With HRSA's approval window now closed, attention turns to whether health system pharmacies can reconcile rebates at scale before the pilot's Jan. 1 start.
News|Articles|October 7, 2026
Why PhRMA Sued to Block Medicare's GLOBE Pricing Model
Author(s)Stephen Appezzato
PhRMA's lawsuit argues CMS overstepped its demonstration authority by tying Medicare Part B rebates to international prices.
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The Pharmaceutical Research and Manufacturers of America (PhRMA) filed a federal lawsuit on Oct. 7 challenging the Global Benchmark for Efficient Drug Pricing (GLOBE) Model, CMS's most favored nation (MFN) pricing policy for Medicare Part B. The trade group filed in the US District Court for the District of Columbia and is asking the court to declare GLOBE unlawful and vacate the rule.1
In a press release, PhRMA president and CEO Stephen J. Ubl said “GLOBE is unlawful and clearly exceeds CMS' authority.”1 “The policy doesn't make medicines more affordable for most beneficiaries, while putting future medical innovation and patient access at risk.”
What Does PhRMA's Lawsuit Argue?
PhRMA's central claim is that CMS is using its demonstration model authority to impose nationwide price-setting that Congress never authorized.1 Specifically, the complaint alleges that GLOBE:
- Fails the test-a-model requirement: Mandatory manufacturer rebates predetermine the outcome, so the rule does not test a new model as the statute requires.
- Rewrites the rebate framework: GLOBE overrides Medicare's statutory rebate structure and expands civil monetary penalties beyond CMS's authority.
- Raises constitutional concerns: The policy implicates separation of powers and the limits on authority Congress delegated.
Ubl said PhRMA shares the administration's goal on access and affordability, “but CMS cannot rewrite the law and bypass Congress to impose foreign price controls.”1
“Patients need more choices and more breakthroughs — not government price-setting schemes that undermine both,” he said.1
How Does the GLOBE Model Work?
CMS finalized GLOBE on Sept. 30. The model tests an alternative rebate formula within the Medicare Part B Drug Inflation Rebate Program. It uses international prices as a benchmark for certain separately payable Part B drugs and biologics.2 PhRMA said the benchmarks are drawn from prices in 19 OECD countries.1
The model runs from Jan. 1, 2027, through March 31, 2032. It applies to beneficiaries in randomly selected geographic areas covering about 25% of Original Medicare enrollees.2 It excludes orphan-only drugs, plasma-derived products and certain cell and gene therapies. It also excludes biosimilars and their reference biologics once a biosimilar launches.
PhRMA disputes the patient benefit. The group said only 0.3% of Part B beneficiaries would have seen lower out-of-pocket costs under the proposed rule, and even fewer would under the final version.1
Why Does the PhRMA Challenge Matter?
The case centers on how far CMS can stretch its demonstration authority. A ruling for CMS would affirm that the agency can use a mandatory pilot to set Medicare drug payment against international benchmarks without new legislation. A ruling for PhRMA would narrow that path for future models, including GUARD, the administration's companion MFN model for Medicare Part D.
Additionally, The civil monetary penalty argument raises the compliance stakes.1 If the court finds CMS expanded penalties beyond its authority, that ruling would limit the enforcement tools behind GLOBE and similar models.
The legal challenge arrives following the
That record bears directly on PhRMA's core claim. If Congress has declined to legislate MFN pricing, the court's reading of CMS's model-testing authority will determine whether the policy can advance without it.
References
1. Pharmaceutical Research and Manufacturers of America. “PhRMA Challenges CMS' MFN Policy as Unlawful Overreach.” Oct. 7, 2026.
2. Centers for Medicare & Medicaid Services. “CMS Finalizes New Mandatory Drug Payment Model to Deliver Lower Drug Prices for Beneficiaries in Original Medicare Part B.” Sept. 30, 2026.
3. Schoonveld, Ed. “A Complex Chess Game With Invisible Pieces.” Pharmaceutical Commerce. Sept. 8, 2026.
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