend or supplant any congressionally
enacted drug pricing framework. The CMS Innovation Center was
established by section 1115A of the Act for the purpose of testing
``innovative payment and service delivery models to reduce program
expenditures while preserving or enhancing the quality of care''
provided to individuals who receive benefits from Medicare, Medicaid,
or CHIP. This authority does not violate separation of powers or the
nondelegation doctrine because Congress provided a statutory framework
that both authorizes and constrains CMS's development and testing of
models. Under the nondelegation doctrine, a delegation of authority to
an executive agency is permissible where Congress has provided an
``intelligible principle'' to guide the agency's exercise of that
authority. See Whitman v. Am. Trucking Ass'ns, 531 U.S. 457 (2001).
Section 1115A of the Act satisfies this standard because, as discussed
herein, section 1115A of the Act contains intelligible limiting
principles.
Commenters cited FCC v. Consumers' Research, which reaffirmed the
longstanding intelligible principle standard for evaluating delegations
of legislative authority to executive agencies--the same standard
articulated in Whitman v. American Trucking Ass'ns, and its
predecessors. As discussed previously, section 1115A of the Act readily
satisfies this standard. Congress did not delegate open ended or
standardless authority to CMS; rather, it enacted a detailed, purpose-
specific statutory framework that identifies the goals of model testing
(reducing program expenditures while preserving or enhancing quality of
care), authorizes specific waivers of certain Medicare and Medicaid
requirements only as necessary to carry out model tests, and
establishes binding criteria governing when a model may be expanded.
These provisions collectively constitute a robust intelligible
principle that meaningfully guides and constrains CMS's exercise of
authority under section 1115A of the Act. The GLOBE Model has been
designed in accordance with the limitations of section 1115A of the Act
to generate evidence about the effects on Medicare expenditures and
beneficiaries' quality of care of considering international drug
pricing information in alternative payment methodologies for drugs
payable under Medicare Part B. This evidence can inform future policy
decisions by Congress, as envisioned by section 1115A(g) of the Act
which states that reports to Congress on activities under section 1115A
of the Act ``shall provide such recommendations as the Secretary
determines are appropriate for legislative action to facilitate the
development and expansion of successful payment models.'' Thus, testing
the GLOBE Model is precisely the kind of evidence-generating function
that section 1115A of the Act was designed to support.
The intelligible principle supplied by Congress is not merely
present in the abstract; it is directly operative in shaping the design
and boundaries of the GLOBE Model itself. Accordingly, FCC v.
Consumers' Research does not provide a basis for concluding that
section 1115A's delegation of authority is constitutionally
inappropriate as applied to the GLOBE Model. Section 1115A of the Act
establishes the scope of permissible models, the parameters for
defining populations for testing, the authority to waive Medicare and
Medicaid requirements as deemed necessary to test a model, and the
criteria for expansion. These statutory conditions and goals
meaningfully direct CMS's development and testing of models. Congress
constrained CMS's authority to test time-limited models by requiring
that models be tested for the specific purpose of reducing program
expenditures while preserving or enhancing quality of care, evaluated
against statutory criteria, and expanded in duration and scope if such
expansion meets the requirements set forth in section 1115A(c) of the
Act. For these reasons, Congress granted CMS broad, yet constrained,
authority under section 1115A of the Act, rather than delegating its
legislative powers to the executive branch. This structure satisfies
the constitutional requirements of separation-of-powers concerns and
does

[[Page 62948]]

not implicate the nondelegation doctrine. With respect to the GLOBE
Model specifically, CMS is not amending statutory drug pricing
frameworks. Instead, as discussed in the GLOBE Model proposed rule (90
FR 60338) and in this final rule, the GLOBE Model is limited to testing
an alternative approach to the calculation of rebates for certain Part
B rebatable drugs and biological products under the Medicare Part B
Drug Inflation Rebate Program established under the IRA for the purpose
of evaluating whether this approach would reduce program expenditures
while maintaining or enhancing quality of care for Medicare
beneficiaries. The GLOBE Model would not implement sweeping MFN-style
pricing; it would test a targeted alternative approach to an existing
rebate calculation methodology within the bounds of the authority under
section 1115A of the Act.
Comment: A commenter stated that the GLOBE Model effectively amends
the IRA's rebate scheme without going through the constitutionally
mandated bicameralism and presentment requirements.
Response: We disagree that the GLOBE Model raises bicameralism and
presentment concerns. The bicameralism and presentment requirements of
Article I, Section 7 of the Constitution apply to the enactment of
legislation by Congress and does not constrain an executive agency's
exercise of authority that Congress has delegated by statute to such
agency. Agency rulemaking and program implementation are executive, not
legislative, functions, and are therefore distinct from the lawmaking
process that bicameralism and presentment are designed to govern.
The GLOBE Model would be implemented pursuant to section 1115A of
the Act, a duly enacted statute that passed both chambers of Congress
and was signed into law. Section 1115A of the Act grants the Secretary
broad authority to test innovative payment and service delivery models
to reduce program expenditures while preserving or enhancing the
quality of care. Congress deliberately crafted this delegation with
wide latitude, anticipating that CMS would exercise significant
discretion in model design. The GLOBE Model falls squarely within this
grant of authority, and its implementation is a lawful exercise of
delegated power, not an end-run around the legislative process.
CMS's exercise of authority under section 1115A of the Act does not
implicate the bicameralism or presentment requirements, as CMS is not
enacting new legislation; rather, it is acting within the bounds of
authority Congress has already granted. The commenter has not
identified any authority suggesting that model design decisions,
including those that interact with other statutory provisions, must
independently satisfy bicameralism and presentment requirements.
Comment: A commenter stated strong support for the inclusion of
severability language in the GLOBE Model, stating that such language
would ensure that existing statutory provisions remain unaffected
should any provision included in the GLOBE Model proposed rule be
deemed invalid or unenforceable by a court. The commenter indicated
that severability protections are an important safeguard for the
integrity of the broader rule and the statutory framework within which
the GLOBE Model operates.
Response: CMS agrees that severability language is an important
structural safeguard for the integrity of the rule and the statutory
framework within which the GLOBE Model operates.
As finalized in this rule, the severability provision is designed
to ensure that, should any individual provision of the GLOBE Model be
found invalid or unenforceable by a court of competent jurisdiction,
the remaining provisions of the rule would continue in full force and
effect to the maximum extent permitted by law. This approach reflects
CMS's intent that each provision of the GLOBE Model be capable of
operating independently, and that the invalidation of any single
provision not be construed to affect the validity or enforceability of
the rule as a whole or of the underlying statutory authority granted to
the CMS Innovation Center under section 1115A of the Act.
CMS believes that the inclusion of severability language is
consistent with sound regulatory drafting practice and supports the
long-term operational stability of the GLOBE Model. Accordingly, CMS is
finalizing the severability provision at Sec. 513.1(d) as proposed.
Comment: Multiple commenters state that the GLOBE Model exceeds
CMS's statutory authority under section 1115A of the Act. Commenters
believed that the GLOBE Model exceeds the permissible boundaries of a
CMS Innovation Center model by attempting to regulate pricing
relationships between the U.S. and other countries. Specifically,
commenters contended that: the use of international reference pricing
(foreign benchmark prices) as the basis for manufacturer rebates
effectively imports foreign price controls into the U.S. Medicare
system; the CMS Innovation Center's statutory authority is limited to
testing payment and service delivery models within the Medicare and
Medicaid programs and does not extend to regulating international
pharmaceutical pricing or trade; and this approach raises significant
concerns regarding the rule of law, separation of powers, and the
appropriate scope of executive agency authority. Commenters believed
this aspect of the model independently renders it unlawful and outside
the scope of the CMS Innovation Center's mandate.
Additionally, a few commenters stated that the model does not take
a phased approach as directed by statute, whereby Phase I is
meaningfully constrained before any broader expansion via rulemaking.
Commenters went on to note that the biotech and pharmaceutical market
is nationwide because manufacturers cannot isolate their global
research, development, and pricing activities to specific geography or
sector; therefore, commenters stated the model would operate as a
functionally mandatory, nationwide program, which goes beyond the CMS
Innovation Center's intended demonstration authority. For these
reasons, commenters recommend the GLOBE Model be withdrawn.
Response: CMS disagrees with these comments. The CMS Innovation
Center was established by section 1115A of the Act for the purpose of
testing ``innovative payment and service delivery models to reduce
program expenditures . . . while preserving or enhancing the quality of
care furnished to individuals'' who receive benefits from Medicare,
Medicaid, or CHIP. CMS's reliance on this authority for the GLOBE Model
does not violate the rule of law, separation of powers, or the non-
delegation doctrine because Congress provided an adequate statutory
framework that both authorizes and constrains CMS's development and
testing of models. Specifically, section 1115A of the Act defines the
scope of permissible models, grants the authority to waive certain
Medicare and Medicaid requirements as necessary to test a model, and
sets criteria for evaluation and expansion of models, among other
provisions. These statutory conditions and goals meaningfully direct
CMS's development and testing of models. Furthermore, as discussed
previously, section 1115A of the Act readily satisfies the
``intelligible principle'' standard. Congress did not delegate open-
ended or standardless authority to CMS; rather, it enacted a detailed,
purpose-specific statutory framework

[[Page 62949]]

that identifies the goals of model testing (reducing program
expenditures while preserving or enhancing quality of care), defines
the permissible scope of models and the populations that may be tested,
authorizes specific waivers of certain Medicare and Medicaid
requirements only as necessary to carry out model tests, and
establishes binding criteria governing when a model may be expanded.
These provisions collectively constitute a robust intelligible
principle that meaningfully guides and constrains CMS's exercise of
authority under section 1115A of the Act.
Congress further constrained CMS's authority by requiring that
models be evaluated against statutory criteria, and expanded only if
the model meets the statutory requirements for expansion under section
1115A(c) of the Act. For these reasons, Congress granted the CMS
Innovation Center broad, yet constrained authority under section 1115A
of the Act, rather than delegating its legislative powers to the
executive branch.
With respect to the GLOBE Model specifically, CMS is not amending
statutory drug pricing frameworks. CMS disagrees with commenters that
the GLOBE Model is functionally a mandatory, nation-wide program that
exceeds the agency's statutory authority. Rather, the GLOBE Model is
limited to testing an innovative payment methodology for the Medicare
Part B drug inflation rebate amount calculation for GLOBE Model drugs.
As discussed in section II.G.1.e. of this final rule, this methodology
uses international drug pricing information to establish a benchmark
reflecting prices paid in a set of economically comparable countries.
Section 1115A(a)(5) of the Act expressly authorizes the Secretary
to ``limit testing of a model to certain geographic areas.'' Consistent
with this authority, the GLOBE Model is limited to a random selection
of ZCTAs representing approximately 25 percent of OM Part B enrollees,
as outlined in section II.F. of this final rule. Other mandatory CMS
Innovation Center models have similarly employed randomization: the
Ambulatory Specialty Model (ASM) and the Transforming Episode
Accountability Model (TEAM) each randomly selected eligible Core Based
Statistical Areas (CBSAs) into their respective intervention groups--
approximately 40 percent for ASM and 25 percent for TEAM.
The GLOBE Model is a time limited test, focused on specific
geographic areas, and applies only to a defined subset of high-
expenditure, Part B rebatable drugs. These design features are
consistent with the ``testing'' framework contemplated by section 1115A
of the Act and distinguish the GLOBE Model from a broad restructuring
of drug pricing policy.
With respect to the model's randomization ratio, as described in
II.D. of the GLOBE Model proposed rule and this final rule, CMS
considered establishing a 1:1 intervention-to-comparison ratio.
However, CMS determined that the randomized design eliminates concerns
about selection bias and the need for post-hoc matching of comparison
group beneficiaries. Accordingly, CMS adopted a 1:3 intervention-to-
comparison ratio, which enables a sufficiently large selection of
beneficiaries into the GLOBE Model while maintaining analytical rigor.
CMS expects this approach will reduce program expenditures for OM Part
B while preserving or enhancing the quality of care furnished to
beneficiaries.
CMS also disagrees that the GLOBE Model imports foreign price-
setting systems, foreign price controls, or a Most Favored Nation-style
approach into the Medicare Part B program. As explained in sections
II.A. and II.B. of this final rule, the GLOBE Model is a time-limited
test focused on a subset of Part B rebatable drugs to evaluate whether
an alternative rebate amount calculation reduces Medicare spending
while preserving or enhancing the quality of care for Medicare
beneficiaries. The GLOBE Model tests an alternative approach to the
Medicare Part B drug inflation rebate amount calculation, as described
in section II.G.3. of this final rule. The existing Medicare Part B
program structure remains in place, and all applicable Medicare Part B
program rules continue to apply under the GLOBE Model.
Further, the GLOBE Model does not mandate or restrict how
manufacturers respond to the model. Manufacturers retain full
discretion in how they choose to respond to the model. CMS notes that
manufacturers may tailor their response to the areas selected for the
GLOBE Model, if they choose to do so. While CMS acknowledges that some
manufacturer responses may have national implications, manufacturers
retain the operational flexibility to implement targeted pricing or
contracting strategies in selected geographies, and the model does not
compel a nationwide response.
Importantly, the GLOBE Model does not incorporate or rely upon any
foreign country's legal policies, formulary rules, coverage rules, or
health technology assessment (HTA) processes in its alternative rebate
amount calculation. Nor does the GLOBE Model require that populations
in foreign countries have the same clinical or disease profiles as the
Medicare population in the U.S. CMS has selected a set of economically
comparable reference countries to derive the international benchmark
for a GLOBE Model drug because CMS believes significant disparities
between U.S. drug prices and prices in economically comparable
countries are contributing to potentially excessive expenditures for
drugs payable by Medicare Part B and harms to beneficiaries' quality of
care. Therefore, testing an alternative approach to the rebate amount
calculation in the Medicare Part B Drug Inflation Rebate Program that
relies on an international benchmarks for certain Part B rebatable
drugs to reduce program expenditures while preserving or enhancing
quality of care is consistent with the CMS Innovation Center's
authority under section 1115A of the Act and does not reflect an
impermissible importation of foreign price controls. Further, the use
of foreign prices in the international benchmark serve as a proxy for
the payment levels drug manufacturers are willing to accept for their
products, from drug manufacturers' perspectives-despite what foreign
payors are willing to spend or how lower foreign prices are developed.
Given that the international benchmarks are illustrative of payment
levels that drug manufacturers may accept for these products, we
believe testing a targeted alternative to the rebate amount calculation
under the Medicare Part B Drug Inflation Rebate Program using these
international benchmarks to reduce program expenditures while
preserving or enhancing quality of care represents a reasoned and valid
innovative payment model duly authorized by section 1115A of the Act.
The evidence generated by this model can inform future policy decisions
by Congress, as envisioned by section 1115A(g) of the Act which states
that reports to Congress on activities under section 1115A of the Act
``shall provide such recommendations as the Secretary determines are
appropriate for legislative action to facilitate the development and
expansion of successful payment models.''
Additionally, CMS notes that there is no language in section 1115A
of the Act that limits model tests to only those models that have
completely contained direct effects. CMS has previously tested models
that have, in practice, had some spillover effects and downstream
effects, including spillover effects on patients, providers, payers,
and health

[[Page 62950]]

systems that were not the primary target of the model's payment
incentives. We present a non-exhaustive list of examples next.
<bullet> The Oncology Care Model (OCM) saw spillover impacts as
participating practices implemented standardized workflows, 24/7
nursing lines, patient navigation, and expanded screening for all
cancer patients regardless of payer.\93\ These benefits extended well
beyond OCM-aligned Medicare beneficiaries and reflected practice
choices to adopt OCM-driven improvements system-wide.
---------------------------------------------------------------------------

\93\ Hassol et al. (2021). Evaluation of the Oncology Care
Model: Participants' perspectives. Abt Associates. Centers for
Medicare & Medicaid Services, U.S. Department of Health and Human
Services. <a href="https://www.cms.gov/priorities/innovation/data-and-reports/2021/ocm-ar4-eval-part-persp-report">https://www.cms.gov/priorities/innovation/data-and-reports/2021/ocm-ar4-eval-part-persp-report</a>.
---------------------------------------------------------------------------

<bullet> The Pioneer Accountable Care Organization (ACO) Model
documented that approximately 45 percent of physicians reported that
the model ``influenced how I care for ALL my patients, even those not
aligned with the ACO,'' and 28 percent of ACO physicians reported being
more likely to deliver higher quality care for non-ACO patients.\94\
---------------------------------------------------------------------------

\94\ L&M Policy Research, LLC (2016). Evaluation of CMMI
Accountable Care Organization Initiatives. Centers for Medicare &
Medicaid Services, U.S. Department of Health and Human Services.
<a href="https://www.cms.gov/priorities/innovation/files/reports/pioneeraco-finalevalrpt.pdf">https://www.cms.gov/priorities/innovation/files/reports/pioneeraco-finalevalrpt.pdf</a>.
---------------------------------------------------------------------------

<bullet> The Next Generation ACO (NGACO) Model documented that the
proportion of visits that the comparison group obtained from Medicare
ACO-affiliated providers increased significantly, ranging from 14 to 18
percent during the baseline and first performance year.\95\
---------------------------------------------------------------------------

\95\ Lowell et al. (2018). Next Generation Accountable Care
Organization (NGACO) Model Evaluation: First Annual Report. NORC at
the University of Chicago. Centers for Medicare & Medicaid Services,
U.S. Department of Health and Human Services. <a href="https://www.cms.gov/priorities/innovation/files/reports/nextgenaco-firstannrpt.pdf">https://www.cms.gov/priorities/innovation/files/reports/nextgenaco-firstannrpt.pdf</a>.
---------------------------------------------------------------------------

<bullet> The Comprehensive ESRD Care (CEC) Model produced anecdotal
evidence from qualitative data collection that care process changes
occurred for patients not aligned to the model as well as those within
it.\96\
---------------------------------------------------------------------------

\96\ Marrufo et al. (2021). Comprehensive End-Stage Renal
Disease Care (CEC) Model: Performance Year 4 Annual Evaluation
Report. The Lewin Group. Centers for Medicare & Medicaid Services,
U.S. Department of Health and Human Services. <a href="https://www.cms.gov/priorities/innovation/data-and-reports/2021/cec-annrpt-py4">https://www.cms.gov/priorities/innovation/data-and-reports/2021/cec-annrpt-py4</a>.
---------------------------------------------------------------------------

<bullet> The Global and Professional Direct Contracting Model,
later modified and renamed by CMS as the ACO REACH Model, generated
evidence from annual ACO surveys showing that approximately half of
ACOs were implementing model strategies in MA populations,
approximately one third were applying strategies to original Medicare
populations not aligned to the model, and some were extending
strategies to commercial and Medicaid beneficiaries as well.\97\
---------------------------------------------------------------------------

\97\ NORC. Evaluation Report 3: Evaluation of the ACO REACH
Model, 2026. Available at: <a href="https://www.cms.gov/priorities/innovation/data-and-reports/2026/aco-reach-3rd-eval-report">https://www.cms.gov/priorities/innovation/data-and-reports/2026/aco-reach-3rd-eval-report</a>.
---------------------------------------------------------------------------

Some CMS Innovation Center models also produced infrastructure and
tool adoption spillovers, where model developed innovations were
adopted broadly beyond the model's direct participants. For example:
<bullet> The Accountable Health Communities (AHC) Model generated
spillovers through the broad adoption of its health-related social
needs screening tool. Beneficiaries assigned to the control group
received community referral summaries, and the community advisory
boards likely had broad impacts beyond those who were screened and
received navigation services, with those impacts likely persisting
after the model ended.\98\
---------------------------------------------------------------------------

\98\ Beil et al. (2026). Accountable Health Communities (AHC)
Model Evaluation: Final Report. RTI International. Centers for
Medicare & Medicaid Services. Available at: <a href="https://www.cms.gov/priorities/innovation/data-and-reports/2026/ahc-final-report">https://www.cms.gov/priorities/innovation/data-and-reports/2026/ahc-final-report</a>.
---------------------------------------------------------------------------

<bullet> The Kidney Care Choices (KCC) Model and the ESRD Treatment
Choices (ETC) Model produced spillovers as participants made electronic
health record modifications and added care coordinators, patient
education programs, and new roles to support home dialysis and
transplantation--infrastructure changes that were likely available to
all providers and patients within an organization or health system, not
just those aligned to the model.99 100
---------------------------------------------------------------------------

\99\ The Lewin Group. Kidney Care Choices (KCC) Model: Second
Annual Evaluation Report, Performance Year 2023, 2026. Centers for
Medicare & Medicaid Services. Available at: <a href="https://www.cms.gov/priorities/innovation/data-and-reports/2026/kcc-2nd-annual-report">https://www.cms.gov/priorities/innovation/data-and-reports/2026/kcc-2nd-annual-report</a>.
\100\ Negrusa et al. The Lewin Group. End-stage Renal Disease
Treatment Choices (ETC) Model Second Annual Evaluation Report,
January 2024. Centers for Medicare & Medicaid Services, U.S.
Department of Health and Human Services. Available at: <a href="https://www.cms.gov/priorities/innovation/data-and-reports/2024/etc-2nd-eval-rpt">https://www.cms.gov/priorities/innovation/data-and-reports/2024/etc-2nd-eval-rpt</a>.
---------------------------------------------------------------------------

<bullet> The BPCI Advanced model generated anecdotal evidence from
interviews and site visits that care redesign best practices--including
enhanced preoperative optimization, changes to interdisciplinary
rounding, establishment of new care protocols, employment of care
navigators, and formation of preferred post-acute care networks--spread
to other hospitals within the same health system that were not
participating in the model.\101\
---------------------------------------------------------------------------

\101\ Henke et al. The Lewin Group. CMS Bundled Payments for
Care Improvement Advanced Model: Fifth Annual Evaluation Report,
2024. Centers for Medicare & Medicaid Services. Available at:
<a href="https://www.cms.gov/priorities/innovation/data-and-reports/2024/bpci-adv-ar5">https://www.cms.gov/priorities/innovation/data-and-reports/2024/bpci-adv-ar5</a>.
---------------------------------------------------------------------------

<bullet> The Strong Start for Mothers and Newborns initiative
generated community and referral network spillovers. The main spillover
effect was the adoption of universal screening tools and related care
improvements, along with strengthened community partnerships, referral
networks, care coordination, and expanded access to services like group
prenatal care beyond the original target population.\102\
---------------------------------------------------------------------------

\102\ Hill et al. Urban Institute. Strong Start for Mothers and
Newborns Evaluation: Year 5 Project Synthesis (Volume 2: Awardee-
Specific Reports, 2018. Centers for Medicare & Medicaid Services.
Available at: <a href="https://downloads.cms.gov/files/cmmi/strongstart-prenatal-finalevalrpt-v2.pdf">https://downloads.cms.gov/files/cmmi/strongstart-prenatal-finalevalrpt-v2.pdf</a>.
---------------------------------------------------------------------------

<bullet> The State Innovation Models (SIM) Initiative generated
State level, multipayer infrastructure spillovers that were sustained
by design. Analyses found that the Arkansas Medicaid Patient Centered
Medical Home Program, using funding from the SIM Initiative, had
spillover effects on commercial populations for early adopting
practices, increasing access to outpatient care.\103\
---------------------------------------------------------------------------

\103\ Hinde, J. M., et al. (2020). Did Arkansas' Medicaid
Patient-Centered Medical Home Program Have Spillover Effects on
Commercially Insured Enrollees? INQUIRY: The Journal of Health Care
Organization, Provision, and Financing, 57. <a href="https://doi.org/10.1177/0046958019900753">https://doi.org/10.1177/0046958019900753</a>.
---------------------------------------------------------------------------

Evidence from across the CMS Innovation Center portfolio suggests
that model participants may voluntarily apply care delivery changes,
infrastructure investments, and practice transformation efforts learned
through model participation beyond the model's targeted populations.
The GLOBE Model is designed as a geographically targeted intervention,
and any broader health system impact would reflect participants'
independent adoption of model informed practices rather than the scope
or intent of the model's design.
CMS also notes that section 1115A(c) of the Act separately provides
for later expansion of the duration and the scope of a tested model, if
statutory criteria are met, which could include testing the GLOBE Model
on a nationwide basis. Contrary to commenters' allegations, the current
design of the GLOBE Model is consistent with a Phase I test, and the
CMS Innovation Center will determine at a later time whether to expand
the GLOBE Model, as authorized under section 1115A(c) of the Act. CMS
does not believe that the GLOBE Model as

[[Page 62951]]

proposed will qualify or function as a Phase II expanded model. For
these reasons, CMS declines to withdraw the GLOBE Model.
Comment: A few commenters stated that the GLOBE Model implicates
the major questions doctrine, which requires Congress to ``speak
clearly'' before an agency may make decisions of ``vast economic and
political significance.'' Util. Air Regul. Grp. v. EPA, 573 U.S. 302,
324 (2014) (internal quotation marks omitted). Commenters stated that
the proposed GLOBE Model would impose approximately $11.9 billion in
new rebates--totaling tens of billions of dollars in new manufacturer
obligations; fundamentally alter net drug payments under OM Part B by
tying rebates to foreign reference prices rather than domestic
inflation benchmarks; and address a question--international reference
pricing--that Congress has actively debated and deliberately declined
to enact when it passed the IRA. Commenters believed that Congress
specifically evaluated and removed international pricing provisions
prior to passing the IRA, opting instead for domestic benchmarks. Given
this context, commenters stated that CMS cannot rely on the CMS
Innovation Center's general ``test'' and ``waiver'' authority to
unilaterally implement a sweeping international reference pricing
regime. Commenters believed that the Supreme Court's decisions in West
Virginia v. EPA, 597 U.S. 697 (2022), and Biden v. Nebraska, 600 U.S.
477 (2023), confirm that such broad agency action requires clear
congressional authorization, which commenters state is absent here.
Commenters also cited Loper Bright Enterprises v. Raimondo, 603 U.S.
369 (2024), and stated that courts must give statutory text its
ordinary meaning in context. Commenters further cited Learning
Resources, Inc. v. Trump, 607 U.S. 229 (2026), and noted that the
Supreme Court has stated that ``both separation of powers principles
and a practical understanding of legislative intent'' suggest that
Congress does not delegate ``highly consequential power'' through
ambiguous language.
Response: CMS disagrees with commenters that the GLOBE Model raises
concerns under the major questions doctrine. Congress created the CMS
Innovation Center for the specific purpose of testing ``innovative
payment and service delivery models,'' expressly authorized the
Secretary to waive under section 1115A(d)(1) of the Act any Medicare
requirements ``as may be necessary solely for the purpose of carrying
out this section,'' and expressly bounded the authority with limiting
conditions. CMS is not invoking broad, general statutory language to
claim transformative power; rather, CMS is acting within a detailed,
purpose-specific statutory framework that Congress designed precisely
for this type of model test in the context of a voluntary Spending
Clause program (Medicare). Notably, section 1115A of the Act does not
merely confer a general or open-ended mandate; it establishes a
structured testing framework and includes an illustrative list of model
types that Congress itself identified as falling within the scope of
the authority. The GLOBE Model fits squarely within that framework,
further confirming that CMS is not claiming power from vague or
ancillary text but is instead acting within the specific contours of
the authority Congress deliberately designed.
The major questions doctrine is directed at agencies that claim
extraordinary power from vague or ancillary statutory text over issues
of vast economic and political significance--the framing the Supreme
Court applied in West Virginia v. EPA. The GLOBE Model, by contrast,
derives its authority from section 1115A of the Act, which provides a
clear and express statutory basis for the model's design and scope. The
GLOBE Model is a time-limited and narrowly scoped test designed to
understand whether changing the Medicare Part B drug inflation rebate
amount calculation will reduce Medicare spending while preserving or
enhancing quality of care furnished to beneficiaries. This structural
limitation is itself significant for purposes of the major questions
doctrine. The doctrine is animated by concern about agencies making
lasting, transformative policy changes without clear congressional
authorization. Because the GLOBE Model operates within this inherently
provisional framework, it cannot produce the kind of sweeping, enduring
transformation that triggers concerns under the major question
doctrine. Congress built this limitation directly into the statute,
demonstrating that it deliberately constrained the scope of the
authority it was delegating.
CMS's approach in designing the GLOBE Model is consistent with the
manner in which the CMS Innovation Center has exercised its section
1115A authority across a wide range of models throughout its history.
Since its establishment, the CMS Innovation Center has routinely tested
alternative payment methodologies that test an alternative approach to
how Medicare pays for items and services, including alternative
approaches for existing statutory payment formulas. For example, OCM
tested, and the Enhancing Oncology Model (EOM) is testing, episode-
based payment approaches that alter standard Medicare fee-for-service
reimbursement for cancer care. The BPCI and BPCI Advanced models
restructured Medicare payment for episodes of care across a broad range
of clinical conditions. The CJR Model--which, like the GLOBE Model, was
implemented on a mandatory basis--altered Medicare payment for lower
extremity joint replacement procedures across geographically selected
markets. The MA Value-Based Insurance Design Model tested modifications
to cost-sharing structures for MA enrollees. In each of these models,
the CMS Innovation Center exercised its section 1115A authority to
waive existing Medicare payment requirements and substitute alternative
payment approaches. Moreover, the very purpose of section 1115A of the
Act is to test innovative policies that would reduce program
expenditures while preserving or enhancing quality of care that
Congress has not yet enacted; requiring prior congressional endorsement
and/or the prior existence of the elements of each innovative payment
and service delivery model proposed by CMS would render the innovative
model-testing authority of section 1115A of the Act superfluous. In
sum, in order to test innovative payment or service delivery models in
accordance with the statutory objectives of section 1115A of the Act,
the CMS Innovation Center must design innovative elements of the model
test and, where applicable, waive statutory and regulatory provisions
that would conflict with the testing of those innovative elements; that
authority is squarely what CMS is exercising here. The GLOBE Model's
alternative approach to the Medicare Part B drug inflation rebate
amount calculation using international drug pricing information
represents the same category of payment model innovation that the CMS
Innovation Center was designed and authorized to test. The major
questions doctrine does not require that every exercise of CMS
Innovation Center authority be tied to a specific precedent; it
requires only that the authority be grounded in clear statutory text,
and, as discussed previously, section 1115A of the Act provides exactly
that.
CMS also does not believe the GLOBE Model implicates the concerns
raised in Biden v. Nebraska. In that case, the Supreme Court held that,
under the HEROES Act, the Secretary of Education could not rely on
authority to waive or

[[Page 62952]]

modify statutory or regulatory provisions applicable to student
financial assistance programs as deemed necessary in connection with a
war or other military operation or national emergency, to implement a
broad student loan forgiveness program, as the latter was statutory
provisions that had vast economic and political significance without
clear congressional authorization. The GLOBE Model is distinguishable
on the basis that the model falls squarely within the purpose-specific
statutory framework of section 1115A of the Act that expressly
authorizes the CMS Innovation Center to test time-limited innovative
payment models, waive any Medicare requirement ``as may be necessary
solely for the purpose of carrying out this section with respect to
testing models,'' and evaluate the results against defined statutory
criteria. Unlike the action at issue in Biden v. Nebraska, which
canceled approximately $430 billion in Federal student loans and
completely erased the debts of 20 million borrowers pursuant to the
claimed authority under the HEROES Act, the GLOBE Model (1) tests a
targeted alternative rebate amount calculation under the Medicare Part
B Drug Inflation Rebate Program in accordance with section 1115A of the
Act's statutory objectives of reducing program expenditures while
preserving or enhancing quality of care, (2) is limited to a random
selection of ZCTAs representing approximately 25 percent of OM Part B
enrollees, (3) focuses on a subset of Part B rebatable drugs, (4)
operates only for a limited test period from January 1, 2027 to March
31, 2034 (further discussed in section II.A. of this final rule), (5)
is estimated to produce overall savings of $440 million \104\ in
Medicare Part B net spending (where overall total OM Part B drug
spending was $81.90 billion according to 2025 claims data), (6) is
evaluated for impacts to program expenditures and quality of care in
accordance with section 1115A(b)(4) of the Act, (7) is subject to
specific statutory requirements for expansion should the CMS Innovation
Center seek to expand the duration and the scope of the model test
pursuant to section 1115A(c) of the Act, and (8) is subject to regular
reporting to Congress under section 1115A(g) of the Act. Thus, the
GLOBE Model does not represent the type of action at issue in Biden v.
Nebraska. Accordingly, CMS does not believe the GLOBE Model presents
the type of sweeping, transformative agency action that the major
questions doctrine is intended to constrain.
---------------------------------------------------------------------------

\104\ Overall Medicare Part B net spending savings are
calculated by adding OM Part B benefit savings and MA payment
savings and then subtracting the premium offset.
---------------------------------------------------------------------------

Commenters also cited Loper Bright for the proposition that courts
must give statutory text its ordinary meaning in context, and they
suggested that this principle undermines CMS's reliance on section
1115A authority for the GLOBE Model. CMS disagrees. Loper Bright held
that courts must independently interpret statutory text and are not
required to defer to an agency's reading of an ambiguous statute.
However, Loper Bright does not alter the outcome here because CMS's
authority to implement the GLOBE Model does not rest on a strained or
ambiguous reading of section 1115A of the Act--it rests on the plain
text of the statute itself. Read according to its ordinary meaning,
section 1115A of the Act expressly authorizes the Secretary to test
``innovative payment and service delivery models'' and to waive any
Medicare requirements ``as may be necessary solely for the purpose of
carrying out this section with respect to testing models.'' The
ordinary meaning of this language provides CMS with the authority to
test an innovative payment model to reduce program expenditures while
preserving or enhancing quality of care that is time-limited and
geographically scoped where CMS waives section 1847A(i)(3) of the Act
as related to calculation of rebate amounts as necessary so that the
rebate amount calculation can incorporate certain international drug
pricing information. See Loper Bright, 603 U.S. at 395 (``When the best
reading of a statute is that it delegates discretionary authority to an
agency, the role of the reviewing court under the APA is, as always, to
independently interpret the statute and effectuate the will of Congress
subject to constitutional limits. The court fulfills that role by
recognizing constitutional delegations, fixing the boundaries of the
delegated authority, and ensuring the agency has engaged in reasoned
decision making within those boundaries'') (cleaned up).
Far from requiring deference to a contested agency interpretation,
the plain text of section 1115A of the Act, read in its full statutory
context, affirmatively supports CMS's authority here. Loper Bright
instructs courts to apply the best reading of the Act's statutory
provision, consistent with its text, structure, and purpose. Here, CMS
believes the best reading of section 1115A of the Act is that it
authorizes the GLOBE Model. The statute was enacted by Congress with
the deliberate purpose of enabling the CMS Innovation Center to test
innovative Medicare payment models, and the GLOBE Model falls squarely
within that purpose. Accordingly, Loper Bright does not provide a basis
for concluding that the GLOBE Model exceeds CMS's statutory authority.
Commenters finally cited Learning Resources, Inc. v. Trump and
noted that the Supreme Court has stated that ``both separation of
powers principles and a practical understanding of legislative intent''
suggest that Congress does not delegate ``highly consequential power''
through ambiguous language. CMS disagrees that this principle
undermines its authority here. As an initial matter, the GLOBE Model
does not rest on ambiguous statutory language. Section 1115A's text is
clear and expansive: it expressly grants the Secretary broad authority
to test innovative payment and service delivery models and to waive any
Medicare requirements as necessary to carry out such testing. The GLOBE
Model represents a time-limited, geographically scoped model designed
to test the effect of incorporating international drug pricing
information into rebate amount calculations, which falls squarely
within the core of the Secretary's expressly delegated testing
authority under section 1115A of the Act. This is not an instance of
CMS claiming sweeping or transformative regulatory power through a
strained reading of ambiguous text; it is a straightforward exercise of
authority that Congress plainly conferred. Accordingly, Learning
Resources does not alter CMS's conclusion that section 1115A of the Act
provides sufficient statutory authority for the GLOBE Model.
CMS also respectfully disagrees with the characterization that
Congress ``actively debated and deliberately declined to enact''
international reference pricing when passing the IRA, and that this
legislative history forecloses the GLOBE Model. The fact that a
Congress subsequent to the one that enacted section 1115A of the Act
considered and did not adopt a particular policy approach in the
specific context of the Negotiation Program does not foreclose the CMS
Innovation Center from testing an approach that uses certain
international drug pricing information within the limited bounds of its
statutory authority under section 1115A of the Act. Section 1115A of
the Act, which predates the IRA and was enacted as part of the Patient
Protection and Affordable Care Act (Pub. L. 111-148), provides the CMS
Innovation Center with express, independent authority to test
innovative payment and service delivery models, including models that
explore alternative rebate and pricing

[[Page 62953]]

methodologies. The GLOBE Model does not purport to implement the
international reference pricing provisions that Congress considered and
did not adopt in the context of the Negotiation Program; rather, it is
a time-limited, narrowly scoped model test conducted pursuant to the
CMS Innovation Center's distinct statutory mandate.
Commenters' position that the CMS Innovation Center cannot test the
GLOBE Model due to the major questions doctrine and the rejection of
using foreign reference prices specifically in the context of the
Medicare Drug Price Negotiation during the passage of the IRA
constrains Congress in a manner that has heretofore never been
recognized by law. Rather than allowing the CMS Innovation Center to
test this model pursuant to its statutory authority under section 1115A
of the Act--a model that has undergone notice and comment rulemaking
and is limited in geographic scope, limited in the drugs subject to the
Model, and limited in duration--in order to understand whether this
alternative payment methodology that incorporates certain international
drug pricing information preserves or enhances beneficiaries' quality
of care while reducing program expenditures, commenters' position
asserts that Congress is prevented from relying on this duly
authorized, limited kind of testing in the first place to understand
the consequences of particular policy approaches on beneficiaries'
quality of care and Federal spending before enacting legislation with
significant, nationwide ramifications. That is not an outcome required
by current law.
As discussed elsewhere in this section of this final rule, CMS does
not believe that the presence of spillover effects means that the GLOBE
Model would constitute a nationwide model, that it would bring about
sweeping changes to the Medicare program, or that it would transform
the negotiation framework that Congress established. CMS disagrees that
the GLOBE Model constitutes a nationwide drug pricing change. As
discussed in the GLOBE Model proposed rule (90 FR 60338) and this final
rule, the model would apply to a randomly selected subset of geographic
areas representing 25 percent of OM beneficiaries, a limited subset of
Part B rebatable drugs, and a defined test period. These limitations
are inconsistent with the characterization of the model as a nationwide
restructuring of drug pricing. The limited footprint of the GLOBE Model
stands in stark contrast to the types of agency actions that courts
have found to constitute claims of ``highly consequential'' or
transformative power, such as nationwide vaccine mandates, sweeping
emissions regulations affecting entire industries, or broad student
loan cancellation programs with economy-wide consequences. The GLOBE
Model does not eliminate or wholesale replace the existing rebate
framework, does not apply universally across the Medicare program, and
does not impose new obligations across the broader healthcare system.
Where the real-world impact of an agency action is this circumscribed
and targeted, the major questions doctrine provides no basis for
invalidation.
Finally, CMS notes that Congress' silence on international
reference pricing in the IRA or other legislation does not prohibit the
CMS Innovation Center from testing models under section 1115A of the
Act. While section 1115A of the Act enumerates twenty-seven model types
for testing that do not include drug pricing tests, the statute, by its
own terms, does not limit CMS's authority to those listed types.
Section 1115A(b)(2)(A) of the Act provides that the models selected for
testing ``may include, but are not limited to, the models described in
subparagraph (B).'' (Emphasis added.) The Supreme Court has held that
``the expansive phrasing of `may include' points directly away from the
sort of exclusive specification'' that commenters' argument requires.
See Chevron U.S.A. v. Echazabal, 536 U.S. 73, 80 (2002) (quoting 42
U.S.C. 12113(b)); see also NationsBank of N.C., N.A., v. Echazabal, 536
U.S. 73, 80 (2002) (quoting 42 U.S.C. 12113(b)); NationsBank of N.C.,
N.A., v. Variable Annuity Life Ins. Co., 513 U.S. 251, 258 n.2 (1995)
(upholding Comptroller of the Currency's ``discretion to authorize
activities beyond those specifically enumerated'' in statute). Here,
section 1115A of the Act provides abundant ``contrary indications''
that Congress intended broad model-testing authority: the statute's
stated purpose is to ``test innovative payment and service delivery
models to reduce program expenditures''; the illustrative models
encompass approaches as varied as promoting payment and practice reform
in primary care, utilizing medication therapy management services, and
familiarizing individuals with coverage availability for qualified
psychologist services (sections 1115A(b)(2)(B)(i), (vii), and (xxvi) of
the Act). This breadth of categories demonstrates that Congress did not
intend the list to cabin CMS's authority within narrow topical
boundaries.
The absence of an express statutory provision permitting
international reference pricing does not establish a prohibition; had
Congress intended to foreclose this type of model testing, it could
have done so expressly. Thus, the CMS Innovation Center is duly
authorized to test the GLOBE Model under section 1115A of the Act.
Comment: A couple of commenters stated a distinct appropriations
law concern under the anti-augmentation principle, codified in the
Miscellaneous Receipts Act, 31 U.S.C. 3302(b). Commenters stated that
this principle requires that any money received by the Federal
government to be deposited into the Treasury's general fund, not into a
specific trust fund, unless Congress has explicitly authorized
otherwise. Commenters believed that, because the GLOBE Model would
direct manufacturer rebate payments into the Federal Supplementary
Medical Insurance Trust Fund, not the general Treasury, and because CMS
lacks express congressional authorization to deposit those funds into
the Federal Supplementary Medical Insurance Trust Fund, the model
violates this long-standing principle of appropriations law.
Response: CMS disagrees with the commenters' argument that the
GLOBE Model violates the anti-augmentation principle. CMS also
disagrees with the commenters' contention that the GLOBE Model
impermissibly augments congressional appropriation by directing new
manufacturer payments into the Federal Supplementary Medical Insurance
Trust Fund without express authorization.
The Medicare Part B Drug Inflation Rebate Program's statutory
framework confirms that manufacturer rebate payments are properly
credited to the Federal Supplementary Medical Insurance Trust Fund, as
mandated by section 1847A(i)(6) of the Act. Further, Congress
established the CMS Innovation Center under section 1115A of the Act to
test innovative payment and service delivery models to reduce program
expenditures while preserving or enhancing quality of care. The GLOBE
Model does not augment agency appropriations through unauthorized
means; rather, it operates pursuant to the CMS Innovation Center's
explicit Congressional authorization to test an innovative payment
model, where the CMS Innovation Center tests a targeted alternative
approach to the rebate amount calculation under the Medicare Part B
Drug Inflation Rebate Program and the rebates are deposited consistent
with the requirements of the Medicare Part B Drug Inflation Rebate
Program

[[Page 62954]]

into the Federal Supplementary Medical Insurance Trust Fund as required
by Congress under section 1847A(i)(6) of the Act.
Comment: A few commenters stated that the GLOBE Model violates the
Anti-Deficiency Act, codified at 31 U.S.C. 1341-1342 and 1511-1519,
which bars employees of the Federal government from obligating funds in
advance of or in excess of appropriations. Specifically, the commenters
stated GLOBE impermissibly directs new incremental rebate payments into
the Federal Supplementary Medical Insurance Trust Fund rather than the
Treasury's general fund, effectively boosting the Federal Supplementary
Medical Insurance Trust Fund's available resources without
congressional authorization. The commenters believed this is an end-run
around Congress's power of the purse.
Response: CMS disagrees that the GLOBE Model violates the Anti-
Deficiency Act. The Anti-Deficiency Act prohibits Federal employees
from obligating or expending funds in advance of or in excess of
available appropriations. The GLOBE Model operates within the existing
statutory framework, wherein Congress authorized rebate payments under
the Medicare Part B Drug Inflation Rebate Program, section 1847A(i) of
the Act. Under that framework, rebate payments from manufacturers are
already directed to the Federal Supplementary Medical Insurance Trust
Fund by statute. The GLOBE Model does not create a new or independent
funding stream; rather, it creates an alternative methodologyby which
the rebate amount is calculated for certain drugs tested under the
model, consistent with the CMS Innovation Center's authority under
section 1115A of the Act. Because the GLOBE Model substitutes an
alternative rebate amount calculation for the otherwise applicable
statutory rebate amount, rather than establishing a wholly new category
of payment obligation, the destination of those funds remains
consistent with the existing statutory framework. No new appropriation
is required, and no funds are obligated in advance of or in excess of
available appropriations. Congress itself established both the Federal
Supplementary Medical Insurance Trust Fund as the repository for
Medicare Part B drug inflation rebates and the CMS Innovation Center's
broad authority to test alternative payment models. The GLOBE Model
operates squarely within both of those congressional mandates.
Furthermore, the Anti-Deficiency Act's prohibition on obligating
funds in excess of appropriations is not implicated here because the
GLOBE Model does not direct CMS to spend funds beyond what has been
appropriated. On the contrary, the model is designed toreduceMedicare
expenditures by testing whether an alternative payment methodology
produces lower net drug costs for the Medicare program while preserving
or enhancing quality of care. Any rebate payments collected under the
model flow through the same statutory channels already established by
Congress for the Medicare Part B Drug Inflation Rebate Program. For
these reasons, CMS does not believe the GLOBE Model violates the Anti-
Deficiency Act, and the related concerns articulated by commenters are
not present here.
Comment: Many commenters raised broader policy concerns about the
GLOBE Model's potential impact on biomedical innovation and patient
access. Commenters stated that tying U.S. drug reimbursement to foreign
prices, which are often set by foreign governments through price
controls, would introduce uncertainty into Medicare Part B
reimbursement. Commenters also stated the GLOBE Model would import
process controls that undervalue biomedical innovation and reduce
incentives for research and development (R&D), particularly for
treatments for rare diseases. A commenter stated that Part B spending
is concentrated in biological products and that use of price controls
``disproportionately affects products with no therapeutic substitutes
and limited pricing flexibility,'' which would affect investment in
these areas. Commenters also stated that reduced R&D investment would
ultimately limit the development of new therapies, harm patient access
to innovative treatments, shorten lifespan, diminish health outcomes,
and that the IRA already includes carefully calibrated exceptions (for
example, the orphan drug exclusion) to protect innovation incentives,
while the GLOBE Model contains no such safeguards. A commenter believed
that implementing foreign price controls would ``circumvent the generic
and biosimilar pathway'' in the U.S. that delivers ``affordability
through market entry and competition.'' Another commenter cited studies
and stated that drug prices in the U.S. are not exorbitant and price
controls harm innovation. Commenters further expressed concerns about
threats to intellectual property, job losses, market distortions,
economic harm, and loss of U.S. global leadership in biopharmaceutical
innovation (potentially shifting to countries like China and other
foreign competitors). A commenter further believed that the GLOBE Model
will result in a net negative for state and Federal government savings
and that states such as California, New York, and Texas will ``suffer
the most'' with respect to potential job losses and economic harm (for
example, tax revenue, earnings). Commenters further stated that these
policy tradeoffs related to innovation are precisely the type of major
decisions that courts presume Congress intends to make itself, rather
than delegate to agencies through ambiguous statutory language such as
section 1115A of the Act. For these reasons, commenters recommended the
GLOBE Model be withdrawn.
Response: CMS appreciates the thoughtful comments submitted
regarding the potential impact of the GLOBE Model on biopharmaceutical
innovation incentives. CMS takes seriously the concern that Federal
drug pricing policies, individually and in combination, could affect
manufacturer investment decisions in therapeutic areas of critical
importance to Medicare beneficiaries, including rare diseases. However,
CMS disagrees that the GLOBE Model will materially reduce
biopharmaceutical R&D spending or innovation, shorten lifespan, or
diminish health outcomes or patient access to treatments in the manner
or to the extent suggested by commenters.
The model's rebate obligation, as a starting point, reaches only
drugs exceeding $100 million in OM Part B allowed charges over a 12-
month period--a threshold reflecting substantial market penetration--
and affects only the OM Part B market, leaving commercial, MA, and ex-
U.S. revenues unaffected. CMS also notes that commenters' analyses of
potential model impacts on innovation and the U.S. pharmaceutical
industry may not fully account for the range of ways in which
manufacturers may adapt to changing market conditions--conditions that
exist regardless of the GLOBE Model--through partnerships, portfolio
management, operational efficiencies, and other strategies to sustain
R&D activities and remain competitive in the U.S. market.
Pharmaceutical manufacturers make R&D decisions in response to the
broader domestic and global environment affecting expected returns,
rather than based on any single payment model or drug-pricing
initiative in one subset of the market. Pharmaceutical R&D investment
is also influenced by development and other input costs, anticipated
lifetime global revenues, and policies affecting the supply of and
demand for drugs within

[[Page 62955]]

a given market, with expected revenues reflecting anticipated prices
and sales across markets worldwide.\105\ This broader environment
includes numerous domestic and international drug-pricing and
reimbursement policies, public and private payer arrangements, and
market-specific conditions. Accordingly, any decision by a manufacturer
to reduce, increase, or redirect investment--and any resulting impact
on future innovation--would reflect the combined effect of these
factors, rather than the singular effect of the GLOBE Model. There are
numerous initiatives that are beyond the scope of this final rule that
will influence R&D spending and innovation for new drugs. We direct the
reader to the 2026 Council of Economic Advisors Report for a discussion
of U.S. based drug pricing policy initiatives.106 107
---------------------------------------------------------------------------

\105\ Congressional Budget Office. Research and Development in
the Pharmaceutical Industry, April 2021. Available at: <a href="https://www.cbo.gov/system/files/2021-04/57025-Rx-RnD.pdf">https://www.cbo.gov/system/files/2021-04/57025-Rx-RnD.pdf</a>.
\106\ The White House. Savings from Most-Favored-Nation Drug
Pricing Policy, May 5, 2026. Available at: <a href="https://www.whitehouse.gov/research/2026/05/savings-from-most-favored-nation-drug-pricing-policy/">https://www.whitehouse.gov/research/2026/05/savings-from-most-favored-nation-drug-pricing-policy/</a>.
\107\ Congressional Budget Office. Research and Development in
the Pharmaceutical Industry, April 2021. Available at: <a href="https://www.cbo.gov/system/files/2021-04/57025-Rx-RnD.pdf">https://www.cbo.gov/system/files/2021-04/57025-Rx-RnD.pdf</a>.
---------------------------------------------------------------------------

Furthermore, projections of reduced innovation are highly dependent
on a series of assumptions regarding manufacturer, investor, and market
responses; assumptions for which the magnitude and direction are
inherently uncertain. Economic research on the relationship between
drug pricing and innovation incentives is highly contested, and no
established economic analysis posits a simple linear relationship
between drug prices and innovation outcomes.108 109 Assuming
such a simplified linear relationship could be established, if taken to
its logical conclusion, this would justify any level of drug spending
regardless of its proportionality or value to the Medicare program.
---------------------------------------------------------------------------

\108\ Light, D., Warburton, R. Demythologizing the high costs of
pharmaceutical research. BIOSOCIETIES 6, 34-50 (2011). <a href="https://doi.org/10.1057/biosoc.2010.40">https://doi.org/10.1057/biosoc.2010.40</a>; Accessed: April 10, 2026.
\109\ M. Schlander et al., How Much Does It Cost to Research and
Develop a New Drug? A Systematic Review and Assessment, 39
PHARMACOECONOMICS 1243 (2021), <a href="https://doi.org/10.1007/s40273-021-01065-y">https://doi.org/10.1007/s40273-021-01065-y</a>. Accessed: April 10, 2026.
---------------------------------------------------------------------------

Researchers additionally have found no association between drug
prices and amount of R&D investments; in other words, high drug prices
are not necessarily due to high R&D costs but rather what the market is
willing to pay.110 111 A substantial body of research
suggests that pharmaceutical R&D incentives are strongly shaped by
expected commercial returns, patent and exclusivity rules, and risk-
adjusted profitability, which can steer investment toward known, high-
revenue therapeutic areas, follow-on products, line extensions, and
other incremental innovation rather than exclusively toward products
with the greatest clinical value.112 113 114 We note that
the GLOBE Model does not alter any of these existing incentives.
However, even if lower expected revenues led to fewer future approvals,
it does not necessarily mean that patients would lose access to a
proportional number of high value therapies; some foregone products
would have offered limited incremental benefit.
---------------------------------------------------------------------------

\110\ O. Wouters, L. Berenbrok, M. He, Y. Li, & I. Hernandez,
Association of Research and Development Investments With Treatment
Costs for New Drugs Approved From 2009 to 2018, 5 JAMA 9, 2022,
doi:10.1001/jamanetworkopen.2022.18623 (Accessed: June 15, 2026).
\111\ A. Angelis, R. Polyakov, O. Wouters, E. Torreele, M.
McKee, High drug prices are not justified by industry's spending on
research and development, 380 BMJ (2023), <a href="https://doi.org/10.1136/bmj-2022-071710">https://doi.org/10.1136/bmj-2022-071710</a> (Accessed: June 15, 2026).
\112\ E. Budish, B.N. Roin & H. Williams, Do firms underinvest
in long-term research? Evidence from cancer clinical trials, 105 AM.
ECON. REV. 2044 (2015), <a href="https://doi.org/10.1257/aer.20131176">https://doi.org/10.1257/aer.20131176</a>
(Accessed: May 12, 2026).
\113\ A.S. Kesselheim, J. Avorn & A. Sarpatwari, The High Cost
of Prescription Drugs in the United States: Origins and Prospects
for Reform, 316 JAMA 858 (2016), <a href="https://doi.org/10.1001/jama.2016.11237">https://doi.org/10.1001/jama.2016.11237</a> (Accessed: May 12, 2026).
\114\ A. Kapczynski, C. Park & B. Sampat, Polymorphs and
prodrugs and salts (oh my!): an empirical analysis of ``secondary''
pharmaceutical patents, 7 PLOS ONE e49470 (2012), <a href="https://doi.org/10.1371/journal.pone.0049470">https://doi.org/10.1371/journal.pone.0049470</a> (Accessed: May 12, 2026).
---------------------------------------------------------------------------

CMS also disagrees that the GLOBE Model imports foreign price-
setting systems or foreign price controls into the Medicare program or
that the GLOBE Model would lead to significant uncertainty in Medicare
Part B reimbursement. The GLOBE Model tests an alternative approach to
the Medicare Part B drug inflation rebate amount calculation such that
the GLOBE Model rebate for a GLOBE Model drug reflects the difference
between a benchmark price, which is informed by international drug
pricing information, and the specified amount, as described in section
II.G.4. of this final rule. The existing OM Part B program structure
remains in place, and all applicable OM Part B program rules continue
to apply under the GLOBE Model. Importantly, the GLOBE Model does not
incorporate or rely upon any foreign country's legal policies,
formulary rules, coverage rules, or health technology assessment
processes in its alternative rebate amount calculation or into the
Medicare program. Therefore, we disagree that the use of foreign prices
as a benchmark in the GLOBE Model would lead to limits in patient
access, reduce lifespan, or diminish health outcomes as the model does
not incorporate foreign price-setting systems or foreign price
controls.
As stated previously, the use of foreign prices in the
international benchmark serve as a proxy for the payment levels drug
manufacturers are willing to accept for their products, from drug
manufacturers' perspectives--despite what foreign payors are willing to
spend or how lower foreign prices are developed. Given that the
international benchmarks are illustrative of payment levels that drug
manufacturers may accept for these products, we believe testing a
targeted alternative to the rebate amount calculation under the
Medicare Part B Drug Inflation Rebate Program using these international
benchmarks to reduce program expenditures while preserving or enhancing
quality of care represents a reasoned and valid innovative payment
model duly authorized by section 1115A of the Act.
CMS also disagrees with the commenter's general statement that drug
prices in the U.S. are not high compared to other countries. The data
shows that U.S. prescription drug prices, particularly for U.S.
originator drugs, exceed those found in other OECD countries, with 23.1
percent of U.S. patients skipping prescribed medicines because of
costs.\115\ In addition, prior studies on generic drug pricing in the
U.S. have shown that generic drug prices in the U.S. generally compare
to or fall below international comparisons, which suggests that high
overall drug costs in the U.S. are primarily driven by originator,
single source drugs or sole source biological products. Based on the
high spending by OM Part B and Medicare Part B beneficiaries on single
source drugs and sole source biological products, in this final rule,
we finalized the GLOBE Model to test the impact of using international
drug pricing information as a benchmark for an alternative Medicare
Part B drug inflation rebate amount calculation for a subset of Part B
rebatable drugs (certain single source drugs and sole source biological
products that meet the criteria defined in Sec. 513.130) to reduce

[[Page 62956]]

Medicare program expenditures while preserving or enhancing quality of
care.
---------------------------------------------------------------------------

\115\ The Commonwealth Fund. U.S. Health Care from a Global
Perspective, 2026, May 2026. Available at: <a href="https://www.commonwealthfund.org/publications/issue-briefs/2026/may/us-health-care-global-perspective-2026">https://www.commonwealthfund.org/publications/issue-briefs/2026/may/us-health-care-global-perspective-2026</a>.
---------------------------------------------------------------------------

CMS notes that the scope of the model is limited to approximately
25 percent of OM Part B beneficiaries and a subset of Part B rebatable
drugs that meet certain criteria, as described in section II.B. of this
final rule, and that, as noted previously, the model operates for the
purpose of evaluating whether an alternative rebate amount calculation
reduces Medicare spending while preserving or enhancing quality of care
for Medicare beneficiaries. As such, we disagree with the assertion
that the GLOBE Model contains no safeguards for biomedical innovation
and patient access. Because the GLOBE Model is applicable to only 25
percent of the OM Part B beneficiaries, leaving commercial, MA, and ex-
U.S. revenues unaffected, we believe the model's design itself provides
a meaningful safeguard for innovation. In addition, in response to
these and other comments expressing concerns about reduced incentives
for R&D, particularly for treatments for rare diseases, CMS is adopting
additional drug exclusions in the finalized GLOBE Model design, as
discussed in section II.B. of this final rule, such that Part B
rebatable drugs designated as a drug for one or more rare diseases or
conditions under section 526 of the Federal FD&C Act (21 U.S.C. 360bb)
and for which the only approved indication (or indications) is for one
or more such rare diseases or conditions are excluded from the GLOBE
Model (hereinafter the ``orphan-only drugs'').
CMS notes that biopharmaceutical research and investment decisions
are influenced by a wide range of factors--including scientific
feasibility, market size, competitive dynamics, regulatory pathways,
and the broader policy environment--that are difficult to disentangle
from the potential effects of a model test within the Medicare program.
As part of the GLOBE model test, CMS will work with its evaluation
contractor, as described in section II.P. of this final rule, and will
address confounding factors and develop rigorous analytic approaches
for assessing the GLOBE Model's contribution to any observed changes in
innovation activity and will be transparent about the limitations of
these analyses in its public evaluation reports, given the complexity
of such analyses. Leveraging the randomized design of the GLOBE Model
and CMS's extensive experience with evaluating models in complex,
policy environments, the GLOBE Model evaluation, as described in
section II.P. of the final rule, will be designed to isolate the
model's effects on program expenditures and quality of care, including
through the use of appropriate comparison groups and statistical
methods.
Also, CMS disagrees with the comment that the GLOBE Model
circumvents the generic and biosimilar pathway in the U.S. We assume
the comment refers to the drug approval pathway and incentives to
develop generics and biosimilars in the U.S. As stated in the GLOBE
Model proposed rule (90 FR 60255 through 60256), only single source
drugs and sole source biological products that are Part B rebatable
drugs would be GLOBE Model drugs. As such, the GLOBE Model
intentionally does not include multi-source drugs or biological
products to prevent disruption to the generic and biosimilar approval
pathways and their related incentives to develop such products in the
U.S.
We acknowledge that the GLOBE Model focuses on high-spend Part B
rebatable drugs that are single source drugs or sole source biological
products. This focus is intentional, as the model is designed to test
an alternative Medicare Part B drug inflation rebate calculation on
high spend Part B rebatable drugs where access barriers--such as high
costs--are likely to contribute to deficits in care. Further, the
generic and biosimilar pathways commenters have referenced do not
address the high prices of these high spend Part B rebatable drugs
prior to generic or biosimilar entry in the U.S. and as such cannot
address related deficits in care prior to such generic or biosimilar
market entry in the U.S. In contrast, the GLOBE Model seeks to address
Medicare's significant expenditure on these drugs and related access
barriers or deficits in care prior to generic or biosimilar market
entry in the U.S.
Additionally, we strongly disagree that the GLOBE Model will
undermine U.S. biopharmaceutical leadership, domestic manufacturing
(that is, job losses), market stability, or create a net negative in
savings for state and Federal governments as suggested by the
commenters. The GLOBE Model is a limited test of an alternative
Medicare Part B drug inflation rebate amount calculation for a defined
subset of drugs and beneficiaries, and commenters' predictions related
to loss of capital, market stability, supply-chain relocations, or
geopolitical effects depend on a series of uncertain assumptions about
how manufacturers, investors, and foreign markets will respond. CMS has
not identified record evidence sufficient to quantify those economy-
wide effects with reasonable certainty for this time-limited model. CMS
has nevertheless considered those risks in model design by limiting the
model's scope, excluding orphan-only drugs, plasma-derived products,
certain approved cellular and gene therapy products, and low-spend
drugs, and monitoring access and utilization outcomes.
With respect to the commenters' statement that the policy tradeoffs
such as those related to innovation presented by the GLOBE Model are of
the type that courts presume Congress intends to resolve itself, rather
than delegate to agencies, CMS disagrees that the major questions
doctrine precludes the GLOBE Model as discussed more thoroughly
previously. Section 1115A of the Act was enacted by Congress
specifically to authorize the CMS Innovation Center to test innovative
payment and service delivery models, including models that involve
alternatives to existing payment and rebate structures, to reduce
program expenditures while preserving or enhancing quality of care. The
GLOBE Model is a targeted, time-limited test directly tied to the CMS
Innovation Center's express statutory mandate. CMS does not rely on
ambiguous or incidental statutory language to justify the GLOBE Model;
rather, the model is a direct exercise of the authority Congress
conferred in section 1115A of the Act.
For these reasons, CMS does not believe that the GLOBE Model must
be withdrawn. Finally, CMS has responded to comments about intellectual
property and patents in another comment summary and refer readers to
our response related to the Patent Clause of the U.S. Constitution in
this next comment.
Comment: Commenters stated that by imposing below-market,
administratively determined benchmark prices on patented drug products
prior to patent expiration or the end of FDA-granted exclusivities, the
GLOBE Model conflicts with the Patent Clause of the U.S. Constitution
and the Federal intellectual property framework established by
Congress--both of which are designed to protect manufacturers' time-
limited right to earn market-rate returns on their patented
innovations.
Response: CMS disagrees that the GLOBE Model violates the Patent
Clause or conflicts with the Federal intellectual property framework
established by Congress. The Patent Clause of the U.S. Constitution
provides Congress the power to ``promote the Progress of Science and
useful Arts, by securing for limited Times to Authors and Inventors the
exclusive Right to their respective

[[Page 62957]]

Writings and Discoveries.'' U.S. Const. art. I, Sec. 8, cl. 8.
Critically, this is an affirmative grant of power to Congress, not a
grant of rights to patent holders. It empowers Congress to create a
patent system; it does not itself confer substantive rights on
inventors or manufacturers, nor does it guarantee any particular
economic outcome. Because the Patent Clause is an affirmative grant of
power to Congress rather than a grant of rights to private parties,
commenters have not identified a constitutional defect in the GLOBE
Model under the Patent Clause. A constitutional challenge under the
Patent Clause would require demonstrating that Congress exceeded or
acted contrary to this grant of power, not merely that a Federal
program affects the economic value of a patent. Commenters have not
made that argument here. We also disagree that the GLOBE Model
conflicts with the Federal intellectual property framework. The GLOBE
Model is intended to reduce expenditures for certain high spend Part B
rebatable drugs while preserving or enhancing the quality of care. The
Federal intellectual property framework does not entitle drug
manufacturers to particular payment levels or prices for their patented
drugs or biological products. As such the GLOBE Model does not conflict
with the Federal intellectual property framework as asserted by
commenters. Further, Federal agencies routinely procure patented
inventions, and Federal intellectual property frameworks do not require
Federal agencies to bear whatever prices suppliers command. In sum, the
GLOBE Model does not conflict with the Federal intellectual property
framework.
We have addressed related concerns regarding economic impact and
constitutional property protections in our responses to comments on Due
Process and the Takings Clause, and would refer readers to those
responses in other parts of this section of this final rule.
For these reasons, CMS disagrees with commenters that the GLOBE
Model exceeds the CMS Innovation Center's statutory authority under
section 1115A of the Act based on Patent Clause concerns. The GLOBE
Model does not violate the Patent Clause, alter patent or exclusivity
rights, or guarantee any price or revenue outcome--nor is CMS required
to do so under the Patent Clause or any provisions of law.
Comment: A commenter stated that the use of an international
reference price benchmark that is unilaterally established by CMS--
without notice or an opportunity for review--combined with a mandatory
rebate system lacking meaningful procedural protections constitutes a
deprivation of manufacturer property rights without due process of law
in violation of the Fifth Amendment. The commenter also stated that CMS
has departed from the more robust procedural protections ordinarily
afforded to CMS Innovation Center model participants in favor of
procedures that parallel the Medicare Part B Drug Inflation Rebate
Program, which the commenter characterizes as insufficiently
protective. Several commenters also state that the GLOBE Model violates
the Fifth Amendment Due Process Clause on the basis that CMS would
deprive manufacturers of protected property interests without adequate
procedural protections or that the international reference price
benchmark would impose arbitrary or confiscatory prices without
ensuring a reasonable return.
Response: CMS respectfully disagrees that the GLOBE Model would
deprive manufacturers of property rights without due process of law,
impose rebate obligations so excessive as to be confiscatory, or
otherwise violate the Fifth Amendment's Due Process Clause.
Since the enactment of the Medicare and Medicaid programs in 1965,
multiple courts have consistently rejected this precise argument. See,
for example, Garelick v. Sullivan, 987 F.2d 913 (2d Cir. 1993), see
also Bristol Myers Squibb Co. v. Sec'y U.S. Dep't of Health & Hum.
Servs., 155 F.4th 245, 256 n.10 (3d Cir. 2025), cert. denied sub nom.
Bristol Myers Squibb Co. v. Kennedy, No. 25-751, 2026 WL 1377095 (U.S.
May 18, 2026), and cert. denied sub nom. Janssen Pharms., Inc. v.
Kennedy, No. 25-749, 2026 WL 1377134 (U.S. May 18, 2026). The Due
Process Clause of the Fifth Amendment provides that no person shall be
deprived of life, liberty, or property without due process of law.
First, commenters' arguments do not identify a deprivation of a
constitutionally protected property interest. When drug manufacturers
voluntarily sell their goods to Medicare, there is no constitutionally
protected interest in selling goods, patented or otherwise, to Medicare
at a certain price level to which due process protections would apply.
No court has recognized a constitutionally protected property interest
in such circumstances. See Nat'l Infusion Ctr. Ass'n v. Kennedy,
__F.4th __, 2026 WL 2517285, at *12 (5th Cir. Aug. 26, 2026);
Boehringer Ingelheim Pharms., Inc. v. HHS, 150 F.4th 76, 94 (2d Cir.
2025), cert. denied, No. 25-799, 2026 WL 1377142 (May 18, 2026).
CMS notes that the procedural framework for the Medicare Part B
Drug Inflation Rebate Program was established by Congress. The use of a
similar procedural framework for the GLOBE Model reflects CMS's
considered judgment that the framework in section 1847A(i) of the Act
provides an appropriate reference and balance of procedural protection
and administrative efficiency for a mandatory model test of an
alternative rebate amount calculation. CMS disagrees that the GLOBE
Model's procedures are constitutionally deficient as they are modeled
on an existing congressionally established program.
Further, the GLOBE Model does not eliminate, abridge, curtail, or
otherwise interfere with manufacturers' patent rights. Because the
GLOBE Model does not deprive manufacturers of a protected property
interest, the procedural protections required by Mathews v. Eldridge,
424 U.S. 319 (1976), are not triggered. The Mathews v. Eldridge
balancing framework applies where the government seeks to deprive an
individual or entity of an existing protected interest. Here, no such
deprivation occurs: manufacturers continue to hold and exercise their
patent rights in full.
We further note that manufacturers are not without due process
under the GLOBE Model. The model's terms, drug selection criteria,
rebate calculation methodology, and applicable exclusions are set forth
in this final rule, providing manufacturers with advance notice of
their obligations. Manufacturers receive preliminary rebate reports and
preliminary reconciliation reports that are subject to a suggestion of
error process under the model and can appeal civil monetary penalties
imposed for failure to pay rebate obligations under the model, similar
to the Medicare Part B Drug Inflation Rebate Program. These procedural
protections are consistent with the requirements of the Due Process
Clause.
We also disagree that the GLOBE Model imposes rebate obligations so
excessive as to be ``confiscatory'' within the meaning of Duquesne
Light Co. v. Barasch, 488 U.S. 299 (1989). That case was about utility
rate regulation, where a government-imposed rate structure could, in
theory, prevent a regulated utility from earning any return on its
investment--effectively confiscating the utility's property. The
commenter's extension of this notion to pharmaceutical manufacturer
rebate obligations under a Medicare payment model is novel and
unsupported.
We acknowledge that manufacturers may disagree with the GLOBE
Model's rebate methodology and may believe that the rebate obligations
are excessive.

[[Page 62958]]

However, disagreement with payment policy does not establish a
constitutional violation. CMS further notes that the GLOBE Model is a
time-limited model test under section 1115A of the Act, not a permanent
statutory program. The procedural framework for the GLOBE Model is
designed to be consistent with the model's objectives and operational
requirements, and CMS retains the flexibility to adjust the framework
as CMS gains experience with its implementation. For these reasons, we
conclude that the GLOBE Model does not violate the Fifth Amendment's
Due Process Clause and does not impose confiscatory rebate obligations.
We also disagree that we did not provide notice or opportunity for
review of the international reference price benchmark rebate
calculation methodologies in the GLOBE Model or that such methodologies
are unilaterally established by CMS. In section II.G.1. of the GLOBE
Model proposed rule (90 FR 60265 through 60273), we discussed the
proposed international drug pricing information data sources, the
requirements for existing data sources, and the hierarchy for using
such existing data sources. The comments we received addressing very
methodological questions for this section is evidence that CMS provided
sufficient notice and opportunity for review. We refer readers to
section II.G.1. of this final rule for our response to public comments
related to existing data sources. As proposed and finalized in sections
II.G.1.d. and II.G.6. of this final rule, manufacturers may also choose
to voluntarily submit international drug net pricing data.
Comment: A commenter stated that by mandating manufacturer
participation in the GLOBE Model, imposing below-market prices through
a rebate scheme, and compelling the supply of patented drugs on
nonconsensual terms, including at launch, CMS effectuates a forced
transfer of constitutionally protected property interests for public
benefit without just compensation, in violation of the Takings Clause
of the Fifth Amendment.
Commenters stated that the GLOBE Model violates the Takings Clause
of the Fifth Amendment, which prohibits the government from taking
``private property . . . for public use, without just compensation.''
Specifically, commenters contended that CMS's use of its CMS Innovation
Center authority under section 1115A of the Act to establish new rebate
requirements based on prices calculated from international reference
pricing data would constitute an unconstitutional taking. Commenters
note that both the Due Process Clause and the Takings Clause require
the government to allow for a just or reasonable return on investment
and prohibit the imposition of arbitrary or confiscatory prices.
Commenters noted that the GLOBE Model imports reference prices from
countries whose legal frameworks do not include equivalent
constitutional protections, therefore the resulting ``calculated''
prices cannot satisfy these constitutional requirements. Commenters
stated that forcing manufacturers to bear these financial burdens
violates the constitutional principle that public burdens should be
borne by the public, not imposed on private entities. For these
reasons, commenters recommended the GLOBE Model be withdrawn.
Response: CMS disagrees that the GLOBE Model effects an
unconstitutional taking of manufacturer property under the
Constitution's Fifth Amendment. The Takings Clause of the Fifth
Amendment provides that private property shall not ``be taken for
public use, without just compensation.'' U.S. Const. amend. V. The
commenter contends that the GLOBE Model's mandatory rebate structure
effectuates a forced transfer of constitutionally protected property
interests, including patent rights, for public benefit without just
compensation and characterizes the GLOBE Model as compelling
manufacturers to supply patented drugs on ``nonconsensual terms.''
As an initial matter, commenters have identified no deprivation of
a constitutionally protected property interest under the Due Process or
Takings Clauses. When drug manufacturers voluntarily participate in
Medicare, there is no constitutionally protected property interest in
selling goods to Medicare beneficiaries, patented or otherwise, at
prices preferred by drug manufacturers. Thus, there can be no Takings
Clause or Due Process Clause claim. Commenters' position stating that
the GLOBE Model is an unconstitutional taking, by extension, would
establish that sellers have a constitutionally protected property
interest to command whatever price they desire from the Federal
government, regardless of what the Federal government is willing or
able to pay. That principle has never before been recognized by any
court. Further, participation in the Medicare program, while
practically significant for manufacturers of drugs covered by Medicare,
is not legally compelled. Manufacturers retain the ability to withdraw
their products from the Medicare market. See Bristol Myers Squibb Co.
v. Sec'y U.S. Dep't of Health & Hum. Servs., 155 F.4th 245, 260-61 (3d
Cir. 2025). The practical significance of Medicare as a voluntary
market does not transform a manufacturer's business decision to
participate in that market into legally compelled conduct for purposes
of the Takings Clause. In any case, the payment methodology under the
GLOBE Model provides just compensation to drug manufacturers, as the
use of foreign prices in the international benchmark serve as a proxy
for the payment levels drug manufacturers are willing to accept for
their products, from drug manufacturers' perspectives. This also belies
any claim under the Takings Clause.
As discussed in this section of this final rule in response to
other comments, CMS believes the model's rebate methodology is a
permissible exercise of the CMS Innovation Center's broad model-testing
authority and would not violate the constitutional limitations
commenters have identified. For these reasons, we do not believe the
GLOBE Model would violate the Takings Clause of the Fifth Amendment.
Comment: A few commenters stated that by setting Medicare payment
levels based on foreign government prices and structuring incentives
that directly influence manufacturer global pricing strategies and
foreign market participation decisions, the GLOBE Model operates as an
instrument of foreign economic regulation--a power vested exclusively
in Congress and not delegated to CMS through section 1115A of the Act
or any other authority. Specifically, a commenter stated that the GLOBE
Model would ``operate as an instrument of foreign economic regulation
in violation of the foreign commerce clause'' because it could
influence manufacturer negotiations with foreign nations and impact
manufacturer decisions about whether to enter or remain in foreign
markets. They noted that the GLOBE Model would ``represent an agency
instrument of foreign economic regulation that is not authorized by
Congress and is beyond the scope of CMS authority.''
Response: CMS respectfully disagrees that the GLOBE Model operates
as an instrument of foreign economic regulation in violation of the
Foreign Commerce Clause, or that it exceeds the authority granted to
the CMS Innovation Center under section 1115A of the Act. At the
outset, the GLOBE Model would operate exclusively within the U.S.
applying to approximately 25 percent of OM beneficiaries.
Using pricing data from reference countries to inform the GLOBE
Model

[[Page 62959]]

rebate payment calculation does not constitute regulating foreign
commerce. The use of pricing data from reference countries is an
element of the domestic payment model authorized to be tested under
section 1115A of the Act; the regulation of foreign commerce would
require CMS to impose obligations on foreign markets or foreign
commercial actors--which the GLOBE Model does not do. The commenter
characterizes the GLOBE Model as an instrument of foreign economic
regulation because it uses international reference prices as benchmarks
for Medicare payment and because its incentive structure may influence
manufacturer pricing decisions in foreign markets. CMS respectfully
disagrees with this characterization. The GLOBE Model is, at its core,
a domestic Medicare payment model. Its purpose is to test whether
aligning Medicare drug payment with prices paid in comparable
international markets can reduce Medicare program expenditures while
preserving beneficiary access to innovative therapies. The model
operates entirely within the domestic Medicare program: it applies to
Medicare-covered drugs, imposes obligations on manufacturers of drugs
payable under Medicare Part B, and directs any rebates collected to the
Federal Supplementary Medical Insurance Trust Fund. The GLOBE Model
does not adopt, replicate, or incorporate any foreign regulatory,
coverage, or pricing framework.
The GLOBE Model does not purport to, or otherwise contain any
provision that would, regulate the prices that manufacturers charge in
foreign markets, does not impose obligations on foreign governments,
and does not direct manufacturers to take any particular action in
foreign markets.
The fact that the GLOBE Model uses international reference prices
as an input into a domestic payment calculation does not transform it
into an exercise of foreign commerce regulation. Federal agencies
routinely reference foreign data, standards, and practices in designing
domestic regulatory programs without thereby regulating foreign
commerce. For example, the FDA routinely accepts foreign clinical trial
data in support of domestic drug approval decisions; and the
Occupational Safety Health Administration has incorporated the United
Nations' Globally Harmonized System of Classification and Labelling of
Chemicals into its Hazard Communication Standard. In each of these
cases, the use of internationally developed data, standards, or
frameworks as an input into a domestic regulatory determination has not
been understood to constitute an exercise of foreign commerce
regulation. The GLOBE Model's use of inte

[…truncated; see source link]

View on FederalRegister.gov →Plain-text source

Indexed from Federal Register on October 2, 2026.

This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.