The Centers for Medicare & Medicaid Services (CMS) has finalized a new model that ties Medicare Part B drug rebates to prices in other wealthy countries. The Global Benchmark for Efficient Drug Pricing (GLOBE) Model is projected to save $80 million annually, a significant drop from the initial estimate of $2.3 billion. Over the full payment period, which runs through 2034, the final estimate is $440 million.
The model, which runs from 2027 to 2034, will apply to about 25% of Original Medicare beneficiaries, selected by ZIP code. It focuses on single-source drugs and biologics with high Medicare Part B spending, specifically those with more than $100 million in yearly spending in classes like cancer drugs, immunological agents, and eye drugs. Negotiated-price drugs and biosimilars are excluded.
How the GLOBE Model Works
Part B covers drugs administered by clinicians, such as infusions. The GLOBE Model sets a benchmark using prices from 19 countries, including Canada, France, Germany, Japan, and the United Kingdom. Drugmakers already pay rebates when Part B prices outpace inflation, but GLOBE tests a different formula for selected drugs, starting January 1, 2027.
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Beneficiaries in selected areas may see lower out-of-pocket costs starting April 1, 2027. The model excludes Medicare Advantage enrollees, orphan-only drugs, cell and gene therapies, plasma-derived products, and biosimilars once they enter the U.S. market.
Why the Savings Estimate Dropped
CMS lowered its savings estimate due to several changes. The agency excluded additional drug categories, delayed the start date to January 2027, and considered the impact of the GENEROUS Model, a voluntary program announced in November 2025 aimed at reducing Medicaid drug costs. Manufacturers participating in GENEROUS by August 17, 2026, will be waived from GLOBE. This adjustment reflects CMS’s need to isolate the effects of GENEROUS, though no formal exemption was written into the rule.
Projected patient savings also decreased. CMS now expects beneficiaries to save $111 million in out-of-pocket costs, down from the initial $1.4 billion estimate. This includes $50 million in coinsurance and $61 million in premiums.
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Part D Premiums Show Mixed Trends
CMS also released 2027 premium projections for Medicare Advantage (MA) and stand-alone Part D plans. The average monthly premium for MA drug coverage is expected to drop 38% to $7, while stand-alone plan premiums will rise slightly to $36. This disparity leaves stand-alone enrollees paying about five times more on average. The Part D Premium Stabilization Demonstration, a temporary program that cost $9.8 billion over 2025 and 2026 and capped premium increases, ended in 2026. MHE reported in July that the 2027 base beneficiary premium would rise from $38.99 to $41.33.
CMS Administrator Mehmet Oz encouraged beneficiaries to review their coverage during open enrollment, which runs from October 15 to December 7. “Medicare Part B patients and American taxpayers have paid significantly more for prescription medications than people in comparable countries,” Oz said, emphasizing the need for cost-saving measures like GLOBE.
