CMS Finalizes New Mandatory Drug Payment Model to Deliver Lower Drug Prices for Beneficiaries in Original Medicare Part B

CMS Finalizes New Mandatory Drug Payment Model Aimed at Lowering Original Medicare Part B Drug Costs

Recently, the Centers for Medicare & Medicaid Services (CMS) announced the finalization of the Global Benchmark for Efficient Drug Pricing (GLOBE) Model. This is a five-year test designed to explore a new way to determine Part B drug prices that may help reduce costs for Original Medicare beneficiaries and the Medicare program, while continuing to support high-quality care and medical innovation.

What is the GLOBE Model?

The GLOBE Model uses an alternative method to calculate inflation rebates for certain separately payable Medicare Part B drugs and biological products. It relies on international pricing information to identify a benchmark that reflects prices paid in a set of economically comparable countries. Key details include:

• The model applies to Medicare Part B drugs and biological products that are typically administered in clinical settings by clinicians.
• It excludes biosimilars and their reference biologicals once a biosimilar enters the U.S. market, as well as orphan-only drugs, plasma-derived products, and certain cell and gene therapies. This exclusion is a change based on public comments.
• The model is designed to test whether this alternative pricing approach can reduce costs without compromising quality of care.

Who is Affected and When?

The GLOBE Model will be implemented in a way that affects a randomly selected subset of geographic areas, covering about 25% of total Medicare beneficiaries who have Original Medicare as their primary coverage. Beneficiaries from selected areas who are affected may begin to see reduced out-of-pocket costs beginning April 1, 2027.

Duration and Follow-Up

The model will operate for five years, from January 1, 2027, through March 31, 2032. Pharmaceutical manufacturer rebate invoicing and reconciliation will continue through March 31, 2034.

Why This Matters for Consumers

For people enrolled in Original Medicare Part B, the GLOBE Model represents a potential approach to lowering some drug costs while maintaining care quality. CMS describes the effort as an action to pilot a new method for pricing, with the goal of reducing costs for both beneficiaries and the Medicare program.

Notes for Beneficiaries

As this is a model and a final rule, specific beneficiary experiences, costs, or coverage changes may vary by geographic area and over time. For those in the selected areas, there could be changes in out-of-pocket costs starting in 2027 if the model leads to lower prices for certain drugs.

What This Could Mean for Medicare Consumers

CMS says the GLOBE Model tests an alternative pricing method using international price benchmarks to identify potential savings for Part B drugs. This could influence the overall cost environment for Part B drugs administered in clinical settings, though outcomes will depend on model results and implementation.

What You Can Do

The CMS announcement is primarily informational about a pilot model. If you are a beneficiary in a selected area, stay informed about future CMS updates and notices related to Part B drugs and potential changes in cost-sharing. No specific action is required at this time unless you receive official CMS guidance for your area.

Source

This article is based on information published by the Centers for Medicare & Medicaid Services (CMS).

For personalized Medicare guidance, you can contact Haddy Health Insurance to speak with a licensed insurance agent.

This article is for educational purposes only and is not individualized Medicare, medical, legal, or financial advice.