Medicare Drug Costs Could Decrease Under New GLOBE Proposal

The Trump administration has introduced a new proposal aimed at reducing Medicare drug costs through a model called the Global Benchmark for Efficient Drug Pricing (GLOBE). Announced by the Centers for Medicare & Medicaid Services (CMS), this initiative seeks to address the rising costs associated with Medicare Part B, which has seen drug spending grow significantly compared to other healthcare expenditures in the United States.

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The GLOBE model aims to lower drug prices for Medicare beneficiaries by tying U.S. drug prices to those in comparable countries. Health and Human Services Secretary Robert F. Kennedy, Jr. emphasized the need for Americans to access affordable medications, stating, “Americans deserve access to low-cost medicines on the same terms as other developed nations.” The proposal is expected to save seniors money on essential medications, including those for chronic diseases such as cancer and diabetes.

Newsweek

CMS plans to implement a new rebate formula for certain Medicare Part B drugs, which are typically administered in healthcare settings. The model will exclude biosimilars and their reference biologicals once they enter the U.S. market. CMS Innovation Center Director Abe Sutton noted that the GLOBE model would make life-saving treatments more affordable, stating, “Americans should not have to choose between medical treatment and daily living expenses.”

Newsweek

If approved, the GLOBE model is set to operate for five years, beginning on October 1, 2026, and concluding on September 30, 2031. This timeline allows for a structured evaluation of the model's effectiveness in reducing costs while maintaining the quality of care.

Newsweek

Supporters of the GLOBE model, including CMS Administrator Dr. Mehmet Oz, argue that it will alleviate the financial burden on Medicare beneficiaries and taxpayers. Dr. Oz remarked, “The proposed GLOBE Model will reduce costs and improve quality of care without slowing down medical innovation.” Financial experts, such as Kevin Thompson, CEO of 9i Capital Group, also highlight the importance of lowering out-of-pocket costs for retirees, particularly as Medicare expenses continue to rise.

Newsweek

However, some experts express concerns about the potential long-term effects on drug innovation. Alex Beene, a financial literacy instructor, pointed out that while the GLOBE model could reshape Medicare drug pricing, there is a risk that pushing prices down too far might hinder the development of new treatments. He stated, “The longer-term question is more nuanced. If prices are pushed down too far, what happens to innovation?”

Newsweek

While the GLOBE model has garnered support, its future remains uncertain pending Congressional approval. The debate continues regarding the balance between affordability and the sustainability of drug innovation in the U.S. healthcare system.

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• “As HHS Secretary, I am focused on making health care affordable – starting with the price Americans pay for prescription drugs,” — Robert F. Kennedy, Jr., HHS Secretary

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• “Mehmet Oz said in a statement: “For too long, the patients who use Medicare Part B and the taxpayers who fund it have been paying far more than people from comparable countries for the exact same drugs.” — Dr. Mehmet Oz, CMS Administrator

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• “ Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: “Getting prices down is pivotal for retirees, as Medicare out-of-pocket costs continue to rise.” — Kevin Thompson, CEO of 9i Capital Group

Newsweek

• “CMS’s proposed Global Benchmark for Efficient Drug Pricing (GLOBE) Model could completely reshape how Medicare Part B pays for expensive medicines by tying rebates and benchmarks to drug prices from locations outside of the United States, aiming to lower the cost to beneficiaries while preserving the quality of care. Under the plan, about a quarter of Part B beneficiaries in defined regions could see reduced out-of-pocket costs, as manufacturers supply rebates when U.S. prices exceed those in comparable countries.” — Alex Beene, Financial Literacy Instructor

Newsweek