On December 19, 2025, the Trump Administration announced two new Center for Medicare and Medicaid Innovation (CMMI) models: the Global Benchmark for Efficient (GLOBE) Drug Pricing Model, which proposes most favored nation (MFN)-based rebates in Medicare Part B; and the Guarding U.S. Medicare Against Rising Drug Costs (GUARD) Model, which proposes MFN-based rebates in Medicare Part D. The notices of proposed rulemaking (NPRMs) for GLOBE and GUARD were published on December 23, 2025, and comments are due February 23, 2026.
These mandatory models represent the latest phase of the Administration’s efforts to institute MFN prices for prescription drugs in the United States, as set forth in the President’s May 12 Executive Order titled “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients.” The models also appear intended to meet the President’s Medicare-related directive in the April 15 Executive Order “Lowering Drug Prices By Once Again Putting Americans First,” which called for “a payment model to improve the ability of the Medicare program to obtain better value for high-cost prescription drugs and biological products covered by Medicare.” The Administration previously released a voluntary model for MFN pricing in Medicaid, the GENErating cost Reductions fOr U.S. Medicaid (GENEROUS) Model. Our prior client alerts have analyzed the May 12 MFN Executive Order, the April 15 Drug Pricing Executive Order, and the November 6 GENEROUS Model. In addition, on December 23, 2025, CMS also announced the Better Approaches to Lifestyle and Nutrition for Comprehensive hEalth (BALANCE) Model, which is a new voluntary model for manufacturers of GLP-1 receptor agonist drugs used for weight management and metabolic health improvement. Under the model, CMS will negotiate pricing and coverage terms with participating manufacturers on behalf of state Medicaid agencies and Medicare Part D plans.
In the GLOBE and GUARD Models, CMS proposes to exercise its authority under Section 1115A of the Social Security Act to waive requirements related to the inflation rebate calculations set forth in the Inflation Reduction Act (IRA) and accompanying regulations. Instead of requiring rebates when price increases for rebatable drugs exceed the rate of inflation, the models would require rebates when the U.S. price exceeds the MFN price, as determined based on newly proposed calculations. Specifically, the models propose replacing the current domestic benchmark used to calculate manufacturer rebates with a benchmark derived from international pricing information, in addition to other timing and calculation changes as compared to inflation-based rebates. Both models contemplate applying the same MFN pricing calculations and the same reference country basket, but the operations and timing are distinct.
The Administration’s approach in the GLOBE and GUARD Models represents a departure from the first Trump Administration’s efforts to implement MFN pricing in Medicare Part B through the “Most Favored Nation Model,” which sought to tie Medicare reimbursement to MFN prices. This prior model was enjoined by courts and rescinded by the Biden Administration, and we expect significant legal challenges to the GLOBE and GUARD Models as well. Our team continues to analyze the business and legal implications of the models, and we are available for any questions.
Global Benchmark for Efficient Drug Pricing (GLOBE) Model
The GLOBE Model is described as mandatory for all manufacturers of Part B rebatable drugs that also qualify as GLOBE Model drugs, as described below. The proposed model cohort for GLOBE consists of approximately 25% of the beneficiaries enrolled in Medicare Part B based on defined geographic regions. The proposed GLOBE Model would have a 7-year test period that includes 5 performance years, beginning October 1, 2026, and ending September 30, 2031, and 7 payment years, beginning October 1, 2026, and ending September 30, 2033.
- Drugs Included in Model: The Part B drugs that would be included in the model are single source drugs or sole source biological products, have a HCPCS Level II code with Medicare Part B fee-for-service spending greater than $100 million over a 12-month period, and are classified as antigout agents, antineoplastics, blood products and modifiers, central nervous system agents, immunological agents, metabolic bone disease agents, or ophthalmic agents as specified in the USP DC. The model would exclude (1) drugs or biological products without a calculable “specified amount” as used for the U.S. net price, (2) drugs for which a maximum fair price (MFP) under the Medicare Drug Price Negotiation Program is in effect, and (3) drugs or biological products that are no longer Part B rebatable drugs during the duration of the GLOBE Model.
- MFN Pricing Benchmark Calculation: CMS proposes to give manufacturers the choice to rely on a “default” methodology of CMS-derived international pricing benchmarks or to submit their own international drug net pricing information:
- Under the default approach (Method I GLOBE Model benchmark), CMS would calculate the international benchmark for drugs for which there is available data on international drug pricing in the reference countries. CMS would use both publicly available data and proprietary data to calculate the international benchmark price. The international benchmark would be the lowest country-level average price among the set of average prices for each reference country, adjusted by the country-specific GDP based on purchasing power parity (PPP).
- Under the alternative approach (Method II GLOBE Model benchmark), manufacturers may submit international across-country average net price data for the reference countries where products that are part of a drug’s set of international analogs are sold. Manufacturers would need to adjust these across-country average net prices by the country-specific GDP based on PPP. If CMS finds the data submission to be acceptable, the pricing data would serve as an alternative international benchmark.
- CMS would determine the applicable international benchmark, consisting of the greater of the Method I GLOBE Model benchmark and the Method II GLOBE Model benchmark. If there is only a Method I GLOBE Model benchmark, it would become the applicable international benchmark.
- Mapping U.S. Products to their International Analogs: When conducting its Method I benchmark calculations, CMS proposes selecting a data source that contains the following information: (1) complete package size information, (2) scientific or nonproprietary name, (3) dosage form, (4) route of administration (if applicable), and (5) strength data. CMS states that these data will allow CMS to match international analogs to model drugs using the model drugs’ HCPCS Level II code descriptors. CMS further states that it would perform “data checks” to ensure that extracted data aligns with the model drugs’ HCPCS Level II code descriptions and information about formulations and package sizes sold.
- MFN Rebate: CMS proposes that the per unit GLOBE Model drug rebate amount would be the difference between the average sales price of the drug, or when not available, its wholesale acquisition cost (WAC), and the per unit GLOBE Model benchmark amount. To calculate the total GLOBE Model drug rebate amount that a manufacturer owes for an applicable calendar quarter, CMS proposes multiplying the per unit rebate amount by the total number of GLOBE Model billing units (total rebate amount = per unit rebate amount x total GLOBE Model billing units for the 25% of Medicare Part B beneficiaries randomly selected for participation). Units for which payment is subject to an agreement under the 340B program would be excluded from the calculation of the GLOBE Model rebate amount. If the standard IRA inflation rebate would be higher, no GLOBE rebate would be due.
- MFN Countries: The proposed reference countries are Australia, Austria, Belgium, Canada, Czech Republic, Denmark, France, Germany, Ireland, Israel, Italy, Japan, the Netherlands, Norway, South Korea, Spain, Sweden, Switzerland, and the United Kingdom.
- Enforcement of Manufacturer Payment of Rebate: The model contemplates imposing a civil monetary penalty (CMP) on manufacturers that fail to pay required rebates in a timely manner equal to at least 125% of the manufacturer’s owed GLOBE Model rebate amount.
- Timeline for Payment of Rebate: The model proposes two options for inflation rebate invoicing. Under the first option, which CMS is calling a “combined approach,” CMS would delay Medicare Part B Drug Inflation Rebate Program Preliminary Rebate Reports for all manufacturers by up to 2 months and send a combined report to all manufacturers of Part B rebatable drugs for both the Medicare Part B Drug Inflation Rebate Program and the GLOBE Model. Under this approach, the total GLOBE Model rebate amount due would be invoiced using the Medicare Part B Drug Inflation Rebate Program rebate report processes. The second option, the “incremental approach,” would maintain existing inflation rebate invoicing under the applicable regulations. Eight months after every quarter for which rebates have been assessed, CMS would compare the MFN rebate against the standard inflation rebate and invoice the manufacturer for the difference. CMS will only implement one of these proposed options and has solicited comments regarding the two approaches.
Guarding U.S. Medicare Against Rising Drug Costs (GUARD) Model
The GUARD Model is also described as mandatory and would include certain Part D drugs in the Medicare Part D Inflation Rebate Program, including sole-source drugs and sole-source biologics from specific therapeutic classes, as described below. GUARD would be implemented in randomly selected geographic areas representing 25% of beneficiaries enrolled in Medicare Part D. The GUARD Model would launch January 1, 2027, and run through December 31, 2031, with rebate invoicing and reconciliation continuing into 2033.
- MFN Pricing Benchmark Calculation: GUARD proposes the same dual methodology to calculate the applicable international benchmark as described for GLOBE, above.
- Mapping U.S. Products to their International Analogs: When conducting its Method I benchmark calculations, CMS proposes to rely on data sources that fulfill and apply standardized approaches within and between countries to consistently define drug products in terms of their active ingredient(s), route of administration, dosage forms, and strengths. The selected data source would need to use: (1) a standardized active ingredient naming scheme, (2) a standardized method to differentiate between dosage forms (including route of administration) of drug products, and (3) a standardized method for differentiating between different dosage strengths of drug products in terms of different strength units that can reliably be converted to and expressed in terms of National Council for Prescription Drug Program units, which are the units used in the transmission of Part D claims. If the identifying characteristics of a model drug and the potential international analog do not exactly align, CMS proposes applying adjustors where they would not materially change the international drug’s characteristics. This could include, for example, removing prefixes or suffixes from the active ingredient names. If there is still misalignment, CMS proposes to conduct further review to determine whether the products can be considered equivalent because the differences are “insignificant.”
- MFN Countries: The proposed reference countries are the same as those in GLOBE. Please see above.
- Enforcement of Manufacturer Payment of Rebate: The model contemplates imposing a CMP on manufacturers that fail to pay required rebates in a timely manner equal to 125% of the manufacturer’s owed GUARD Model rebate amount.
- Drugs Included in Model: Sole-source drugs and sole-source biological products that are in the following specific therapeutic categories would be included in the model: Analgesics; Anticonvulsants; Antidepressants; Antimigraine Agents; Antineoplastics; Antipsychotics; Antivirals; Bipolar Agents; Blood Glucose Regulators; Cardiovascular Agents; Central Nervous System Agents; Gastrointestinal Agents; Genetic or Enzyme or Protein Disorder: Replacement or Modifiers or Treatment; Immunological Agents; Metabolic Bone Disease Agents; Ophthalmic Agents; and Respiratory Tract/Pulmonary Agents. The model would exclude: (1) generics and biosimilar biological products, (2) sole-source drugs and biological products with annual covered costs below the minimum spend threshold (which is $69 million in 2027 and will be updated annually based on inflation), and (3) drugs with an MFP in effect.
- MFN Rebate: Manufacturers would be required to pay a rebate if the Medicare net price is greater than the applicable international benchmark for a drug. The Medicare net price would be calculated by subtracting manufacturer rebates and discounts paid under the Manufacturer Discount Program from the WAC of the drug. A manufacturer’s total rebate liability would equal the product of the per unit rebate amount and the total number of units of the drug covered by Part D plan sponsors for the 25% of Medicare Part D enrollees randomly selected for participation (total rebate amount = per unit rebate amount x total units of drug dispensed to the GUARD Model beneficiary population). Units for which payment is subject to an agreement under the 340B program would be excluded from the total number of units dispensed. When the per unit GUARD Model rebate exceeds the per unit Part D inflation rebate amount, CMS would instead apply the GUARD Model rebate amount.
- Timeline for Payment of Rebate Obligation: CMS proposes to provide a GUARD Model Rebate Report, which serves as an invoice, to each manufacturer of a GUARD Model drug within twenty-two months of the end of the performance year. Because the standard applicable period for inflation rebates is calculated based on the fiscal year and the MFN rebate would be calculated using a calendar year, CMS has proposed using a blend of data for both applicable periods to calculate MFN rebates under the model. CMS proposes to send a GUARD Model Rebate Report with the following information for each performance year of the model: the performance year per unit Part D inflation rebate amount, the incremental per unit GUARD Model rebate amount, the total units of the GUARD Model drug dispensed during the performance year, and the total incremental GUARD Model rebate amount for each model drug. Accordingly, a portion of the total GUARD Model rebate amount would be invoiced via the rebate report through the Medicare Part D Inflation Rebate Program, while the total incremental GUARD Model rebate amount would be invoiced through the GUARD Model rebate report. The manufacturer of a model drug must pay the total incremental GUARD Model rebate amount for each model drug no later than 30 calendar days after receipt of the GUARD Model rebate report.
Better Approaches to Lifestyle and Nutrition for Comprehensive hEalth (BALANCE) Model
The BALANCE Model is described as a voluntary model intended to help patients improve their metabolic health with GLP-1 treatment, along with access to lifestyle interventions, to improve people’s long-term health, potentially preventing chronic disease and disability. Participation in BALANCE is voluntary for manufacturers, state Medicaid agencies, and Part D plans. Manufacturers are eligible if they market or expect to market an eligible product by January 1, 2027. Model testing will conclude in December 2031.
Under the BALANCE model, CMS will negotiate pricing and coverage terms with participating manufacturers on behalf of state Medicaid agencies and Medicare Part D plans. State Medicaid agencies can join the model beginning in May 2026, and Part D plans can join beginning in January 2027. Manufacturers interested in participating in the model should respond to the BALANCE Request for Applications (RFA) by January 8, 2026.
CMS also announced the agency plans to implement a new Medicare GLP-1 payment demonstration beginning in July 2026, which will serve as a short-term bridge to the model. This additional payment demonstration means that Medicare beneficiaries can start accessing these important medications at prices negotiated by the Administration as soon as possible.
Next Steps
Interested parties have until February 23, 2026, to submit comments on the GLOBE and GUARD Model proposed rules. CMS has highlighted numerous issues on which it solicits comments.
Notably, CMS states that it does not believe that there is significant overlap or interaction between the GUARD Model and other CMMI models or CMS programs and initiatives at this time, but that it anticipates that the GLOBE Model may overlap with other CMMI models, such as the Enhancing Oncology Model, and other CMS programs and initiatives. While CMS is not proposing to modify or adjust either proposed model based on potential overlap, CMS solicits comments regarding its proposed approach.
The final rules, if issued, will almost certainly be subject to numerous changes and potential legal challenges that may ultimately postpone or preclude implementation. Interested parties should closely monitor the evolution of these models.
The Administration is separately pursuing implementation of the BALANCE model and a related demonstration, as well as the GENEROUS Model. Our team continues to closely monitor the Administration’s drug pricing models and related activity.
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If you have any questions concerning the material discussed in this client alert, please contact a member of our Health Care practice.
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