Global Benchmark for Efficient Drug Pricing (GLOBE) Model

Federal RegisterDec 23, 2025

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 513

[CMS-5545-P]

RIN 0938-AV66

Global Benchmark for Efficient Drug Pricing (GLOBE) Model

AGENCY:

Centers for Medicare & Medicaid Services (CMS), Department of Health and Human Services (HHS).

ACTION:

Proposed rule.

SUMMARY:

This proposed rule proposes to implement the Global Benchmark for Efficient Drug Pricing Model (“GLOBE Model”), a new Medicare payment model under section 1115A of the Social Security Act (the Act). The GLOBE Model would test whether a payment model that uses an alternative method for calculating Part B inflation rebate amounts for certain separately payable Part B drugs and biologicals products reduces costs for Medicare fee-for-service (FFS) beneficiaries and the Medicare program while preserving quality of care.

DATES:

To be assured consideration, comments must be received at one of the addresses provided below, by February 23, 2026.

ADDRESSES:

In commenting, please refer to file code CMS-5545-P.

Comments, including mass comment submissions, must be submitted in one of the following three ways (please choose only one of the ways listed):

Electronically.

You may submit electronic comments on this regulation to

http://www.regulations.gov.

Follow the “Submit a comment” instructions.

By regular mail.

You may mail written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-5545-P, P.O. Box 8013, Baltimore, MD 21244-8013.

Please allow sufficient time for mailed comments to be received before the close of the comment period.

By express or overnight mail.

You may send written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-5545-P, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

For information on viewing public comments, see the beginning of the

SUPPLEMENTARY INFORMATION

section.

FOR FURTHER INFORMATION CONTACT:

Vinod Mitta, (667) 290-8712 or

GLOBEmodel@cms.hhs.gov.

SUPPLEMENTARY INFORMATION:

Inspection of Public Comments:

All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following website as soon as possible after they have been received:

http://www.regulations.gov.

Follow the search instructions on that website to view public comments. CMS will not post on

Regulations.gov

public comments that make threats to individuals or institutions or suggest that the commenter will take actions to harm an individual. CMS continues to encourage individuals not to submit duplicative comments. We will post acceptable comments from multiple unique commenters even if the content is identical or nearly identical to other comments. We encourage commenters to include supporting facts, research, and evidence in their comments. When doing so, commenters are encouraged to provide citations to the published materials referenced, including active hyperlinks. Likewise, commenters who reference materials which have not been published are encouraged to upload relevant data collection instruments, data sets, and detailed findings as a part of their comment. Providing such citations and documentation will assist us in analyzing the comments.

Plain Language Summary:

In accordance with 5 U.S.C. 553(b)(4), a plain language summary of this rule may be found at

https://www.regulations.gov/.

I. Executive Summary and Background

A. Executive Summary

1. Purpose

The purpose of this proposed rule is to propose the implementation and testing of a new mandatory model under the authority of the Centers for Medicare & Medicaid Services (CMS) Center for Medicare and Medicaid Innovation (CMMI) (Innovation Center). Section 1115A of the Social Security Act (the Act) authorizes the Innovation Center to test innovative payment and service delivery models expected to reduce Medicare, Medicaid, and Children's Health Insurance Program (CHIP) expenditures while preserving or enhancing the quality of care furnished to the beneficiaries of such programs.

2. Summary of Major Provisions

a. Proposed GLOBE Model Drugs

The proposed Global Benchmark for Efficient Drug Pricing Model (“GLOBE Model”) would focus on a set of Part B rebatable drugs that are single source drugs and sole source biological products that are furnished to a cohort of beneficiaries in the traditional Medicare program. The set of included drugs, as proposed in section II.B. of this proposed rule, would include certain Part B rebatable drugs as identified in 42 CFR 427.101 for the purpose of the Medicare Part B Drug Inflation Rebate Program and that meet the proposed definition of GLOBE Model drugs in proposed 42 CFR 513.130. Drug selection (and removal, if applicable) for the model test would be determined by CMS based on the eligibility criteria and would not be subject to appeal.

b. Proposed Defined Population and Intervention

The proposed cohort of beneficiaries is described in section II.C. of this proposed rule. This cohort would be identified from approximately 25 percent of beneficiaries who are enrolled in traditional Medicare Part B and meet certain criteria (as determined by CMS as set forth in proposed 42 CFR 513.120). These beneficiaries must have traditional Medicare Part B as their primary payer, as defined by a beneficiary being enrolled in Medicare Part B fee-for-service (FFS), and must not be enrolled in a Medicare Advantage plan, section 1876 cost plan,

or section 1833 healthcare prepayment plan.

Beneficiaries must not have other group health coverage that is a primary payer (such as employer-sponsored health insurance). Finally, beneficiaries must be identified by CMS for inclusion in the model (based on the beneficiary's address of record at a certain point in time being within the GLOBE Model geographic areas) and must not be identified by CMS for inclusion in the comparison group or otherwise not eligible for inclusion. Medicare beneficiaries who are in the selected cohort, or “GLOBE Model beneficiaries,” would not be model participants

but would benefit from reduced coinsurance, as applicable, when they receive a GLOBE Model drug as described in section II.G.7. of this

proposed rule. When a GLOBE Model beneficiary receives a GLOBE Model drug on a date of service where they are identified as a GLOBE Model beneficiary, separately payable claim lines for that service would be included in the calculation of GLOBE Model billing units as described in section II.G.4. of this proposed rule. Beneficiary selection for the model cohort and comparison group (and removal, if applicable) would be solely determined by CMS and would not be subject to appeal. Providers and suppliers who furnish GLOBE Model drugs to Medicare FFS beneficiaries who are in the model cohort would not be model participants and would continue to buy and bill for GLOBE Model drugs as usual and receive separate payment under Medicare Part B (if applicable). These providers and suppliers include, but may not be limited to, hospital outpatient departments, physician practices, ambulatory surgical centers, pharmacies enrolled as durable medical equipment (DME) suppliers. When the GLOBE Model reduced beneficiary coinsurance applies to units of GLOBE Model drugs furnished to Medicare Part B FFS beneficiaries who are included in the GLOBE Model beneficiary cohort, the provider or supplier would reduce the amount of coinsurance charged to the beneficiary and the portion of the Medicare Part B allowed amount that would be payable by Medicare Part B would be adjusted upwards. For example, if the Medicare Part B allowed amount under the GLOBE Model is $100 and the GLOBE Model beneficiary coinsurance percentage is reduced to 10 percent (instead of the usual 20 percent), the Medicare Part B program payment to the provider or supplier would be adjusted upward and would be $90 (instead of the usual $80) and the beneficiary coinsurance financial responsibility would be $10.

As established in section 1876 of the Act (42 U.S.C. 1395mm).

As established in section 1833 of the Act (42 U.S.C. 1395l).

As proposed in section II.E. of this proposed rule, manufacturers of GLOBE Model drugs would be model participants.

c. Proposed Manufacturer Participation

The proposed GLOBE Model would require mandatory participation for all manufacturers (as defined in 42 CFR 427.20) of Part B rebatable drugs that are also GLOBE Model drugs

(

as identified in proposed 42 CFR 513.130 and discussed in section II.B. of this proposed rule). When Part B rebatable drugs subject to the GLOBE Model are furnished to Medicare FFS beneficiaries who are in the model cohort, manufacturers that are GLOBE Model participants would pay GLOBE Model rebates to the Medicare Part B account in the Federal Supplementary Medical Insurance Trust Fund if the amount specified in section 1847A(i)(3)(A)(ii)(I) of the Act for the GLOBE Model drug exceeds a benchmark amount that would be based on available international drug pricing information (as described in section II.G. of this proposed rule), which would not be less than any rebates owed under the Medicare Part B Drug Inflation Rebate Program. The total GLOBE Model rebate amount would only apply to certain units of the GLOBE Model drugs (as identified in proposed 42 CFR 513.520) and would be solely determined by CMS and would not be subject to appeal. Manufacturers would have the opportunity to submit a Suggestion of Error if the manufacturer believes that there is a mathematical error or errors to be corrected.

d. Model Purpose

The intent of the proposed GLOBE Model is to test an innovative payment model that modifies the Part B inflation rebate amount for GLOBE Model drugs using international drug pricing information to identify a benchmark that reflects prices paid in a set of economically comparable countries (as discussed in section II.G.1.e. of this proposed rule), which CMS expects would reduce program expenditures for Medicare Part B while preserving or enhancing beneficiaries' quality of care. As described in section II.G.2. of this proposed rule, CMS proposes that the model test would include two approaches for identifying a benchmark amount for the modified rebate calculation—using differently sourced international drug pricing information and different calculations—and the model evaluation would assess the impacts of testing these different approaches for identifying a benchmark amount for the modified rebate calculation. One approach, described in section II.G.2.a. of this proposed rule (Method I), would use existing international drug pricing information to identify a benchmark based on an estimation of the lowest international price among the set of economically comparable countries, which may be tied to pricing data that represent list, invoice, ex-manufacturer sales, other prices, or a combination of such prices as available in commercially-available data sources. The other approach, described in section II.G.2.b. of this proposed rule (Method II), would use voluntary manufacturer-submitted international drug net pricing data to estimate a benchmark based on an average international price among the set of economically comparable countries, which would reflect net prices realized by a manufacturer.

In this proposed rule, we propose to test the GLOBE Model in a manner that captures all applicable billing units for all separately payable Medicare Part B FFS claims for GLOBE Model drugs that are furnished to Medicare Part B FFS beneficiaries who are in the model cohort (on the date of service) and that are paid under the GLOBE Model for dates of service during a performance year and for which the GLOBE Model beneficiary coinsurance and adjusted payments to providers and suppliers could apply. For purposes of calculating the total GLOBE Model rebate amount, applicable billing units would be identified by CMS several months after the end of a calendar quarter (as described in section II.G. of this proposed rule) and additional time is necessary for calculations of rebate amounts and creating invoices. This means that GLOBE Model test processes for claims processing, data collection, invoicing, payment of GLOBE Model rebates, and reconciliation would occur concurrently with and continue after the end of a performance year and subsequent years after the last performance year.

e. Proposed Model Performance Period

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, during which the GLOBE Model beneficiary coinsurance and adjusted payments to providers and suppliers could apply and monitoring activities would occur, and 7 payment years, beginning October 1, 2026, and ending September 30, 2033, during which CMS would calculate, invoice, collect, and reconcile the GLOBE Model rebates for a performance year. The model evaluation would encompass the 7-year test period.

f. Proposed Model Waivers

We believe it would be necessary to waive certain requirements of title XVIII of the Act and related program requirements codified in regulations solely for purposes of carrying out the testing of the GLOBE Model under section 1115A(b) of the Act. Specifically, as further described in section II.O. of this proposed rule, we propose to waive provisions in section 1847A(i), 1833(a), and 1833(t) of the Act to the extent necessary to permit testing of an alternative rebate calculation for certain units of GLOBE Model drugs and collect GLOBE Model rebate amounts. We propose to issue waivers using the waiver authority under section 1115A(d)(1) of the Act. Each of the proposed waivers is discussed in detail in section II.O. of this proposed rule.

We propose to codify the requirements of the GLOBE Model at 42 CFR part 513. We propose at § 513.800 that should any provision of the proposed part 513 be held invalid or unenforceable by its terms, or as applied to any person or circumstance, such provisions would be severable from the remainder of part 513 and the invalidity or unenforceability would not affect the remainder of the provisions of part 513. For example, should the proposed alternate rebate calculation payment methodology in this proposed rule be deemed invalid or unenforceable, the underlying obligation under current statute will continue. We seek comment on our proposed severability policies.

3. Summary of Costs and Benefits

In section IV. of this proposed rule, we set forth a detailed analysis of the regulatory and Federalism impacts that the proposed GLOBE Model would have on affected entities and beneficiaries. As detailed in section II.A. of this proposed rule, this proposed rule would establish a 7-year GLOBE Model alternative payment test for certain separately payable Medicare Part B rebatable drugs furnished in the outpatient setting to Medicare FFS beneficiaries in the model cohort and that are paid under the GLOBE Model. Tables 13, 14, and 15 in section IV.D. of this proposed rule display the estimated overall impact of the proposed GLOBE Model on the Medicare and Medicaid programs.

We estimate that the GLOBE Model would result in overall savings of $11.9 billion in Medicare Part B net spending during the 7-year model, inclusive of $8.4 billion in Medicare Part B FFS, 7.5 billion in Medicare Advantage (MA) savings, and $4 billion in premium offset impacts. In this estimate, we assume manufacturer behavioral changes and beneficiary utilization changes, as described in section IV. of this proposed rule. We estimate savings for the MA program of $7.5 billion due to the way CMS calculates MA rates using Medicare FFS claims, which would include claims paid under the GLOBE Model beginning with rate setting for 2028, and savings for the Medicaid program of around $1.0 billion, of which roughly $0.7 billion would be federal savings and roughly $0.3 billion would be state savings.

When annualized over the 7-year period, we estimate that the GLOBE Model would result in overall cost savings in Medicare Part B FFS net spending of approximately $2.3 billion at both the 3 and 7 percent rates of discount.

Note:

Totals do not add up due to rounding. See section IV. of this proposed rule for the Regulatory Impact Analysis.

B. Background

A 2024 report from the Office of the Assistant Secretary for Planning and Evaluation (ASPE) revealed that U.S. prices for U.S. originator drugs were 422 percent higher than other countries.

A number of studies have also demonstrated observable differences in pricing dynamics of single source

versus multi-source,

where multi-source drugs and biological products typically have higher price concessions and manufacturer discounts than single source drugs and sole source

biologics.

This study reports unadjusted ratios, meaning they have not been adjusted to account for GDP per capita. Available at:

https://aspe.hhs.gov/sites/default/files/documents/f96a072f8f82f3ba546abd52bfcaeb57/aspe-cover-idr-pricing-availability.pdf.

U.S. originator drugs are the original biological products and drugs developed and licensed or approved via section 351(a) of the Public Health Services Act or submitted under section 505(b) and approved under section 505(c) of the Federal Food, Drug, and Cosmetic Act (FD&C Act). U.S. originator drugs are also sometimes called brand name drugs, reference listed drug, or reference products.

Single source drugs and biological products in this sentence refers to drugs without generic competition (drugs approved under section 505(j) of the FD&C Act) and biological products without biosimilar competition (biological products licensed under 351(k) of the Public Health Service Act).

Multi-source refers to drugs and biological product with generic (drug approved under section 505(j) of the FD&C Act) or biosimilar competition (biological products licensed under 351(k) of the Public Health Service Act).

Jofre-Bonet, Mireia, et al. “The Price Effects of Biosimilars in the United States.”

Value in health: the journal of the International Society for Pharmacoeconomics and Outcomes Research

vol. 28,5 (2025): 742-750. doi: 10.1016/j.jval.2025.02.008.

Changes in the List Prices of Prescription Drugs, 2017 to 2023, Office of the Assistant Secretary for Planning and Evaluation (October 6, 2023). Available at:

https://aspe.hhs.gov/sites/default/files/documents/e24f630a33f0a0585337c65745904487/aspe-drug-price-tracking-brief.pdf

San-Juan-Rodriguez, A, et al. Trends in List Prices, Net Prices, and Discounts for Originator Biologics Facing Biosimilar Competition.

JAMA Netw Open.

2019;2(12): e1917379. doi:10.1001/jamanetworkopen.2019.17379.

Recent CMS analysis of claims data for 2024 shows that total Medicare spending is at $70.71 billion, with more than two-thirds ($46.38 billion) of this spend being attributed to Medicare Part B rebatable drugs. Research has shown Medicare Part B drug spending is also concentrated among a small number of drugs. In 2021, the top 20 drugs accounted for over half of total Medicare Part B FFS drug spending, with the top 10 representing 40 percent.

Notably, all 20 drugs were biological products.

Medicare Part B Drug Pricing, Office of the Assistant Secretary for Planning and Evaluation (June 9, 2023).

Available at:

https://aspe.hhs.gov/sites/default/files/documents/fb7f647e32d57ce4672320b61a0a1443/aspe-medicare-part-b-drug-pricing.pdf

To discourage drug manufacturers from increasing drug prices faster than the rate of inflation and to improve access to affordable treatments for Medicare beneficiaries, the Inflation Reduction Act of 2022 created the Medicare Part B Drug Inflation Rebate Program. If drug manufacturers raise prices for certain drugs faster than the rate of inflation for a calendar quarter beginning with the first quarter of 2023, manufacturers must pay a rebate to the Medicare Part B account in the Federal Supplementary Medical Insurance Trust Fund and Medicare lowers beneficiary coinsurance amounts for applicable drugs accordingly.

Medicare Part B FFS drug spending

has grown by 85.8 percent ($18.7 billion)

from 2014 to 2021 with the standard monthly Medicare Part B premium for beneficiaries increasing by 41.5 percent ($104.90

to $148.50

). Based on the increasing Medicare Part B FFS and beneficiary drug spending, we propose to test a model that reduces Medicare Part B FFS drug spending and beneficiary coinsurance amounts using international drug pricing information as a benchmark to test an alternative Part B inflation rebate amount calculation for certain single source drugs and sole source biological products that would reduce Medicare program expenditures while preserving or enhancing quality of care.

Measured by drug allowed charges.

Medicare Part B Drug Pricing, Office of the Assistant Secretary for Planning and Evaluation (June 9, 2023).

Available at:

https://aspe.hhs.gov/sites/default/files/documents/fb7f647e32d57ce4672320b61a0a1443/aspe-medicare-part-b-drug-pricing.pdf

CMS announces major savings for Medicare beneficiaries. Available at:

https://www.cms.gov/newsroom/press-releases/cms-announces-major-savings-medicare-beneficiaries

2021 Medicare Parts A & B Premiums and Deductibles. Available at:

https://www.cms.gov/newsroom/fact-sheets/2021-medicare-parts-b-premiums-and-deductibles

The pace of growth in drug prices varies across disease categories. A report by the Healthcare Distribution Alliance (HDA) Research Foundation, showed that drugs classified in immunology, oncology, rheumatology, endocrinology and ophthalmology are among the top 20 therapeutic classes based on spending or prescriptions volume in the United States and that most of these categories have shown notable growth

between 2023 and 2024.

This trend is also observed in Medicare Part B FFS drugs, where these five therapeutic classes represent at least $24 billion in Medicare Part B FFS allowed charges in 2024.

18 19 20

HDA Research Foundation. HDA 96th Edition HDA Factbook. The Facts, Figures, and Trends in Healthcare (2025-2026). Available at:

https://www.hda.org/publications/.

CMS. Medicare Utilization for Medicare Part B FFS. Available at:

https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-fee-for-service-parts-a-b/medicare-utilization-part-b.

Dickson, S.R., and James, K.E. Treatments Associated with Manufacturer Payments to Ophthalmologists.

JAMA Health Forum,

2023, 4 (9): e232951. doi:10.1001/jamahealthforum.2023.2951.

Desai S., Sekimitsu, S., Rossin, E.J., Zebardast, N. Trends in Anti-Vascular Endothelial Growth Factor Original Medicare Part B Claims in the United States, 2014-2019.

Ophthalmic Epidemio,

2024, 31(5): 468-477. doi: 10.1080/09286586.2024.2310854.

Increasingly high drug costs limit access to care and treatment which in turn results in complications that can lead to worse health outcomes and premature death. This results in increased medical spending to treat patients' conditions and potentially avoidable expenditures for all payers, including CMS.

Results from recent surveys revealed that many Americans, including Medicare beneficiaries, face significant financial burden of care that results in skipping or rationing medication due to cost.

A survey conducted in June 2025 showed that one quarter of adults reported not filling their prescription in 2024 because of cost; among those who had taken a prescription, one in three stated they did not fill at least one prescription because of the cost.

Financial toxicity, or the negative impact that the monetary burden of medical care can have on patients' well-being, fiscal security, and overall health,

can be most pronounced among the elderly population and among patients where the cost of treatment is high and with low income. One in four adults taking prescriptions report difficulty affording their medication, including 40 percent of those with household income of less than $40,000 per year.

A separate survey conducted concluded that about 4 in 10 older adults with Medicare reported problems accessing healthcare because of its costs, and that 14 percent of Medicare beneficiaries stated they skipped taking or sometimes did not even fill their prescription because of the expense.

Studies show that Medicare patients with cancer and certain chronic conditions are more likely to report cost-related medication non-adherence (that is, not taking medications as prescribed or indicated by a physician due to cost).

27 28 29

Nekui F., Galbraith A.A., Briesacher B.A., Zhang F., Soumerai S.B., Ross-Degnan D., Gurwitz J.H., Madden J.M.

Cost-related Medication Nonadherence and Its Risk Factors Among Medicare Beneficiaries.

Medical Care. 2021;59(1):13-21.

https://doi.org/10.1097/MLR.0000000000001458

Arnold Ventures, Commonwealth Fund, and PerryUndem. Drug Costs and Their Impact on Care. February 10, 2025. Available at:

https://www.arnoldventures.org/stories/drug-costs-and-their-impact-on-care.

Center for Opinion Research and I-MAK Survey. Understanding Americans' Top Concerns on Drug Pricing: Corporate Greed and Patent Reform. Available at:

https://www.i-mak.org/survey/.

Ehsan AN, Wu CA, Minasian A, et al. Financial Toxicity Among Patients With Breast Cancer Worldwide: A Systematic Review and Meta-analysis. JAMA Netw Open. 2023;6(2):e2255388. doi:10.1001/jamanetworkopen.2022.55388.

Sparks, G., Kirzinger, A., Montero, A., et al. Public Opinion on Prescription Drugs and Their Prices. KFF Poll Finding, October 4, 2024. Available at:

https://www.kff.org/health-costs/public-opinion-on-prescription-drugs-and-their-prices/.

The Commonwealth Fund. Medicare's Affordability Problem: A Look at the Cost Burdens Faced by Older Enrollees. Issue Briefs, September 19, 2023. Available at:

https://www.commonwealthfund.org/publications/issue-briefs/2023/sep/medicare-affordability-problem-cost-burdens-biennial.

Zhang, J.X, and Meltzer, D.O. Prevalence and Persistence of Cost-related Medication Non-Adherence Before and During the COVID-19 Pandemic Among Medicare Patients at High Risk of Hospitalization.

PLoS One,

2023, 18(8): e0289608. doi: 10.1371/journal.pone.0289608.

Zhang, J.X., and Meltzer, D.O. Longitudinal Progression of Cost-related Medication Non-Adherence Among Medicare Patients with Diabetes at High Risk of Hospitalization: The Role of Dual Eligibility.

PLoS One, 2025,

20(8): e0329031. doi: 10.1371/journal.pone.0329031.

Cutler, R.L., Fernandez-Llimos, F., Frommer, M., Benrimoj, C, et al. Economic Impact of Medication Non-adherence by Disease Groups: A Systematic Review.

BMJ Open,

2018, 8(1): e016982. DOI: 10.1136/bmjopen-2017-016982.

Studies have also shown that the impacts on access to care due to costs can be significant. A literature review concluded that annual costs of medication non-adherence are up to $290 billion, that 10 percent of hospitalizations in adults are attributed to medication non-adherence, with the typical non-adherent patient requiring three extra visits per year leading to $2,000 in increased treatment costs per year.

This paper also found that cancer patients experience more than double the cost variation compared to other disease groups. Further, a 2020 report estimated that up to 112,000 seniors could die prematurely because drug prices are so high that they cannot afford their medication, and that Medicare could be spending $17.7 billion annually on avoidable medical spending because of complications associated with cost-related medication non-adherence.

Cutler, R.L., Fernandez-Llimos, F., Frommer, M., Benrimoj, C, et al. Economic Impact of Medication Non-adherence by Disease Groups: A Systematic Review.

BMJ Open,

2018, 8(1): e016982. DOI: 10.1136/bmjopen-2017-016982.

Xcenda. Modeling the Population Outcomes of Cost-Related Non-adherence: Model Report. September 21, 2020. Available at:

https://global-uploads.webflow.com/5e5972d438ab930a0612707f/5fa9bf4419f4da03a7daf190_WHPC-Xcenda_NonAdherence%20Population%20Model_Report_22Oct2020r.pdf.

1. Medicare Part B Drug Benefit

a. Medicare Payment for Separately Payable Under Medicare Part B Drugs

The majority of drugs covered under Medicare Part B generally fall into three categories: drugs furnished incident to a physicians' service which are not usually self-administered by the patient (section 1861(s)(2)(A) and (B) of the Act), drugs administered via a covered item of durable medical equipment (DME) (section 1861(s)(6) of the Act), and drugs specified by statute (for example, vaccines (section 1861(s)(10)(A) and (B) of the Act), oral cancer drugs (section 1861(s)(2)(Q) of the Act), oral antiemetics (section 1861(s)(2)(T) of the Act), and immunosuppressive therapy (section 1861(s)(2)(J) of the Act)).

Many drugs payable under Medicare Part B are administered via injection or infusion in a physician office, a Hospital Outpatient Department (HOPD), and certain other outpatient settings, such as ambulatory surgery centers (ASCs), and, when Medicare allows separate payment for these drugs, the payment limit is typically based on the methodology described in section 1847A of the Act. Payment for these drugs does not include payment for administration; payment for drug administration services is made in accordance with the applicable payment policy for the setting in which the drug was furnished, such as the Physician Fee Schedule (PFS), the Hospital Outpatient Prospective Payment System (OPPS), or the Ambulatory Surgical Center Payment System. Medicare Part B also allows separate payment for drugs in less common situations such as osteoporosis drugs furnished by a home health agency, and when a beneficiary does not have benefits available under the Medicare Part A program.

The payment methodology described in section 1847A of the Act is generally based on the volume-weighted average sales price (ASP) for all National Drug Codes (NDCs) that are assigned to a Healthcare Common Procedure Coding System (HCPCS) Level II code for the drug plus an add-on percentage. For most HCPCS Level II codes, the add-on percentage is 6 percent except during the initial sales period when ASP is not yet available, for certain qualifying

biosimilar biological products, and in certain circumstances specified within section 1847A(d)(3)(C) of the Act. When ASP is not yet available and the wholesale acquisition cost (WAC) is used, the add-on is 3 percent. Section 11403 of the Inflation Reduction Act of 2022 requires a temporary, 5-year increase for qualifying biosimilar biological products (as defined in section 1847A(b)(8)(iii) of the Act) that have an ASP less than the ASP of the reference biological product. In these cases, the add-on is 8 percent of the reference biological product's ASP. Following the applicable five-year period (as described in section 1847A(b)(8)(ii) of the Act) for these qualifying biosimilar biological products, the add-on percentage reverts back to 6 percent of the reference biological product's ASP.

The volume-weighted ASP for a HCPCS Level II code is calculated by CMS quarterly using manufacturer-submitted data on sales to all purchasers (with limited exceptions as articulated in section 1847A(c)(2) of the Act,

such as sales at nominal charge and sales exempt from Medicaid best price)

with manufacturer rebates, discounts, and price concessions included in the ASP calculation (that is, the sales price is net of these rebates, discounts, and price concessions). The ASP-based payment limit that Medicare pays for a separately payable Medicare Part B FFS drug claim does not vary based on the exact price an individual provider or supplier pays to acquire the drug. This payment methodology may create an incentive for the use of more expensive drugs. Although the statute does not specifically state what the add-on represents, as noted in the MedPAC report,

it may be needed to account for handling and overhead costs and additional mark-up in U.S. distribution channels that are not captured in the manufacturer-reported ASP.

OMB Control Number 0938-0921, Centers for Medicare & Medicaid Services.

Best price is defined in section 1927(c)(1)(C) of the Act.

MedPAC, June 2017, “Medicare Part B Drug Payment Policy Issues,” accessed via

https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/jun17_ch2.pdf.

Currently, under Medicare Part B, beneficiary cost-sharing

is generally 20 percent of the Medicare-allowed amount. The term “Medicare-allowed amount” means the maximum amount that a provider or supplier would be paid for a covered health care service or drug. However, for items and services paid under the OPPS, beneficiaries are only financially responsible for a copayment amount up to the amount of the inpatient hospital deductible.

Medicare pays for the remaining portion of the Medicare allowed amount.

Not including the annual deductible.

Section 1833(t)(8)(C)(i) of the Act limits the amount of beneficiary copayment that may be collected for a procedure performed in a year to the amount of the inpatient hospital deductible for that year. This limit is $1,676 in 2025.

Centers for Medicare & Medicaid Services. Outpatient Services Payment for People with Medicare Part B, Revised May 2021. Available at:

https://www.medicare.gov/publications/02118-Part-B-Outpatient-Services-Payment.pdf.

b. Medicare Part B Drug Inflation Rebate Program

Section 11101 of the Inflation Reduction Act of 2022 (IRA) (Pub. L. 117-169, enacted August 16, 2022) established requirements under which drug manufacturers must pay Part B inflation rebate amounts if they raise their prices for certain drugs payable under Medicare Part B faster than the rate of inflation. Specifically, section 11101 of the IRA amended section 1847A of the Act by adding new subsection (i) which establishes a requirement for drug manufacturers to pay rebates into the Medicare Part B account in the Federal Supplementary Medical Insurance Trust Fund for Part B rebatable drugs for each calendar quarter beginning on or after January 1, 2023, if the amount specified, as determined under section 1847A(i)(3)(A)(ii) of the Act exceeds the inflation-adjusted payment amount, which is calculated as set forth in section 1847A(i)(3)(C) of the Act. The IRA also provides for an adjustment to the beneficiary coinsurance amount in cases where the price of a Part B rebatable drug increases faster than the rate of inflation such that the beneficiary coinsurance is calculated based on the lower inflation-adjusted payment amount instead of the applicable payment amount, resulting in a coinsurance percentage that is equal to 20 percent of the inflation-adjusted payment amount as described in section 1847A(i)(3)(C) of the Act for a calendar quarter. Section 1847A(i)(2) of the Act defines a “Part B rebatable drug,” in part, as a single source drug or biological product (as defined in section 1847A(c)(6)(D) of the Act), including a biosimilar biological product (as defined in section 1847A(c)(6)(H) of the Act), for which payment is made under Medicare Part B. Certain product categories are excluded from the definition of a Part B rebatable drug pursuant to 42 CFR 427.101(b). Currently excluded product categories include: (1) qualifying biosimilar biological products;

(2) products with historically excepted grouped billing and payment codes; (3) products billed under a “not otherwise classified” (NOC) code; (4) radiopharmaceutical drugs and biological products; (5) skin substitutes; (6) drugs with average total allowed charges under the applicable threshold ; (7) certain vaccines and other products;

and (8) generic drugs.

The applicable threshold specified in section 1847A(i)(2) of the Act was equal to $100 for applicable calendar quarters in 2023. Thereafter, CMS calculates the applicable threshold as equal to the unrounded applicable threshold calculated for the prior calendar year increased by the percentage increase in the consumer price index for all urban customers (CPI-U) for the 12-month period ending with June of the previous year, rounded to the nearest multiple of $10.

Qualifying biosimilar biological products are defined under section 1847A(b)(8)(B)(iii) of the Act and, during the applicable 5-year period, must have an ASP that is not more than the ASP of the reference biological product for a calendar quarter to qualify for an add-on amount equal to 8 percent of the payment amount calculated under section 1847A(b)(4) of the Act for the reference biological product.

This includes influenza, pneumococcal, hepatitis B, and COVID-19 vaccines, and monoclonal antibodies used for treatment or post-exposure prophylaxis of COVID-19.

Part B drugs submitted in an Abbreviated New Drug Application (ANDA) and approved under section 505(j) of the FD&C Act.

42 CFR 427 Subpart B, Electronic Code of Federal Regulations.

https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-427.

For applicable calendar quarters during 2023, the applicable threshold was $100.

For each calendar quarter beginning on or after January 1, 2023, the manufacturer of a Part B rebatable drug is required, for such drug, not later than 30 days after date of receipt (as defined in 42 CFR 427.505) of the Rebate Report from CMS, to pay a rebate into the Medicare Part B account in the Federal Supplementary Medical Insurance Trust Fund if the amount specified in section 1847A(i)(3)(A)(ii) of the Act exceeds the inflation-adjusted payment amount (calculated as set forth in section 1847A(i)(3)(C) of the Act) for an applicable calendar quarter. With respect to invoicing manufacturers for the rebate amount owed, under section 1847A(i)(1) of the Act, CMS must report rebate amounts to each manufacturer of a Part B rebatable drug no later than 6 months after the end of each calendar quarter, except that for calendar quarters beginning in 2023 and 2024, CMS had until September 30, 2025, to invoice manufacturers for rebates. In the CY 2025 Physician Fee Schedule (PFS) final

rule (89 FR 98228 through 98313)

to implement section 11101 of the IRA, CMS codified these requirements and established other policies at 42 CFR part 427. In the CY 2026 PFS final rule (90 FR 49733 through 49739),

CMS adopted certain limited modifications to the policies for the Medicare Prescription Drug Inflation Rebate Program set forth in part 427 under title 42, chapter IV of the Code of Federal Regulations (CFR) for Part B. For example, at 42 CFR 427.302(c)(5) described how CMS identifies the payment amount benchmark quarter in certain instances and the calculation for the Part B rebate amount in such instances.

“Medicare and Medicaid Programs; CY 2025 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies; Medicare Shared Savings Program Requirements; Medicare Prescription Drug Inflation Rebate Program; and Medicare Overpayments,” 89 FR 98228-98313 (December 9, 2024).

“Medicare and Medicaid Programs; CY 2026 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies; Medicare Shared Savings Program Requirements; and Medicare Prescription Drug Inflation Rebate Program,” 90 FR 49266-50481 (November 5, 2025).

c. Medicare Drug Price Negotiation Program

Sections 11001 and 11002 of IRA establish the Medicare Drug Price Negotiation Program (hereinafter the “Negotiation Program”) to negotiate maximum fair prices (MFPs)

for certain high expenditure, single source drugs and biological products. The requirements for this program are described in sections 1191 through 1198 of the Act, as added by sections 11001 and 11002 of the IRA. Additionally, on July 4, 2025, the Working Families Tax Cuts Act (Pub. L. 119-21) was signed into law. Section 71203 of the Working Families Tax Cuts Act expanded protections for certain orphan drugs in section 1192(e) of the Act. Drugs payable under Medicare Part B are eligible to be selected for negotiation for initial price applicability year 2028.

In accordance with section 1191(c)(3) of the Act, MFP means, with respect to a year during a price applicability period and with respect to a selected drug (as defined in section 1192(c) of the Act) with respect to such period, the price negotiated pursuant to section 1194 of the Act, and updated pursuant to section 1195(b) of the Act, as applicable, for such drug and year.

2. Medicare and Beneficiary Spending

a. Historical Trending

An Issue Brief from ASPE evaluated Medicare Part B total spending and fee-for-service (FFS) drug allowed charges from 2014 to 2021.

Medicare Part B total spending increased from $265.9 billion in 2014 to $405.5 billion in 2021, representing an increase of $139.6 billion. Medicare Part B FFS drug allowed charges increased from $21.8 billion in 2014 to $40.5 billion in 2021, an increase of $16.4 billion. While total spending and drug allowed charges have both increased significantly, Medicare Part B FFS drug allowed charges have seen higher spending growth. In 2014, Medicare Part B FFS drug allowed charges represented about 12.1 percent of Medicare Part B FFS spending but grew to approximately 20 percent in 2021.

Medicare Part B Drug Pricing, Office of the Assistant Secretary for Planning and Evaluation (June 9, 2023). Available at:

https://aspe.hhs.gov/sites/default/files/documents/fb7f647e32d57ce4672320b61a0a1443/aspe-medicare-part-b-drug-pricing.pdf.

Medicare Part B Drug Pricing, Office of the Assistant Secretary for Planning and Evaluation (June 9, 2023). Exhibit 3: Part B FFS drugs' share of Part B FFS spending, 2014 to 2021 from

https://aspe.hhs.gov/sites/default/files/documents/fb7f647e32d57ce4672320b61a0a1443/aspe-medicare-part-b-drug-pricing.pdf.

The same report also found that between 2014 and 2021, Medicare Part B FFS drug spending per enrollee grew on “average at 9.2 percent annually” more than three times the rate of Medicare Part D (2.6 percent) and nearly four times as high as the rate of per capita annual prescription drug spending (2.4 percent). Medicare Part B FFS drug spending was also concentrated among a few drugs where the top 20 drugs accounted for greater than 50 percent of drug spending in 2021 and the top 10 drugs accounted for 40 percent of drug spending in the same period. When comparing biological products to non-biologicals, biological products accounted for 89 percent of the Medicare Part B FFS drug spending growth between 2008 and 2021 and 79 percent of Medicare Part B FFS drug spending in 2021. When reviewing Medicare Part B FFS spending on multi-source drugs and biological products in 2021, generic drugs

accounted for only 2 percent of spending and only 3 of the top 20 drugs by spend

(all biological products) were multi-source. Therefore, the majority of Medicare Part B FFS drug expenditures in 2021 were attributable to single source drugs and sole source biological products.

Generic drugs are submitted in an Abbreviated New Drug Application (ANDA) and approved under section 505(j) of the FD&C Act. For Medicare Part B FFS, generic drugs share the same HCPCS Level II code as the originator drug.

The three multi-source biological products in the top 20 Part B drugs by total Medicare Payments were Rituxan (rituximab), Remicade (infliximab), and Neulasta (pegfilgrastim).

An ASPE report evaluating Medicare Part B FFS spending from 2018 to 2023 estimated biosimilar biological product competition (multi-source biological products) reduced spending by $12.9 billion, a 31 percent decrease compared to projected spending if only the reference biological product existed.

Savings after biosimilar biological product competition entered the market were driven by a mix of beneficiary switches to a lower-priced biosimilar biological product and price reductions in the reference biological products.

Medicare Part B Enrollee Use and Spending on Biosimilars, 2018-2023, Office of the Assistant Secretary for Planning and Evaluation (January 2025). Available at:

https://aspe.hhs.gov/sites/default/files/documents/be065dbbd1f866c65cf627995bd2ea56/biosimilars-medicare-part-b.pdf.

It is also important to note that the number of enrollees for Medicare Part B FFS has decreased (8.8 percent) between 2016 to 2021 (34 million to 31 million),

while Medicare Part B FFS drug allowed charges has increased (47 percent) for the same time period.

Therefore, this increase in Medicare Part B FFS spending for drugs during this period is likely explained more by increases in the prices of drugs, introduction of new drugs,

changes in utilization of drugs, and changes in the mix of drugs for those beneficiaries who received them more so than the changes in Medicare Part B enrollment.

Medicare Part B FFS enrollment derived from Table V.B3 of the 2023 Annual Report of the Board of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Trust Funds.

Available at:

https://www.cms.gov/oact/tr/2023.

Medicare Part B Drug Pricing, Office of the Assistant Secretary for Planning and Evaluation (June 9, 2023). Exhibit 3: Part B FFS drugs' share of Part B FFS spending, 2014 to 2021. Available at:

https://aspe.hhs.gov/sites/default/files/documents/fb7f647e32d57ce4672320b61a0a1443/aspe-medicare-part-b-drug-pricing.pdf.

Hyland MF, Sachs RM, Robillard L., Hayford TB, Bai G. Spending on and Use of Clinician-Administered Drugs in Medicare. JAMA Health Forum. September 8, 2023.

Available at:

https://jamanetwork.com/journals/jama-health-forum/fullarticle/2809283.

The average annual growth in number of Medicare Part B FFS beneficiaries was less than 2.5 percent from 2014 to 2021, so the change in Medicare Part B beneficiaries does not fully account for the average annual growth in Medicare Part B drug spending (9.2 percent annual growth). Instead, the increase during this period is more fully explained by increases in the prices of drugs, introduction of new drugs, changes in drug utilization, and changes in the mix of drugs than by increases in Medicare enrollment.

b. Impact on Premiums, Beneficiaries, and Taxpayers

Medicare Part B is funded by premiums paid by beneficiaries and general federal revenues. Total Medicare Part B Premium amounts increased from $74 billion in 2016 to $113 billion in 2021, representing an increase of $39

billion.

While this increase in total Medicare Part B premiums is partially attributable to the increase in beneficiaries from 52 million to 58 million,

there was also a rise in premium amount per enrollee from $1,423 in 2016 to $1,942 in 2021. A research study found the 2024 Medicare Part B premiums accounted for more than 10 percent of annual per capita income for 12 percent of Medicare Part B beneficiaries—approximately 7.4 million of the 61 million Medicare Part B beneficiaries.

The rise in premiums is partly due to projected costs for new drugs, price changes for health care services, new technologies, and assumed utilization increases.

57 58 59

CMS Program Statistics—Medicare Premiums, Centers for Medicare & Medicaid Services. Medicare Part B Premiums are from Table, MDCR Premiums 4.

Available at:

https://data.cms.gov/summary-statistics-on-use-and-payments/medicare-premium-reports/cms-program-statistics-medicare-premiums.

These enrollment numbers include total Medicare Part B beneficiaries in Medicare Part B FFS, Medicare Advantage plans, section 1876 cost plans, and section 1833 healthcare prepayment plans. Medicare Part FFS enrollment for 2016 and 2021 were 34 million and 31 million, respectively.

Cottrill A, Cubanski J, Neuman T, Smith K. Seven Million People with Medicare Spend More Than 10% of Income on Part B Premiums—The Reconciliation Bill Could Drive the Number Higher. Kaiser Family Foundation (June 23, 2025).

Available at:

https://www.kff.org/medicare/issue-brief/seven-million-people-with-medicare-spend-more-than-10-of-income-on-part-b-premiums-the-reconciliation-bill-could-drive-the-number-higher/.

2025 Medicare Parts A & B Premiums and Deductibles, Centers for Medicare & Medicaid Services (November 8, 2024).

Available at: https://www.cms.gov/newsroom/fact-sheets/2025-medicare-parts-b-premiums-and-deductibles.

Neuman T, Cubanski J, Freed M. Monthly Part B Premiums and Annual Percentage Increases. Kaiser Family Foundation (January 12, 2022).

Available at:

https://www.kff.org/medicare/slide/monthly-part-b-premiums-and-annual-percentage-increases/.

Congressional Research Service. Medicare: Part B Premiums. CRS Report R40082. Washington, DC: Library of Congress, 2021.

Available at:

https://www.congress.gov/crs_external_products/R/PDF/R40082/R40082.48.pdf.

In addition to a monthly premium, Medicare Part B FFS beneficiaries typically need to cover 20 percent of the cost of a Medicare Part B drug once their Medicare Part B deductible is met. Medicare Part B FFS does not have an out-of-pocket maximum, whereas other forms of coverage such as MA plans and Medigap policies may have a maximum. While the IRA has reduced beneficiary coinsurance for certain Medicare Part B drugs whose prices have risen faster than inflation, beneficiaries may continue to experience significant cost sharing as overall Medicare Part B FFS spending has increased. As previously discussed, this increase is likely driven by high overall prices and the introduction of new drugs.

60 61

Hyland MF, et al. Spending on and Use of Clinician-Administered Drugs in Medicare. JAMA Health Forum. 2023;4(9):e232941. doi:10.1001/jamahealthforum.2023.2941.

Changes in the List Prices of Prescription Drugs, 2017 to 2023, Office of the Assistant Secretary for Planning and Evaluation (October 6, 2023). Available at:

https://aspe.hhs.gov/sites/default/files/documents/e24f630a33f0a0585337c65745904487/aspe-drug-price-tracking-brief.pdf.

Further, as discussed earlier in this section, increasing high drug costs limit access to care and treatment which in turn results in complications that can lead to worse health outcomes and increased medical spending. For example, though not specific to Medicare Part B, the national healthcare expenditure (NHE) out-of-pocket (OOP) spending increased by 25.5 percent ($102.7 billion) between 2019 to 2023.

High OOP costs have been shown to reduce medication adherence. A study on specialty drugs found that 30 percent of new cancer drug prescriptions went unfilled among patients without low-income subsidies, while another showed that 7 percent of adults 65 and older skipped or did not take their medications as prescribed because of cost.

63 64

Research has also found multiple indications of worse health status were associated with a higher likelihood of cost-related nonadherence to medications.

The 25.5 percent and $102.7 billion was calculated using NHE Table 3: National Health Expenditures, by Source of Funds for out of pockets costs for years 2019 and 2023.

Available at:

https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data/nhe-fact-sheet.

Dusetzina SB, Huskamp HA, Rothman RL, Pinheiro LC, Roberts AW, Shah ND, Walunas TL, Wood WA, Zuckerman AD, Zullig LL, Keating NL.

Many Medicare Beneficiaries Do Not Fill High-Price Specialty Drug Prescriptions.

Health Affairs (December 2021).

https://doi.org/10.1377/hlthaff.2021.01742.

Anderer S.

High Drug Costs Influence Nonadherence to Medications Among Older Adults.

JAMA. Published online October 4, 2024; 332(16):1323.

https://doi.org/10.1001/jama.2024.19690.

Nekui F, Galbraith AA, Briesacher BA, Zhang F, Soumerai SB, Ross-Degnan D, Gurwitz JH, Madden JM.

Cost-related Medication Nonadherence and Its Risk Factors Among Medicare Beneficiaries.

Medical Care. 2021;59(1):13-21.

https://doi.org/10.1097/MLR.0000000000001458.

The second source for Medicare Part B funding comes from general federal revenues, which taxpayers primarily finance. General revenues fund approximately 75 percent of Medicare Part B expenditures, with beneficiary premiums accounting for the remaining 25 percent of projected expenditures.

Historical trend analysis on Medicare Part B spending has shown an increase in annual federal revenue contribution from $235.6 billion in 2016 to $386.0 billion in 2024, illustrating the growth in general federal revenues in Medicare Part B financing.

U.S. Government Accountability Office. Federal Trust Funds and Other Dedicated Funds: Fiscal Sustainability Is a Growing Concern for Some Key Funds. GAO-20-156. Washington, DC: GAO, January 2020.

Available at:

https://www.gao.gov/assets/gao-20-156.pdf.

2025 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. Centers for Medicare & Medicaid Services, Office of the Actuary. June 2025.

Available at:

https://www.cms.gov/oact/tr/2025.

c. Relative High Price of Medicare Part B Drugs

Research from ASPE and RAND provides comparative data on U.S. prescription drug prices relative to 32 other Organisation for Economic Co-operation and Development (OECD) countries.

These studies examine pricing patterns of prescription drugs and present findings on how U.S. prescription drug costs compare to international benchmarks. OECD countries are generally developed, high-income nations, making them suitable comparators for evaluating drug prices.

The 32 countries compared to were Australia, Austria, Belgium, Canada, Chile, Czech Republic, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, Turkey, and United Kingdom.

ASPE funded research published in July 2022 indicated that U.S. prescription drugs prices exceeded those of non-U.S. OECD countries combined by 256 percent

using 2018 data.

In 2024, the study was updated with pricing information from 2022 and showed an even larger gap of 278 percent compared to non-U.S. OECD countries combined.

When comparing the U.S. against individual G7 countries,

the price differential ranged from 229 percent higher than Canada to 347 percent higher than Japan.

Authors calculated price indexes using U.S. volume weights to account for differences in volume and mix of drugs across countries.

Ratios from this study are not adjusted for differences in purchasing power-adjusted GDP per capita. See Andrew W. Mulcahy, Christopher M. Whaley, Mahlet Gizaw, Daniel Schwam, Nathaniel Edenfield, and Alejandro Uriel Becerra-Ornelas,

International Prescription Drug Price Comparisons: Current Empirical Estimates and Comparisons with Previous Studies,

RAND Corporation, RR-2956-ASPEC, 2021.

Available at:

https://www.rand.org/pubs/research_reports/RR2956.html.

Ratios from this study are not adjusted for differences in purchasing power-adjusted GDP per capita.

Available at:

https://pmc.ncbi.nlm.nih.gov/articles/PMC11147645/.

The G7 countries are Canada, France, Germany, Italy, Japan the United Kingdom, and the U.S.

This analysis reveals even larger pricing differences when examining

originator drugs separately. U.S. originator drug prices are 422 percent higher than non-U.S. OECD countries combined. Among individual G7 countries, the difference between U.S. and the international prices ranged from 324 percent higher than Canada to 464 percent higher than Japan. These data points indicate there are significant cost differences within the global pharmaceutical market for U.S. originator drugs and international originator drugs.

An international originator is an original biological product or drug approved or licensed in a non-U.S. country under that non U.S. country's regulatory framework under a pathway similar to 351(k) of the PHS Act or approved under a pathway similar to section 505(c) of the FD&A Act in the U.S. Individual countries differ in the regulatory processes and standards governing approval of drugs and biologicals. Use of international drug pricing information in the proposed GLOBE Model should not be interpreted to connote FDA approval or to otherwise describe any scientific or regulatory relationship between U.S.-approved and non-U.S.-approved products.

In contrast, the unbranded generic drug market, not including biologics such as biosimilar biological products, shows different pricing dynamics. The same study showed U.S. unbranded generic pricing was 67 percent of the average price among non-U.S. OECD countries. The comparison of U.S. prices to individual G7 countries for unbranded generic drugs shows pricing that is 39 percent lower than Canada and 46 percent lower than Germany. This indicates that pricing patterns vary significantly between originator drugs and generic drugs in the U.S. market.

A separate ASPE analysis examined Medicare Part B drugs. The study evaluated drug prices for the top 50 Part B drugs against non-U.S. OECD countries using 2018 drug spending data.

Although this report included only 50 drugs, those drugs accounted for 80 percent of the total 2018 Medicare Part B drug spending. The analysis found that U.S. prices were 211 percent higher than other OECD countries on average.

In G7 country comparisons, the difference between the U.S. and individual countries for U.S. originators and international originators drugs ranged from 148 percent higher than Japan to 225 percent higher than France.

U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation. (2020).

Medicare FFS Part B and International Drug Prices: A Comparison of the Top 50 Drugs.

Available at:

https://aspe.hhs.gov/sites/default/files/migrated_legacy_files//197401/Part-B%20Drugs-International-Issue-Brief.pdf.

These unadjusted price ratios of US to non-US OECD countries are taken from Table 4, Overall Ratios Spending for Matched Part B Drugs by Country, of this report:

https://aspe.hhs.gov/sites/default/files/migrated_legacy_files/197401/Part-B%20Drugs-International-Issue-Brief.pdf.

The reported price ratio were converted to a percentage. The report also adjusts for purchasing power-adjusted GDP per capita. After adjusting for purchasing power-adjusted GDP per capita, the adjusted US to non-US OECD country price ratio decreases to 1.53 (153 percent). This price ratio is also volume weighted.

These unadjusted price ratios of US to non-US OECD countries are taken from Table 4, Overall Ratios Spending for Matched Part B Drugs by Country, of this report:

https://aspe.hhs.gov/sites/default/files/migrated_legacy_files/197401/Part-B%20Drugs-International-Issue-Brief.pdf.

The reported price ratios were converted to a percentage. The report also adjusts for purchasing power-adjusted GDP per capita. The adjusted price ratio changes to 1.06 (106 percent) for Japan and 1.66 (166 percent) for France. These price ratios are also volume weighted.

The research findings indicate that U.S. prices used to calculate ASP rates for Medicare Part B FFS payment limits are different from prices in international comparator countries. This price differential has led to recurring policy discussions about potential approaches for reducing Medicare Part B drug and biological product spending by reviewing international prices. Research from the Brookings Institute indicates that many non-U.S. OECD countries use international reference pricing as a benchmark when negotiating with prescription drug manufacturers, demonstrating that this practice is established among manufacturers.

Young, C.L., Frank, R.G., & Sachs, R. (2025).

International reference pricing for prescription drugs.

Brookings Institution. Available at:

https://www.brookings.edu/articles/international-reference-pricing-for-prescription-drugs/.

The data shows that U.S. prescription drug prices, particularly for U.S. originator drugs,

exceed those found in other OECD countries. In addition, prior studies on generic drug pricing in the U.S. have shown that generic drug prices generally compare to or fall below international comparisons; suggesting that high overall drug costs are primarily driven by originator, single source drugs or sole source biological products. Based on the high spending by Medicare Part FFS and Medicare Part B beneficiaries on single source drugs and sole source biological products, in this proposed rule, we propose the GLOBE Model to test the impact of using international drug pricing information as a benchmark for an alternative Part B inflation rebate amount calculation for a subset of Medicare Part B rebatable drugs (certain single source drugs and sole source biological products) on Medicare program expenditures and quality of care.

U.S. originator drugs are the original biologics and drugs developed and licensed or approved via section 351(a) of the Public Health Services Act or submitted under section 505(b) and approved under section 505(c) of the Federal Food, Drug, and Cosmetic Act (FD&C Act). U.S. originator drugs are also sometimes called brand name drugs, reference listed drug, or reference products.

II. Provisions of the Proposed Regulations

In this proposed rule, we propose our policies for the GLOBE Model, including the general framework for implementing and evaluating the GLOBE Model and model-specific parameters, requirements, and definitions. We note that section 1115A(b) of the Act gives the Secretary discretion in the design of models. In accordance with section 1115A(a)(3) of the Act, through this proposed rule, CMS seeks input from interested parties and welcomes comments on the proposed GLOBE Model.

The proposed model-specific parameters, requirements, and definitions are described in subsections of this section of this proposed rule and we propose to codify them at proposed 42 CFR 513. In addition, for purposes of this proposed rule and the proposed GLOBE Model, we propose that the following terms would have the same meaning as set forth for the Medicare Part B Drug Inflation Rebate Program in 42 CFR 427.20: allowed charges, applicable calendar quarter, average sales price, billing and payment code, billing unit, biosimilar biological product, final action claim, inflation-adjusted payment amount, manufacturer, National Drug Code (NDC), Not Otherwise Classified (NOC) code, Part B rebatable drug, single source drug, specified amount, and unit (with respect to a Part B rebatable drug). We propose that the following terms would have the same meaning as set forth in 42 CFR 427.400: currently in shortage, drug shortage or shortage, natural disaster, other unique or unexpected event, plasma-derived product, and severe supply chain disruption.

A. Proposed Model Test Period

In proposed 42 CFR 513.1(c), we propose that the GLOBE Model would have a 7-year test period consisting of 5 performance years, beginning October 1, 2026 and ending September 30, 2031, during which the GLOBE Model beneficiary coinsurance and adjusted payments to providers and suppliers would apply (as applicable) and monitoring activities would occur, and 7 payment years during which CMS would calculate, invoice, collect, and reconcile the GLOBE Model rebates for a performance year, unless sooner terminated in accordance with proposed 42 CFR 513.100(d)). It is necessary to include 2 payment years after the end of the final performance year to allow for

rebate invoicing and reconciliation activities, as CMS delivers the information defined in 1847A(i)(1)of the Act no later than 6 months after the close of the calendar quarter, and, as codified in 42 CFR 427.501(d), CMS would perform reconciliation of the rebate amount in specified scenarios, including one regular reconciliation of the rebate amount within 12 months of the date of the receipt of the Rebate Report for each applicable calendar quarter. As such, CMS proposes a 7-year test period to include 7 payment years in order for rebate invoicing and reconciliation processes to take place for all of the applicable calendar quarters in the model performance period. The proposed model test period is illustrated in Figure 1.

In 42 CFR 513.20, we propose to define “

performance year

” (PY) as a 12-month period beginning on October 1 and ending on September 30 during the first 5 years of the GLOBE Model test period. As such, we propose to define “

GLOBE Model performance period

” as a 5-year period of time beginning on October 1, 2026, through September 30, 2031. We propose to define “

payment year

” as a 12-month period beginning on October 1 and ending on September 30 during the GLOBE Model test period. As such, we propose to define “

GLOBE Model payment period

” as the 7-year period of time beginning on October 1, 2026, through September 30, 2033.

We propose to test the GLOBE Model to capture all applicable billing units (as discussed in section II.G.4. of this proposed rule) for all Medicare Part B FFS claims for GLOBE Model drugs that are furnished to Medicare beneficiaries who are in the model cohort on the date of service during the model performance period and that are paid under the GLOBE Model. This means that, given the length of time during and after the end of an applicable calendar quarter that is necessary to conduct the proposed GLOBE Model processes for claims processing, data collection, rebate invoicing, manufacturer payment of GLOBE Model rebates, reconciliation, and model evaluation, model-related activities would continue into calendar year 2033, through September 30, 2033, as applicable, as codified in 42 CFR 513.1(c).

Payment Years 6 and 7 are for rebate invoicing and reconciliation for Performance Years 4 and 5.

Figure 1: Illustration of the Proposed Globe Model Test Period

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B. Proposed GLOBE Model Drugs

The proposed GLOBE Model would include, as GLOBE Model drugs, a set of Part B rebatable drugs (single source drugs and sole source biological products) that are used to treat beneficiaries with conditions where access barriers like high costs likely contribute to deficits in care leading to poor clinical outcomes and high program expenditures which may be avoidable. Analysis of historical Medicare Part B FFS drug spending and non-U.S. OECD spending for similar drugs and biological products has highlighted U.S. originator drugs without generic

or biosimilar biological product

competition (called “

single source drug

” and “

sole source biological

” for purposes of this proposed rule and the GLOBE Model) as the main contributor to high drug spending within Medicare Part B FFS and globally.

Part B drugs approved under an Abbreviated New Drug Application (ANDA) submitted under section 505(j) of the FD&C Act.

Biosimilar biological product is defined in section 1847A(c)(6)(H) of the Act as “biological product approved under an abbreviated application for a license of a biological product that relies in part on data or information in an application for another biological product licensed under section 351 of the Public Health Service Act.” See

https://www.ssa.gov/OP_Home/ssact/title18/1847A.htm.

The majority of Medicare Part B FFS drug spending is also concentrated in a select number of drugs and biological products. For example, and as illustrated in Table 2, spending for the top 50 Medicare Part B FFS drugs and biological products in 2024 was concentrated in the therapeutic areas of oncology (39 percent), immunology (19 percent), skin substitutes (13 percent), ophthalmology (12 percent), endocrinology (9 percent), and rheumatology (5 percent). Per 42 CFR 427.101(b), skin substitutes are an excluded product category for Part B rebatable drugs.

EP23DE25.026

In addition, studies have shown notable spending growth in cancer, endocrinology, immunology, rheumatology, and ophthalmology. Increased drug costs limits access to care and treatment for beneficiaries with conditions in these categories increasing their risk for deficits of care and worse health outcomes. According to an ASPE report, between 2008 and 2021, the average annual payment for Medicare Part B drugs grew by 8.8 percent.

In contrast, Medicare Part B program payments in the therapeutic areas of oncology, immunology, endocrinology, and rheumatology grew by an average of 10.8 percent annually,

suggesting that these therapeutic areas experienced faster spending growth. The same ASPE report also found that ophthalmologists

had the highest average annual Medicare Part B payment increase at 15 percent, 1.7 times higher than the overall average annual payment growth for all Medicare Part B drugs. These therapeutic types and physician specialties use drugs and biological products to treat conditions related to cancer, endocrinology, immunology, rheumatology, and ophthalmology. CMS identified the categories for the top 50 Medicare Part B drugs using the standardized United States Pharmacopeia (USP) Drug Classification (DC) criteria paired with internal clinical knowledge and FDA label review. These therapeutic areas are associated with the following USP DC categories listed in Table 3.

Calculated from the “All” Category from Exhibit 5 of an ASPE 2023 Report (Nguyen, N., Olsen, A., Sheingold, S., and De Lew, N. Medicare Part B Drugs: Trends in Spending and Utilization, 2008-2021. Washington, DC: Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services, June 2023. Available at:

https://www.ncbi.nlm.nih.gov/books/NBK605978/pdf/Bookshelf_NBK605978.pdf

Calculated by combining therapeutic types of Cancer, Immunosuppressive, Intravenous Immuno-globulin (IVIG), Rheumatoid Arthritis, Oral Cancer, and Osteoporosis from Exhibit 5 of an ASPE 2023 Report (Nguyen, N., Olsen, A., Sheingold, S., and De Lew, N. Medicare Part B Drugs: Trends in Spending and Utilization, 2008-2021. Washington, DC: Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services, June 2023. Available at:

https://www.ncbi.nlm.nih.gov/books/NBK605978/pdf/Bookshelf_NBK605978.pdf

Ophthalmologists are more likely to have prescribed or used drugs in the ophthalmic agents category.

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While higher drug costs are not the only contributor to Medicare Part B spending growth, it may lead to increased financial burden for some beneficiaries. Previous studies have found that high costs can increase the

likelihood of nonadherence to medications leading to potentially worse health status.

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Thus, CMS is proposing to scope the GLOBE Model to target potential deficits of care in specific USP DC categories as shown in Table 3 and defined in 42 CFR 513.130.

Nekui F, Galbraith AA, Briesacher BA, Zhang F, Soumerai SB, Ross-Degnan D, Gurwitz JH, Madden JM.

Cost-related Medication Nonadherence and Its Risk Factors Among Medicare Beneficiaries.

Medical Care. 2021;59(1):13-21.

https://doi.org/10.1097/MLR.0000000000001458.

Arnold Ventures, Commonwealth Fund, and PerryUndem. Drug Costs and Their Impact on Care. February 10, 2025. Available at:

https://www.arnoldventures.org/stories/drug-costs-and-their-impact-on-care.

Fusco, N., et al. (2023). “Cost-sharing and adherence, clinical outcomes, health care utilization, and costs: A systematic literature review.”

Journal of Managed Care & Specialty Pharmacy.

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Previous analyses have also shown that U.S. originator drugs are, on average, about 422 percent more expensive in the U.S. than in non-U.S. OECD countries. Other studies indicate that growth in Medicare Part B drug spending has largely been driven by single source drugs and sole source biologics. As such, we propose to scope this model to focus on testing drugs and biological products where program expenditures are most likely to arise.

To meet this GLOBE Model intent, we also propose to identify the single source drugs and sole source biological products in the selected drug categories in Table 3 that would be GLOBE Model drugs for an applicable calendar quarter by applying a set of criteria (as further described in section II.B.1. of this proposed rule) in advance of the applicable calendar quarter using information available to CMS (as determined by CMS). By applying the proposed criteria to identify GLOBE Model drugs for an applicable calendar quarter, CMS would use a consistent methodology to identify a set of Part B rebatable drugs that are used to treat beneficiaries with conditions where deficits in care and high program expenditures are potentially avoidable and a representative subset of Part B rebatable drugs that account for a substantial portion of annual Medicare Part B FFS spending for Part B rebatable drugs. By excluding Part B rebatable drugs that are not sole source biological products, the GLOBE Model would also avoid including drugs with biosimilar biological product approvals in the U.S. which may be subject to unique market dynamics that would confound the model test. We note by definition that Part B rebatable drugs includes single source drugs and have chosen to re-iterate the term “

single source drugs

” for clarity and completeness.

Using Part B rebatable drugs as the basis for identifying GLOBE Model drugs that are single source drugs and sole source biological products and meet the USP DC categories in Table 3 is necessary to allow CMS to test an alternative Part B inflation rebate amount calculation methodology. Limiting inclusion in the model test to a set of Part B rebatable drugs that meet the proposed inclusion criteria is necessary to focus the model test where model impacts related to expected high program expenditures may be observed within the study population over the course of the model evaluation (as described in section II.F. of this proposed rule). As further described in section II.B.1. of this proposed rule, CMS would identify GLOBE Model drugs and add them to the GLOBE Model Drug List that would be made available on the GLOBE Model web page at

https://www.cms.gov/priorities/innovation/innovation-models/globe.

The GLOBE Model Drug List would be maintained quarterly to add and remove drugs as appropriate in accordance with the inclusion criteria. We propose to identify a GLOBE Model drug using the same applicable billing and payment code (that is, Healthcare Common Procedure Coding System (HCPCS) Level II code) that is identified for the Part B rebatable drug pursuant to 42 CFR 427.101(a)(1)(ii) for the Medicare Part B Drug Inflation Rebate Program.

Further, for the purposes of the GLOBE Model test, we propose to treat biosimilar biological products and their reference biological products as “multi-source” products instead of sole source biological products when certain conditions are met due to the unique market dynamics of these products within the U.S and because qualifying biosimilar biological products are not Part B rebatable drugs.

We note that qualifying biosimilar biological products (as defined under section 1847A(b)(8)(iii) of the Act) are not included in the Part B rebatable drug definition at 42 CFR 427.20 and therefore, would not be a GLOBE Model drug regardless of whether the criteria for exclusion in proposed 42 CFR 513.130(c) were met. We also note that the Medicare Part B Drug Inflation Rebate Program includes non-qualifying biosimilar biological products and their reference biological products.

We believe there are observable differences in pricing dynamics of sole source and multi-source biological products that lead to unique market dynamics. For example, when there is no competing biological product licensed under section 351(k) of the Public Health Service (PHS) Act to a U.S. originator drug, manufacturers are less likely to provide price concessions and rebates. Compared with sole source biological products, when reference biological products and their biosimilar biological products that are licensed

under section 351(k) of the PHS Act are sold, manufacturers of multi-source biological products may provide higher price concessions and discounts to be competitive. These market differences result in varying manufacturer-to-provider incentives. In markets with competing biosimilar biological products, manufacturers may provide discounts to providers through price concessions and rebates that impact Medicare spending. Manufacturers may change these discount strategies depending on how many patients are within a GLOBE Model due to geographic location. As such, manufacturers may provide lower discounts to clinics with more patients in the GLOBE Model geographic region than to clinics with less patients. This difference in incentives may lead to providers switching between biosimilar biological products to their reference biological products, reference biological products to their biosimilar biological products, or from one biosimilar biological product to another.

We recognize that if the reference biological product for a biosimilar biological product that is licensed under 351(k) of the PHS Act were included in the GLOBE Model and the biosimilar biological product was not included, beneficiaries could face higher cost sharing amounts for biosimilar biological products than reference biological products. The discussion in section II.B.1. of this proposed rule further describes our proposed approach to exclude biosimilar biological products and their reference biological products.

1. Proposed GLOBE Model Drug Inclusion Criteria

We propose to apply the following criteria to identify GLOBE Model drugs for an applicable calendar quarter during the GLOBE Model performance period. In advance of each applicable calendar quarter, in 42 CFR 513.130, we propose that CMS would identify the GLOBE Model drugs for that applicable calendar quarter by applying these criteria to Part B rebatable drugs (as identified by CMS as set forth in 42 CFR 427.101): (1) are listed 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; (2) are single source drugs or sole source biological products as set forth in proposed 42 CFR 513.130; (3) have Medicare Part B FFS spending greater than $100 million over a 12-month period (as further specified in proposed 42 CFR 513.130(d)); and (4) are drug or biological products that are not excluded from the GLOBE Model under proposed 42 CFR 513.130(c). A Part B rebatable drug would have to meet all the four criteria to be included as a GLOBE Model drug.

To identify GLOBE Model drugs for the first criterion for the first applicable calendar quarter of the GLOBE Model performance period, we propose to use the USP Drug Classification 2025 (USP DC 2025)

to identify all Part B rebatable drugs that meet the categories listed in Table 3 using their scientific or nonproprietary name(s), brand name, and/or NDC. The publicly available USP DC system has four tiers, of which we propose to use the highest-level tier, USP DC category. CMS believes the drug category level is sufficient to identify therapeutic areas that may have deficits of care, while allowing for differences in mechanism of action and biological or molecular targets for products that treat the same therapeutic area. We recognize that a drug or biological product may be listed in more than one USP DC category. As such, as long as one of the categories listed in Table 3 applies to the drug or biological product, it would be considered to have met this criterion. We also recognize that drug and biological products may be added to the Part B rebatable drug list after the GLOBE Model's start and may not appear in USP DC 2025. As such, we propose that for Part B rebatable drugs that were not previously assigned a USP DC category, CMS would use the most recently published USP DC to identify the category for such Part B rebatable drug to determine whether it meets the first criterion. We also propose that once CMS has identified the USP DC category for a GLOBE Model drug or biological product, it would remain in that category for the entire model duration. Accordingly, drugs or biological products included in the initial GLOBE Model Drug List would retain their USP DC 2025 category, while newly added drugs and biological products to the GLOBE Model Drug List would retain the category assigned at the time of their identification, based on the most recently published USP DC available then. We also propose that, when posted on the GLOBE Model website, the GLOBE Model Drug List would include the USP DC category for each HCPCS Level II code. Table 4 shows the associated USP DC category for an illustrative list of HCPCS Level II codes. The USP DC 2025 has 50 categories of which Medicare Part B rebatable drugs during 2024 are listed in at least 34 of them. Our proposal to include 7 categories represents 21 percent of the 34 possible Medicare Part B rebatable drug categories. Analysis of 2024 Medicare Part B FFS spending data indicates that these 7 USP DC categories were responsible for most Medicare Part B spending (91 percent), with antineoplastics having the highest proportion of any single category at approximately 47 percent.

The USP Drug Classification 2025 file can be found here:

https://www.usp.org/health-quality-safety/usp-drug-classification-system.

We are also proposing that if USP creates a new drug category that stems from the drug categories set forth in 42 CFR 513.130(b)(1), then such newly created drug categories would be incorporated into the GLOBE Model drug inclusion criterion. We propose that CMS would make this determination based on a review of USP revision bulletins, revision histories, and corresponding change log information published by USP.

For the second criterion, CMS would focus the GLOBE Model test on a subset of Part B rebatable drugs that are single source drugs or sole source biological products. We recognize by definition, only single source drugs are Part B rebatable drugs and are proposing to use the same definition of single source drug as defined in section 1847A(c)(6)(D) of the Act, which is not a multiple source drug and which is produced or distributed under a new drug application approved by the FDA, including a drug product marketed by any cross-licensed producers or distributors operating under the new drug application. A

multiple source drug,

as defined in section 1847A(c)(6)(C) of the Act, means, for a calendar quarter, a drug for which there are 2 or more drug products which: (1) are rated as therapeutically equivalent (under the FDA's most recent publication of “Approved Drug Products with Therapeutic Equivalence Evaluations”); (2) except as provided in section 1847(A)(6)(E) of the Act, are pharmaceutically equivalent and bioequivalent, as determined under section 1847(A)(6)(F) of the Act and as determined by the FDA, and (3) are sold or marketed in the United States during the quarter.

We also propose to define “sole source biological” in 42 CFR 513.20 for the purposes of the GLOBE Model as a biological product licensed by the FDA in under a biologics license application (BLA) under section 351(a) of the PHS Act and that, at time of evaluating for inclusion into the GLOBE Model for each applicable ASP calendar quarter, is not the reference biological product, as defined in section 1847A(c)(6)(I) of the Act, for a biosimilar biological product

licensed by the FDA in a BLA under section 351(k) of the PHS Act. The biosimilar biological product must be recognized in the FDA's Purple Book and be identified as sold or marketed in FDA's NDC Directory. We note that the proposed definition for sole source biological is different than the definition for

single source biological,

as defined in section 1847A(c)(6)(D) of the Act. As the proposed definition of a sole source biological is based on a 351(a) licensure and not being the reference biological product for a biosimilar biological product sold or marketed, any biological product that meets this definition—even if marketed by any cross-licensed producers or distributors operating under the BLA—qualifies as such sole source biological product. The counterpart to a sole source biological product is a multi-source biological product, and the difference is that they have a reference biological product and a biosimilar biological product that is recognized in the FDA's Purple Book and identified as sold or marketed.

We also propose to use the definition for “

sold or marketed”

established in 42 CFR 427.20 which would mean the marketing data as listed in either the ASP data reported to CMS by a manufacturer or an NDC directory list a start marketing date for the biosimilar biological product prior to the applicable calendar quarter and when one of the following criteria is met: (1) the NDC has units reported for the rebate quarter; (2) the end marketing date is during the rebate quarter; (3) the end marketing date is after the rebate quarter; or (4) the end marketing date is missing.

To apply this criterion, we propose, at the time of evaluating inclusion in the GLOBE Model for each applicable ASP calendar quarter, CMS would use the FDA's NDC Directory, including historical information from NDC Directory files such as discontinued, delisted, and expired listings, provided by the FDA or published on the FDA website to determine the marketing status of a biosimilar biological product. We propose that, if a biosimilar biological product is marketed, as determined by CMS for purposes of the GLOBE Model as of the beginning of an applicable calendar quarter, the biosimilar biological product, and reference biological product

for such biosimilar biological product would not be included as a GLOBE Model drug for the applicable calendar quarter. We propose that for an applicable calendar quarter CMS would conduct this analysis as of the beginning of the applicable calendar quarter to update the GLOBE Model Drug List.

Reference product is defined in section 1847A(c)(6)(l) of the Act as “biological product licensed under section 351 of the PHS Act that is referred to in application described in subparagraph (H) of the biosimilar biological product.” See

https://www.ssa.gov/OP_Home/ssact/title18/1847A.htm.

We recognize for the GLOBE Model that authorized generics and unbranded biological products share the same new drug application approved by the FDA or 351(a) licensure as the original drug and biological product and therefore meet the proposed definition of single source drug and sole source biologicals. As such, authorized generics and unbranded biological products could potentially be GLOBE Model drugs. Authorized generics are drugs sold without their brand name by the original manufacturer or a third party under the NDA of the original drug. Unbranded biological products are biological products sold without their brand name by the original manufacturer or a third party licensed by the BLA 351(a) of the original biological product. Since both authorized generics and unbranded biological products, are directly or indirectly, sponsored by the original pharmaceutical drug manufacturer, we believe that if an authorized generic or unbranded biological product is included in the Medicare Part B Drug Inflation Rebate Program, then, subject to the exclusions described in the next section of this proposed rule, it would be included in the GLOBE Model. In other words, an authorized generic or unbranded biological product could meet the definition of a single source drug or sole source biological product if approved under section 505(c) of the FD&C Act or licensed under section 351(a) of the PHS Act.

For the third criterion, we propose to identify the Part B rebatable drugs with total Medicare Part B FFS allowed charges greater than $100 million over a 12-month period using separately payable final action claims (spend threshold). As specified in 42 CFR 513.130(d), we propose that CMS would identify Medicare Part B FFS final action claims with dates of service within the consecutive 12-month period ending 6 months prior to the start of the applicable calendar quarter that have separately payable allowed charges greater than $0 for any billing and payment code used to describe the GLOBE Model drug, and sum the allowed charges. For example, if the applicable calendar quarter is Q1 2027, all separately payable final action claims with Medicare Part B FFS allowed charges greater than $0 for any billing and payment code used to describe the Part B rebatable drug with a date of service from July 1, 2025 to June 30, 2026 would be summed together to determine if the spend threshold is met. By applying a minimum total annual Medicare Part B FFS spend as an inclusion criteria, CMS intends that the GLOBE Model would be focused on Part B rebatable drugs that account for a significant portion of annual Medicare Part B FFS drug spending and on drugs that would be expected to account for approximately a minimum of $8 million in allowed charges per month under the model. We also propose Part B rebatable drugs would need to meet the spend threshold at least one time during the duration of the GLOBE Model to meet this criterion for the applicable ASP calendar quarter and subsequent applicable ASP calendar quarters. For example, if Drug I meets the $100 million threshold for performance year 1 over a 12-month period for Q3 2026 but not for Q4 2026, Drug I is still considered to have met this criterion for Q4 2026 and the subsequent GLOBE Model ASP calendar quarters and would retain inclusion in the GLOBE Model.

Historical analysis of Medicare Part B FFS drug spending has shown that the majority of spending is focused on a select number of drugs. A threshold of $100 million in total annual Medicare Part B FFS spending applied to Part B rebatable drugs for the consecutive 12-month period ending on December 31, 2024 would encompass 90 percent of the total 2024 Medicare Part B FFS spending on Part B rebatable drugs and account for 21 percent of Part B rebatable drugs (by HCPCS Level II code). This analysis highlights that a small number of Part B rebatable drugs represent the majority of Medicare Part B FFS drug spending. A threshold of $100 million would therefore focus the GLOBE Model on a majority of Medicare Part B drug spending to enable detection of expected savings for the GLOBE Model test while reducing the burden of studying the impacts of the GLOBE Model on all Part B rebatable drugs.

2. Proposed Exclusion of Certain Part B Rebatable Drugs

To avoid interactions with other initiatives and programs that focus on manufacturers of drugs payable under Medicare Part B, in 42 CFR 513.130(c)(1)(ii), we propose to exclude from the GLOBE Model a Part B rebatable drug from the GLOBE Model for which a maximum fair price (MFP) (as defined in section 1191(c)(3) of the Act) under the Medicare Drug Price Negotiation Program is in effect. This proposal would mean that drugs that

have been selected for Medicare Drug Price Negotiation (under section 1192 of the Act), for which a MFP has been agreed upon, and for which the manufacturer of such drug is required to provide access to the MFP, would be excluded from the GLOBE Model for appliable calendar quarters in which the MFP is in effect.

For example, if a GLOBE Model drug is selected for negotiation in 2027 for initial price applicability year 2029, the manufacturer and CMS agree upon a MFP for the drug during 2027, and the MFP would go into effect on January 1, 2029, the GLOBE Model drug would exit the GLOBE Model on December 31, 2028. We note that the earliest date for which a MFP would apply for a drug payable under Medicare Part B is January 1, 2028, per section 1192(a)(3) of the Act. Because we are proposing to begin the GLOBE Model on October 1, 2026, we note that there would be no Part B rebatable drugs that could be a GLOBE Model drug for which the manufacturer is required to provide access to the MFP at model start. We propose that this exclusion from the GLOBE Model would end when the Medicare Part B payment limit for a Part B rebatable drug that would otherwise be eligible to be a GLOBE Model drug is no longer based on the MFP. We believe that excluding drugs when the Medicare Part B payment limit is based on a MFP is appropriate because these drugs are subject to different market dynamics within the U.S., and we believe that including them could confound the model test and impact our ability to evaluate the impacts of the model.

CMS. Medicare Drug Price Negotiation Program: Final Guidance, Implementation of sections 1191 through 1198 of the Act for Initial Price Applicability Year 2028 and Manufacturer Effectuation of the Maximum Fair Price in 2026, 2027, and 2028. September 30, 2025. Available at:

https://edit.cms.gov/files/document/ipay-2028-final-guidance.pdf.

In accordance with the IRA, CMS engages in good-faith negotiations with participating companies and uses statutory factors listed at section 1194(e) of the Act as the basis for negotiation an MFP. A Primary Manufacturer with a selected drug is required to ensure that the negotiated price, the MFP, is made available to MFP-eligible individuals and to pharmacies, mail order services, and other dispensing entities with respect to such MFP-eligible individuals who are dispensed such drug, and to hospitals, physicians, and other providers of services and suppliers with respect to such MFP-eligible individuals to whom they furnish or administer such drug. The MFP applies to a selected drug during its price applicability period.

In addition, we propose, in 42 CFR 513.130(c)(1)(i), that a Part B rebatable drug would not be a GLOBE Model drug for applicable calendar quarters prior to the first applicable calendar quarter for which CMS identifies a specified amount pursuant to 42 CFR 427.302(b) for such drug. This proposal would ensure that the GLOBE Model and the Medicare Part B Drug Inflation Rebate Program would treat a subsequently approved drug (that is, a drug first approved or licensed by the FDA after December 1, 2020) in a similar manner. In other words, until a specified amount is established by CMS for a subsequently approved Part B rebatable drug, that drug would not be considered for the GLOBE Model. We note that, given the proposed GLOBE Model drug inclusion criteria in 42 CFR 513.130(b), this exclusion would only be applied to drugs that meet all the proposed inclusion criteria (that is, single source drugs or sole source biological products that are Part B rebatable drugs that are in the USP DC categories shown in Table 3 with total annual Medicare Part B FFS allowed charges greater than the $100 million during the consecutive 12-month period that ends 6 months before the applicable calendar quarter).

We note that during the duration of the GLOBE Model, certain drugs or biological products may no longer be Part B rebatable drugs. As such, in 42 CFR 513.130(c)(1)(iii) we propose that if a GLOBE Model drug is no longer a Part B rebatable drug for an applicable calendar quarter, it would be excluded from the GLOBE Model for that applicable calendar quarter and any other subsequent quarters in which it is no longer rebatable.

3. Summary of GLOBE Model Drug Inclusion and Exclusion

To summarize, GLOBE Model drugs as defined in 42 CFR 513.130 would be a subset of Part B rebatable drugs that: (1) have the listed USP DC categories in Table 3; (2) are single source drugs or sole source biological products; (3) have a HCPCS Level II code with Medicare Part B FFS spending greater than $100 million over a 12-month period; and (4) are not excluded from the GLOBE Model as proposed in 42 CFR 513.130(c).

In addition, once a drug or biological product has been identified as meeting the criterion for inclusion in the GLOBE Model, they would remain in the GLOBE Model unless the drug or biological product becomes multi-source (no longer a single source drug or sole source biological product) or meets the exclusions proposed in 42 CFR 513.130(c).

The drugs or biological products that meet the proposed definition of GLOBE Model drugs are frequently prescribed and administered by various providers in settings such as a physician's office or hospital outpatient department to Medicare beneficiaries with various medical conditions and would have had a minimum of $100 million in Medicare Part B FFS allowed charges over a 12-month period. Examples include drugs used to treat cancer and related conditions, rheumatoid arthritis and other immune mediated conditions, and macular degeneration and other serious eye conditions. Medicare Part B FFS beneficiaries who receive such drugs, often on a recurring basis, face substantial cost-sharing liability directly related to each drug administration in the form of monthly Medicare Part B premiums, the Medicare Part B annual deductible and coinsurance, and premiums and coinsurance through their supplemental insurance. The proposed approach for identifying GLOBE Model drugs could encompass approximately 55 percent

of annual Medicare Part B FFS drug spending for separately payable Medicare Part B drugs based on an analysis of all 2024 Medicare Part B FFS claims. This proposed approach also focuses the model test on single source drugs and sole source biological products with high Medicare Part B program expenditures that could have beneficiaries with deficits of care due to high costs.

This statistic is based on an evaluation of all 2024 Medicare Part B FFS claims that would meet the GLOBE Model inclusion and exclusion criteria and does not account for any geography distinctions. Refer to section II.F. of this proposed rule for discussion on proposed GLOBE Model geographies.

Table 4, Illustrative GLOBE Model Drug HCPCS Level II Code List, in section II.B.6. of this proposed rule shows an illustrative list of how the GLOBE Model could apply to Part B drugs by HCPCS Level II code using available claims information from calendar year (CY) 2024 after applying the proposed drug inclusion and exclusions as discussed in this section of this proposed rule. This illustrative list may not fully capture all relevant HCPCS Level II codes for potential GLOBE Model drugs and may include HCPCS Level II codes for drugs that may not meet the inclusion criteria and exclusion criteria that would be specified in a final rule establishing the GLOBE Model.

4. Alternatives Considered

We considered including all Part B rebatable drugs in the GLOBE Model. However, Medicare Part B FFS drug spending is concentrated among high expenditure drugs, with 50 drugs (by HCPCS Level II code) accounting for 64 percent of 2024 Medicare Part B FFS

drug spending. We also noted that many Medicare Part B rebatable drugs have average monthly total Medicare Part B FFS allowed charges of less than $10 million. For example, using separately payable claims, 302 Medicare Part B rebatable drugs had less than $100 million in total 2024 Medicare Part B FFS drug spending each, representing 7 percent of total 2024 Medicare Part B FFS drug spending. Similarly, 266 Medicare Part B rebatable drugs had less than $50 million in total 2024 Medicare Part B FFS drug spending each, accounting for 3 percent of total 2024 Medicare Part B FFS drug spending. These lower spend drugs could have approximately $8 million or less in allowed charges per month paid under the GLOBE Model, based on our proposed model design described in section II.B of this proposed rule. However, the approximately 80 Part B rebatable drugs with greater than $100 million in 2024 Medicare Part B FFS allowed charges accounted for 61 percent of 2024 Medicare Part B FFS drug spending. As such, it may be too burdensome for the operational and administrative efforts to include Part B rebatable drugs with less than $100 million in total Medicare Part B FFS allowed charges during a consecutive 12-month period in the model test at this time in order to detect potential changes in Medicare spending or beneficiaries' quality of care. We believe that the model test and evaluation could be efficiently focused on Medicare Part B rebatable drugs with over $100 million in total annual Medicare Part B FFS spending without sacrificing the potential for meaningful model findings and learning. Therefore, we are not proposing to include all Part B rebatable drugs in the GLOBE Model and instead are proposing to focus the model on a subset of drugs that would be anticipated to have a meaningful amount of Medicare spending under the model test and address deficits of care for beneficiaries.

In addition, we considered the alternative of including all Part B rebatable drugs in the GLOBE Model, which would introduce multi-source biological products (biosimilar biological products and their reference biological products) into the model. Most of the biosimilar biological products that are available now and are separately payable under Medicare Part B are qualifying biosimilar biological products, which are excluded from the definition of Part B rebatable drugs, and as such could be excluded from being a Part B rebatable drug for some portion of the model performance period. We recognize the list of qualifying biosimilar biological products may also change quarterly when the ASP of the biosimilar biological product exceeds the ASP of the reference biological product or when the applicable 5-year period for a temporary payment add-on has elapsed. Therefore, if biosimilar biological products that are not qualifying biosimilar biological products for an applicable calendar quarter were included as GLOBE Model drugs, there could be operational challenges related to monitoring, potential for beneficiary and healthcare provider confusion related to beneficiary coinsurance changes during the GLOBE Model performance years, and increased complexity and potential challenges in operating the model evaluation. As such and to meet our model intent, we propose to exclude biosimilar biological products licensed under 351(k) of the PHS Act and their reference biological products as proposed in 42 CFR 513.130(b).

We considered an alternate exclusion process for reference biological products by requiring the manufacturers of the reference biological product to submit an attestation of when a competing biosimilar biological product would be sold in the U.S. However, assessing whether market competition exists after a biosimilar biological product has been licensed by the FDA under section 351(k) of the PHS Act would likely require substantial investigation to verify a specific date of first sale. There would be insufficient time for CMS to review requests by a manufacturer of a reference biological product for GLOBE Model exclusion before the manufacturer submits ASP information for the applicable calendar quarter and prior to determination of the GLOBE Model beneficiary coinsurance for included drugs. Further, manufacturers of reference biological products may not have an accurate estimation of when sales of a biosimilar biological product would be first sold in the U.S. Therefore, our proposed approach to use the sold or marketed definition established in 42 CFR 427.20 and FDA's NDC Directory to identify biosimilar biological products that are marketed would likely be a faster and more efficient way than verifying reference biological product manufacturer attestations to identify when a biosimilar biological product and its reference biological product would be excluded from the GLOBE Model drug list of an applicable calendar quarter to support our goal of focusing the model test on single source drugs and sole source biological products.

We also considered including additional USP DC categories such as antimyasthenic agents, cardiovascular agents, dermatological agents; genetic, enzyme, or protein disorder: replacement, modifiers, treatment; and respiratory tract/pulmonary agents, which are also categories represented in Part B rebatable drugs with Medicare Part B FFS spending over $100 million in 2024. However, we believe starting the model with the high expenditure therapeutic areas and their USP DC categories shown in Table 3 would help focus the model test on patients with related conditions that are likely exposed to higher financial burden and greater deficits of care. We may explore a future expansion to other high spend USP DC categories outside of the therapeutic areas listed in Table 3 after we have made operational and administrative progress with respect to the model. We also considered reviewing the latest published USP DC at the beginning of each applicable calendar quarter to determine if a drug or biological product has changed categories. However, we believe using the 2025 USP DC for the GLOBE Model drug list, except in the case of drugs and biological products added after model start, would maintain data standardization. Similarly, we also believe keeping the same category for each drug and biological product once identified also maintains data standardization and allows CMS to test and evaluate an alternative Part B inflation rebate amount calculation. In addition, we considered categorizing the drugs or biological products by therapeutic areas such as endocrinology, immunology, rheumatology, oncology, or ophthalmology or for CMS to develop a classification method. However, we believe using a publicly available drug classification list such as the USP DC provides for a more transparent and straightforward method for identifying GLOBE Model drugs.

We considered other alternatives to the proposed subset of Part B rebatable drugs included as GLOBE Model Drugs such as including only a certain number of Part B rebatable drugs; only including drugs with high utilization among the Medicare population, for example, drugs furnished to more than 20,000 Medicare Part B FFS beneficiaries during a specified period;

and

including drugs based on high annual per beneficiary coinsurance liability, for example, drugs with an average per beneficiary coinsurance amount greater than $200 during a consecutive 12-month period (assuming a coinsurance percentage of 20 percent, this alternative would focus on drugs with approximately $1,000 or more in average per beneficiary Medicare Part B allowed charges during a consecutive 12-month period). We also considered phasing in the inclusion of Part B rebatable drugs in the GLOBE Model over time, for example, starting the model with 50 drugs and adding drugs at the beginning of each performance year until all Part B rebatable drugs that would not be specifically excluded would be included in the model.

The minimum number of beneficiaries for a drug selected for the Medicare Drug Price Negotiation Program for the Initial Price Applicability Year 2026 is 20,000 (Imbruvica). Based on internal CMS analysis, if this was used as a threshold, then approximately 17 percent of all HCPCS Level II codes billed under Medicare Part B in 2024 would have met this criterion.

We are also considering if the spend threshold (total Medicare Part B FFS allowed charges greater than $100 million over a 12-month period) would be adjusted for each subsequent performance year by the percentage increase or decrease in the CPI-U for the previous performance year. This would mean that for each subsequent performance year, the GLOBE Model spend threshold would adjust to account for inflation. We welcome comments on whether CMS should update the spend threshold based on inflation.

We considered these alternative approaches and believe that focusing the model on higher spend drugs that impact beneficiaries who likely have a deficit of care allows a transparent, consistent, and clear approach that would provide sufficient opportunity to observe the impacts of the model test on a sufficient number of Medicare FFS beneficiaries who may receive a Part B rebatable drug. Our proposed approach would minimize complexity within the model implementation and evaluation and improve CMS' ability to understand the findings from model monitoring and evaluation activities by focusing on a subset of beneficiaries. We believe the benefits of including the higher spend drugs for specific USP DC categories of Part B rebatable drugs in the GLOBE Model with limited exclusions as discussed in this section of this proposed rule enable the model to encompass a large number of Part B rebatable drugs without increasing complexity and burden that may occur with a larger set of Part B rebatable drugs.

We welcome comments on our process for identifying the USP DC categories, our method for identifying and excluding certain drugs, and the alternatives we considered. We also welcome comments on CMS' proposed process for when a reference biological product would be excluded from the list of GLOBE Model drugs for an applicable calendar quarter. Specifically, we seek feedback on ways CMS could structure the exclusion process to minimize the potential for excluding a reference biological product for a biosimilar biological product that is marketed under a license under 351(k) of the PHS Act but not sold during an applicable calendar quarter.

5. Considerations Related to Cell and Gene Therapies and Plasma-Derived Products

We are also considering excluding cell and gene therapies (CGTs) from the GLOBE Model. CGTs include cellular immunotherapies, cancer vaccines and other products aimed to treat or prevent certain diseases including cancer, genetic diseases, and infectious diseases. We seek comments on the merits of excluding CGTs based on supply chain criteria, or if there are other factors that warrant their inclusion or exclusion. We similarly welcome comments on whether the GLOBE Model would exclude plasma-derived products, particularly because these products may be more likely to experience shortages and the rebate amount for these products may be reduced as discussed in section II.G. of this proposed rule.

6. Illustrative List of Proposed Performance Year 1 GLOBE Model Drugs and Model Participants

To create an illustrative GLOBE Model Drug HCPCS Level II Code List, we identified the 2024 Part B rebatable drugs by HCPCS Level II code, applied the proposed GLOBE Model drug inclusion criteria and exclusions as discussed in sections II.B.1. and II.B.2. of this proposed rule. Using this approach, an illustrative GLOBE Model Drug HCPCS Level II Code List is shown in Table 4 and includes drugs and biological products that met the proposed criteria for at least one applicable calendar quarter in 2024. Table 4 is an illustrative list of how the GLOBE Model might apply to Part B rebatable drugs and is not intended as a list of GLOBE Model drugs or Part B rebatable drugs that would be applicable for a quarter in a performance year. Further, this illustrative list is based on CMS' initial analyses and proposals discussed in this proposed rule and is provided for informational purposes only. Readers should note that the illustrative list may not reflect the final model design and does not indicate that these drugs or biological products would owe a GLOBE Model rebate.

BILLING CODE 4120-01-P

EP23DE25.029

EP23DE25.030

BILLING CODE 4120-01-C

C. Proposed Defined Population

For the GLOBE Model design, we considered ways to identify the Medicare beneficiaries who would be eligible for inclusion in either the intervention or comparison groups. After considering a number of factors, we propose to use a geographically randomized design such that the defined population for the GLOBE Model would be a set of CMS-selected Medicare Part B FFS beneficiaries who are identified as eligible for inclusion in the model cohort as set forth in 42 CFR 513.120 and receive a GLOBE Model drug (as set forth in 42 CFR 513.130) during the model performance period for which separate Medicare Part B payment is made under the GLOBE Model. The Medicare Part B FFS beneficiaries who are identified as eligible for inclusion in the model cohort would be included in the model cohort as a GLOBE Model beneficiary as of the date they are furnished a GLOBE Model drug for which separate Medicare Part B payment is made during the model performance period. GLOBE Model beneficiaries would be eligible for the GLOBE Model adjusted beneficiary coinsurance for GLOBE Model drugs, if applicable, and would remain in the model cohort unless they no longer meet the criteria for inclusion. A GLOBE Model beneficiary may receive one or more GLOBE Model drugs.

Specifically, we propose that, prior to the model start, CMS would randomly identify the model geographic areas (based on ZIP Code Tabulation Areas as discussed in section II.F.2. of this proposed rule). We also propose that, prior to model start and periodically thereafter, but no more frequently than weekly, CMS would identify eligible Medicare FFS beneficiaries (as set forth in 42 CFR 513.120) and update the

GLOBE Model Eligible Beneficiary List,

which would be effective when the Medicare claims processing system are updated with the