CMS Targets Rising Drug Costs with New Guard and Globe Pilot Programs

On Friday, December 19, the Centers for Medicare & Medicaid Services (CMS) announced two new pilot programs aimed at reducing Medicare spending on prescription drugs and reducing beneficiaries’ out-of-pocket costs. The Guarding U.S. Medicare Against Rising Drug Costs (GUARD) model, which targets Medicare Part D drug spending, would run from January 1, 2027 through December 31, 2031, and the Global Benchmark for Efficient Drug Pricing (GLOBE) model, which targets Medicare Part B drug spending, would run from October 1, 2026 through September 30, 2031, with reconciliation continuing into 2033 for both programs. 

These pilot programs are designed to further the Trump administration’s goal of aligning US drug prices with those of other developed nations, often referred to as “most favored nation” pricing. Under the proposed pilot programs, a manufacturer would owe rebates if prices for their drugs exceeded the prices paid by other economically comparable reference countries, defined in the proposed regulations as OECD countries with a GDP of $400 billion and a per capita GDP that is at least 60% of the US per capita GDP (an initial list of 19 reference countries is included in the proposed rule). 

Rebates due under each model would serve as an alternative to the manufacturer rebates currently calculated under the Medicare Inflation Rebate Programs, which were established by the Inflation Reduction Act of 2022 (IRA) and require manufacturers to pay rebates to the Medicare Trust Fund for certain drugs whose prices grow faster than inflation. Under the proposed models, rebates would be tied to a different benchmark — one that is based on the price that other developed countries pay. The international pricing benchmark used to calculate rebates due under the models would be determined using two main sources of information: (i) available sources of international drug pricing information that meet certain criteria, as determined by CMS, and (ii) international drug net pricing data voluntarily submitted by manufacturers to CMS. 

Each model will be tested on a subset of the rebatable drugs under the Medicare Inflation Rebate Programs in specific therapeutic areas and meeting other defined criteria. Drugs subject to a maximum fair price under the Medicare Drug Price Negotiation Program are exempted. CMS plans to test the new models in randomly selected geographic areas representing 25% of people with a Medicare Part D plan or a Medicare Part B plan, respectively. Participation is mandatory for manufacturers of drugs within the scope of each pilot.

On December 19, PhRMA released a brief statement in opposition to the two proposed models, but there have otherwise been limited public reactions from industry to date.

The Proposed Rules for GUARD and GLOBE were published on December 23, and public comments may be submitted until February 23, 2026. 

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