In my December column, I discussed the “GENEROUS Model” in which the Centers for Medicare & Medicaid Services (CMS) applies most-favored nation (MFN) methodologies to lower Medicaid prices. I highlighted the risk that MFN pricing could be extended to Medicare Part B and Part D. Well, it already happened. On Dec. 23, CMS proposed the “Globe Model” for Medicare Part B and the “Guard Model” for Medicare Part D drugs. Both models use MFN pricing principles to calculate rebates payable by pharmaceutical companies for the highest revenue disease areas.

The Globe and Guard Models are designated as “tests” for seven and five years respectively. Various operational approaches will be used, but the main reason for the “test” designation is probably the ability to stay within CMS authority and avoid the need for congressional approval. The large number of drug pricing policy proposals seem to be a clear example of Steve Bannon’s “Flood the Zone" strategy¹ that hampers the ability to effectively respond to all onslaught in a timely fashion.

Globe model for Medicare Part B

The Globe Model² mandates rebates for any single-source drug or biological with more than $100 million in annual Medicare Part B fee-for-service (FFS) charges. It involves 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,ophthalmic agents, which are the drug categories that have the highest Medicare expenditures and where “access barriers like high costs likely contribute to deficits in care leading to poor clinical outcomes and high program expenditures.”²

The Globe model is supposed to start on Oct. 1, 2026 with first price impact taking place on Jan.1, 2028. The CMS “test” involves 25% of the Medicare population. The MFN calculation would include available net price information from Australia, Austria, Belgium, Canada, Czechia, Denmark, France, Germany, Ireland, Israel, Italy, Japan, Netherlands, Norway, South Korea, Spain, Sweden, Switzerland, and the United Kingdom, with a GDP based adjustment similar to the “GENEROUS” model for Medicaid. Patients that are treated with a drug that is subject to Globe price rebates will be charged a 10% co-pay instead of the customary 20% co-payment for Medicare Part B benefits. As most patients have supplemental Medicare insurance that covers the 20% co-payment, there will be little impact on patients.

Guard model for Medicare Part D

The “Guard” Model³ for Medicare Part D, which starts on Jan. 1, 2026, is similar to the Globe Model. It will involve 25% of the Medicare Part D enrollees. MFN price calculations will be used, with the same list of countries as under Globe, to determine a rebate for each drug. Single-source drugs and single-source biologicals from following therapeutic categories are included: 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. All drugs with annual revenue of more than $69 million will be included for 2027; the threshold will be increased with CPI each year. Ironically, drug cost savings will not be directly passed on to patients under this model.

Overall impact

The combination of GENEROUS for Medicaid, Globe for Medicare Part B and Guard for Medicare Part D will heavily impact the US drug market. President Trump’s rhetoric has been that other countries should pay more. Only the UK made some concessions for higher prices. It seems unlikely that other countries will follow, in my opinion.

Who will benefit from these measures? Patients are not likely to see any direct cost reductions, which is ironic since it is the main stated motivation for the directives. President Trump will point to another win and there will be some drug budget reductions, but it will come at a longer-term cost. It has the potential to choke venture capital investments for many pharmaceutical initiatives and limit drug company investments for the disease areas that are affected, which ironically, are some of the most devastating ones.

About the Author

Ed Schoonveld is a value and access adviser for Schoonveld Advisory, LLC and author of The Price of Global Health.

References

1. Aitken P. Steve Bannon’s ‘Flood the Zone’ Strategy Explained Amid Trump Policy Blitz. Newsweek. February 6, 2025. https://www.newsweek.com/steve-bannon-flood-zone-strategy-explained-trump-policy-blitz-2027482

2. Global Benchmark for Efficient Drug Pricing (GLOBE) Model. US Department of Health and Human Services. December 23, 2025. https://public-inspection.federalregister.gov/2025-23702.pdf

3. Guarding US Medicare Against Rising Drug Costs (GUARD) Model. Federal Register. December 23, 2025. https://www.federalregister.gov/documents/2025/12/23/2025-23705/guarding-us-medicare-against-rising-drug-costs-guard-model