CMS Finalizes Narrowed GLOBE Model Benchmarking Part B Drugs to Foreign Prices

The Centers for Medicare & Medicaid Services (CMS) issued the final rule on September 30, 2026. Covington's alert is dated October 2. The model is mandatory for the drugs it covers. Under it, a manufacturer owes a rebate when the U.S. price of a covered drug exceeds a benchmark based on prices abroad. This replaces the usual Part B inflation rebate, which applies when price increases outpace inflation. CMS relies on Section 1115A of the Social Security Act for this change.

The covered drugs are Part B rebatable single-source drugs and sole-source biologics. They must fall in one of seven drug classes and have more than $100 million in annual Part B spending over a 12-month period. The classes are antigout agents, antineoplastics, blood products and modifiers, central nervous system agents, immunological agents, metabolic bone disease agents and ophthalmic agents. Cancer, bone and eye products used by older patients are squarely in scope. Generics, biosimilars and drugs with a negotiated Medicare price already in effect are exempt.

The benchmark draws on a basket of 19 reference countries, including Canada, Germany, Japan and the United Kingdom. Prices are adjusted for GDP, and the final rule uses World Bank data for that adjustment. Manufacturers can rely on pricing information CMS gathers from third parties (Method I) or submit their own (Method II). CMS clarified that a company may choose Method II even when a licensing partner limits its access to some foreign price data. In that case, the company must explain each missing data element, and CMS will review the explanation.

Two things drive the smaller impact, and the source does not rank them. Covington calls the new exclusions, discussed below, likely one factor. CMS also confirmed that manufacturers that signed Participation Agreements for the GENEROUS Model, its Medicaid pricing model, by August 17, 2026 will be exempt from GLOBE. The exemption applies for each calendar quarter in which the company takes part in GENEROUS. CMS says the reason is that GLOBE could make it harder to isolate GENEROUS effects. Using an illustrative set of drugs, CMS estimates participating manufacturers fall from 19 to 4.

That makes the Medicaid decision a Part B decision as well. Companies that joined GENEROUS by the deadline avoid GLOBE rebates. The few that did not now carry the exposure. Covington does not say which companies fall into which group, and the 19-to-4 figure is based on illustrative drugs, not a final list. Whether the exemption is worth its cost depends on the terms of GENEROUS, which differ materially from GLOBE according to Covington.

The rule also carves out whole product categories. Orphan-only drugs are excluded, which CMS said was done out of caution for beneficiaries with rare diseases who may rely on them. Commenters had warned that the proposal could discourage rare disease research. Certain approved cell and gene therapies on the FDA's list are excluded because of manufacturing complexity. CMS said it may revisit them through future rulemaking. Plasma-derived products are also out. CMS did not state its reasoning, though it had earlier asked whether shortage risk and reduced rebates justified exclusion.

The timeline moved back. The model's start slipped from October 1, 2026 to January 1, 2027. The first performance year begins April 1, 2027, two quarters later than proposed. The performance period runs through March 31, 2032, and the payment period through March 31, 2034 so that accrued rebates can be paid. Manufacturer data submission runs from January 1 to March 31, 2027.

Beneficiaries may see effects too. Per the rule, cost sharing will be reduced for people in the model cohort who receive a GLOBE drug, and Medicare premiums may fall for people in Part B or Medicare Advantage.

For the companies still covered, the benchmark may still matter beyond Medicare. That is an interpretation, not something the source states. The precedent of foreign reference pricing in a mandatory Medicare program is the strategic issue, even at a reduced dollar scale. The weakest part of this analysis is the split between causes of the smaller savings: the source supports both the exclusions and the GENEROUS exemptions as factors but does not say which matters more.

What to watch next

The final rule for the companion GUARD Model, which remains under review at the Office of Management and Budget, and the model's first performance year, which begins April 1, 2027.