Most consequentially, CMS “intends to use its authority under section 1115A(d)(1) of the Act to waive the requirements for mandatory participation” in GLOBE as applicable for any quarter in which a manufacturer participates in the GENEROUS Model. That Model imposes a Medicaid supplemental rebate to align net Medicaid prices for eligible drugs with most favored nation (“MFN”) prices.³ Since we understand that each of the companies that negotiated an MFN Agreement with the White House also agreed to participate in the GENEROUS model, each of those manufacturers will be exempt from GLOBE.

As a result, and given the broad exemptions for certain therapeutic categories and drugs with Medicare spends less than $100 million per year, we believe only a small handful of manufacturers will actually be subject to GLOBE.⁴ The net effect is therefore a far smaller model than the one proposed last December. CMS now estimates only $80 million in annualized savings, compared with $2.3 billion projected under the proposed rule.⁵

Model Mechanics

The GLOBE Model will begin January 1, 2027 and run through March 31, 2032, with rebate invoicing and reconciliation continuing until March 31, 2034.⁶ Manufacturers will owe rebates only on units of eligible drugs furnished to beneficiaries in a randomly selected subset of geographic areas, encompassing approximately 25% of total Medicare beneficiaries who have Medicare as their primary coverage.⁷

The final GLOBE Model includes certain high spend single source drugs and sole source biologicals covered under Medicare Part B in seven United States Pharmacopeia Drug Classification categories: Antigout Agents, Antineoplastics, Blood Products and Modifiers, Central Nervous System Agents, Immunological Agents, Metabolic Bone Disease Agents, and Ophthalmic Agents.⁸ The drugs must have a Healthcare Common Procedure Coding System (“HCPCS”) Level II code with Medicare Part B spending greater than $100 million over a 12-month period ending 6 months prior to the start of the applicable calendar quarter.⁹ In addition to excluding biosimilars and their reference biologicals once a biosimilar enters the market in the United States, the Model will also “exclude orphan-only drugs, plasma-derived products, and certain cell and gene therapies, a change from the proposed rule in response to public comments.”¹⁰

The GLOBE Model will test an alternative rebate amount to that under the Medicare Part B drug inflation rebate obligation, using a benchmark derived from international drug pricing information.¹¹ It will test two benchmark methodologies, “Method I” and “Method II”, as specified in 42 CFR 513.410 and 513.420, respectively.¹² Each quarter, CMS will set the benchmark at the greater of the Method I benchmark, which will be based on “an estimate of the lowest international price” among the set of reference countries using commercially available data, and the Method II benchmark, which will be based on “an average international price” from the set of reference countries using voluntarily submitted manufacturer net pricing data.¹³ Both benchmarks will be adjusted for the difference in gross domestic product based on purchasing power parity between the U.S. and the reference country (for Method I) or reference countries (for Method II).¹⁴ The benchmarks are then increased by an applicable threshold percentage of 102 percent (Method I) or 105 percent (Method II).¹⁵ The difference in percentages is designed to encourage manufacturers to submit net pricing data. For Medicare beneficiaries in Model geographic areas, the specified amount for GLOBE Model drugs will be compared to the applicable international benchmark and the inflation-adjusted payment amount, with the manufacturer rebating any excess to CMS (referred to as the ‘‘incremental per unit GLOBE Model rebate amount’’ as set forth in § 513.510).¹⁶ According to CMS, the model is designed to make “the net cost to Medicare for certain Part B drugs similar to what other comparable countries pay.”¹⁷

Implications for Manufacturers

For manufacturers, the most important feature of the final rule may be one that does not appear in the regulatory text. CMS declined to “codify manufacturer exemptions,” and instead emphasizes that the GENEROUS waiver will be “effectuated under the CMS Innovation Center’s authority to test the GENEROUS Model, a voluntary model that is not subject to notice and comment rulemaking.”¹⁸ A manufacturer’s exposure to GLOBE therefore turns, quarter by quarter, on its continued participation in GENEROUS and on the waiver CMS announced – and could withdraw – outside the rulemaking process.¹⁹ CMS emphasizes that it “has the authority to modify model design as determined by CMS.”²⁰

Manufacturers that remain subject to GLOBE face a strategic choice about Method II – whether to opt into data sharing for the entire Model term. CMS set the higher 105 percent threshold based on the average of prices in the reference set of countries, rather than at 102 percent of the lowest price for a reference country under Method I, “as an incentive for manufacturer voluntary submission of international drug net pricing data,” but submission requires a data agreement that “remains applicable for the duration of the GLOBE Model.” ²¹ CMS rejected allowing manufacturers to opt in or out of reporting quarter by quarter because manufacturers might report “only if the Method II benchmark would be higher than the Method I benchmark.”²² If a manufacturer stops submitting, “CMS may terminate the data agreement for all GLOBE Model drugs of the manufacturer[,]” meaning the manufacturer would be unable to voluntarily report drug pricing data and could only have rebates calculated using Method I.²³

Manufacturers should also expect limited avenues for relief: the Suggestion of Error process reaches only “a mathematical error or errors,” and CMS states that “administrative and judicial review is precluded consistent with sections 1847A(i)(8) and 1115A(d)(2) of the Act.”²⁴

A manufacturer’s failure to pay is enforced through the IRA’s penalty framework: manufacturers that do not “timely pay the incremental GLOBE Model rebate amount may be subject to a civil money penalty (CMP).”²⁵

Upcoming Deadlines

The GLOBE Model test period will begin January 1, 2027, with the Model’s first performance year and payment year beginning on April 1, 2027.²⁶ Manufacturers of GLOBE Model drugs may voluntarily submit international drug net pricing data for all applicable international analogs no later than 30 days after the end of the applicable ASP calendar quarter.²⁷ The first ASP calendar quarter is from October 1 through December 31, 2026, with the first data reporting window open from January 1 through January 30, 2027.²⁸ CMS will publish the model’s geographic areas by ZIP Code on the GLOBE Model website “no later than January 16, 2027.”²⁹ Each data submission includes basic data elements that describe the applicable international analogs, including package size information and net pricing data for sales for the reference countries that occurred during the applicable ASP calendar quarter.³⁰ Because the data agreement must be executed “[p]rior to the submission,” manufacturers contemplating Method II should consider whether they are willing to submit international drug net pricing data to CMS for the duration of the GLOBE Model and ensure they execute a data agreement in time for the January 2027 reporting period.³¹

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Please let us know if you have any questions regarding the GLOBE final rule or its interaction with GENEROUS. As always, we would be glad to assist.