Is International Pricing Coming Onshore for Testing? CMS Proposes Models Tying Medicare Part B and Part D Drug Rebates to International Pricing

On December 19, 2025, the Centers for Medicare & Medicaid Services (“CMS”) proposed two mandatory Center for Medicare and Medicaid Innovation (“CMMI”) drug payment models to test whether alternative methods for calculating Medicare rebates, based on international pricing metrics rather than inflation-based metrics, reduce costs for Medicare fee-for-service (“FFS”) beneficiaries and the Medicare program while preserving quality of care. The first model, the Global Benchmark for Efficient Drug Pricing (“GLOBE”) Model, would consider, for select Medicare Part B products, a rebate derived from international prices instead of the current inflation-based rebate.¹ The second model, the Guarding U.S. Medicare Against Rising Drug Costs (“GUARD”) Model, would similarly test an alternative approach to calculating rebates for certain Medicare Part D products using international pricing benchmarks² (taken together, these models are referred to herein as the “Proposed Payment Models”).

Relying upon legal authority under Section 1115A of the Social Security Act, CMS would waive current legal requirements that assess inflation-based Medicare rebates and replace those rebates with alternative rebates, benchmarked off of international prices. Drugs already subject to the Medicare Drug Price Negotiation Program would be excluded from the Proposed Payment Models.³

The Proposed Payment Models for Part B and Part D have many similarities. For instance, the two models would rely upon the same list of international reference countries, and both Proposed Payment Models would have a seven (7)-year overall test period, consisting of five (5) performance years and a two (2)-year follow-up period for rebate invoicing and reconciliation. However, there are differences for Part B versus Part D, some of which are outlined below. The GLOBE Model would begin on October 1, 2026, and run through September 30, 2031, while the GUARD Model would begin on January 1, 2027, and run through December 31, 2033. Public comments on the Proposed Payment Models are due by February 23, 2026.

Below, we also briefly describe a third, voluntary CMMI model, proposed December 23, 2025, that is specific to GLP-1 drugs.⁴ That voluntary model, the Better Approaches to Lifestyle and Nutrition for Comprehensive hEalth (“BALANCE”) Model, would allow manufacturers of such drugs to opt in to CMS-led negotiation of pricing and coverage terms on behalf of state Medicaid agencies and Medicare Part D plans. Manufacturers interested in participating in this Model must respond to the BALANCE Request for Applications (“RFA”) by January 8, 2026. State Medicaid agencies and Part D plans will be able to join the model in May 2026 and January 2027, respectively. Further details on the BALANCE Model are provided below.

I. Mandatory GLOBE and GUARD Models

a. Drugs Included in the Models and Their International Reference Drugs

i. The GLOBE Model

The GLOBE Model would apply to a subset of Part B rebatable, single-source drugs or sole-source biologicals in specified United States Pharmacopeia Drug Classification (“USP DC”) categories,⁵ with Medicare Part B FFS-allowed charges exceeding $100 million over a 12 month period that ends six months before the applicable calendar quarter. The model would exclude: (1) drugs with a Medicare Drug Price Negotiation Program Maximum Fair Price (“MFP”) in effect; (2) drugs or biological products without a CMS-determined U.S. net price (i.e., Part B rebatable drugs without a so-called “specified amount”); and (3) drugs or biological products that are no longer Part B rebatable drugs during the duration of the GLOBE Model. The specified USP DC categories would be: Antigout Agents; Antineoplastics; Blood Products and Modifiers; Central Nervous System Agents; Immunological Agents; Metabolic Bone Disease Agents; and Ophthalmic Agents.

Under the GLOBE Model, international analog drugs to GLOBE Model drugs would be identified by scientific/nonproprietary name, dosage form, and route of administration. CMS said it would identify available international drug pricing information data sources for a GLOBE Model drug by aligning the GLOBE Model drug’s assigned HCPCS Level II code long description (including dosage form) with the international data sources’ standardized method for identifying scientific names or nonproprietary names, dosage form, and route of administration.

ii. The GUARD Model

The GUARD Model would apply to a subset of Part D rebatable sole-source drugs and sole-source biological products in specified USP DC categories if they meet the overall minimum spend threshold. The GUARD Model would exclude: (1) generics and biosimilars; (2) sole-source drugs or sole-source biological products with annual application-level total gross covered drug costs below the GUARD minimum spend threshold (the minimum spend threshold for the performance year beginning on January 1, 2027 is $69 million, as annually adjusted for inflation thereafter); and (3) drugs with an MFP in effect. Units covered under 340B would be excluded from GUARD rebate calculations. The specified USP DC categories would be: Analgesics; Anticonvulsants; Antidepressants; Antimigraine Agents; Antineoplastics; Antipsychotics; Antivirals; Bipolar Agents; Blood Glucose Regulators; Cardiovascular Agents; Central Nervous System Agents; Gastrointestinal Agents; Genetic or Enzyme or Protein Disorder: Replacement or Modifiers or Treatment; Immunological Agents; Metabolic Bone Disease Agents; Ophthalmic Agents; and Respiratory Tract/Pulmonary Agents.

The GUARD Model approach to identifying international analog drugs would be similar to the approach under GLOBE. Under GUARD, CMS would identify international products whose “identifying characteristics” – including active ingredient(s), route of administration, dosage form, and strength – align with those of the GUARD Model drug. If an international product were not aligned with a GUARD Model drug across all identifying characteristics, CMS would conduct further review to determine whether any differences in identifying characteristics were “insignificant.”⁶

b. Proposed Population of Participating Medicare Beneficiaries

i. The GLOBE Model

To qualify as a GLOBE Model-eligible beneficiary, an individual would need to be enrolled in Medicare Part B as his or her primary payer (not Medicare Advantage (“MA”) or a Health Care Prepayment Plan) and reside in a GLOBE geographic area based on the beneficiary’s address of record with Medicare. Eligibility would be determined and updated by CMS and not subject to appeal. CMS would randomly select a beneficiary cohort comprising approximately 25% of Medicare FFS beneficiaries, chosen by randomly chosen geographic areas (“ZIP Code Tabulation Areas”) to form the intervention group, with the remainder serving as the comparison group.

ii. The GUARD Model

To qualify as a GUARD Model beneficiary, an individual would need to be enrolled in a standalone Prescription Drug Plan or MA‑Prescription Drug plan (not an Employer Group Waiver Plan) and reside in a GUARD geographic area based on the beneficiary’s address of record with Medicare. As in the GLOBE Model, CMS proposes that GUARD Model intervention geographic areas would include a random selection of ZIP Code Tabulation Areas to include approximately 25% of Medicare Part D beneficiaries nationwide. Other non-selected Zip Codes would serve as the comparison group.

c. Proposed Internationally Benchmarked Rebate Calculation

The Proposed Payment Models would test an alternative, international price based benchmark that would replace the existing Part B and Part D inflation-based benchmark for purposes of Medicare rebates.

i. The GLOBE Model

CMS would compute a quarterly per unit “GLOBE Model benchmark” that would be equal to the greater of two methods outlined below. Each method would contain adjustments for the purchasing power parity-adjusted per capita gross domestic product (“GDP (PPP)”). If only Method I (as defined below) were to be available (e.g., because a manufacturer elected to not voluntarily provide pricing data under Method II), Method I would serve as the basis for the benchmark. If neither method were available, the GLOBE Model would default to the standard Part B inflation rebate for that quarter.

The Method I GLOBE Model benchmark would be the lowest country-level price in the list of reference countries, based on available data from existing data sources. CMS identified the following data sources for consideration:

1. A data source with drug specific sales and volume data for the applicable Average Sales Price (“ASP”) calendar quarter from at least one country that is included in the set of reference countries.
2. A data source with drug-specific sales and volume data for any prior ASP calendar quarter beginning on or after April 1, 2025 from at least one country that is included in the set of reference countries.
3. The extracted data used by CMS to identify the most recent per-unit Method I GLOBE Model benchmark available in a document posted on the GLOBE Model website.
4. A data source with drug-specific ex-manufacturer price data for the applicable ASP calendar quarter from at least one country that is included in the set of reference countries.
5. A data source with drug-specific list price data for the applicable ASP calendar quarter from at least one country that is included in the set of reference countries.

The Method II GLOBE Model benchmark would consist of data voluntarily reported by manufacturers, subject to a CMS data agreement. It would reflect a volume-weighted average of the GDP (PPP) adjusted manufacturer’s net price for sales within the set of reference countries, with an economic adjustment.

CMS proposed allowing a modest adjustment above the per-unit benchmark to account for potential differences between the U.S. market and markets in the reference countries, with a proposed 102 percent and 105 percent upward adjustment under Method I and Method II, respectively.

The per-unit GLOBE rebate amount would be equal to the greater of two values: (1) the “specified amount” (as determined for the standard Part B rebate under 42 CFR 427.302(b)) minus the per unit GLOBE benchmark amount, or (2) the “specified amount” minus the inflation adjusted payment amount (i.e., the standard Part B inflation rebate). Under this calculation, the GLOBE rebate would never be less than the standard Part B inflation rebate for a given drug. The total GLOBE Model rebate amount would equal the per unit GLOBE rebate multiplied by the number of “GLOBE Model billing units” for that quarter (i.e., the subset of separately payable, eligible billing units).

ii. The GUARD Model

CMS would similarly test two approaches to calculating the GUARD Model international benchmark. The applicable benchmark for rebate calculations would be the greater of the “default” international benchmark (Method I) or the updated international benchmark (Method II), as further described below.

The Method I GUARD Model international benchmark would be the lowest country-level average price among a fixed set of reference countries using existing international pricing data for international analogs of the GUARD drug, as further discussed below. The Method I benchmark would be the default benchmark for the GUARD Model and would not change during the five-year performance period.

The Method II GUARD Model international benchmark would reflect an “updated” benchmark based on an across-country average net price derived from data voluntarily submitted by manufacturers (again, subject to a CMS data sharing agreement). This benchmark would reflect a volume-weighted average across all reference countries where an international analog is sold, taking into account GDP (PPP) adjustments.

The rebate calculation tested under the GUARD Model would compare a Medicare net price against the applicable GUARD Model international benchmark. A manufacturer would owe a rebate when the drug’s Medicare net price exceeds the applicable international benchmark. The Medicare net price would be calculated as the drug’s Wholesale Acquisition Cost (“WAC”) minus manufacturer rebates reported through direct and indirect remuneration (“DIR”) and discounts provided under the Manufacturer Discount Program.

The total GUARD Model rebate amount would equal the per unit GUARD rebate (i.e., the excess of Medicare net price over the benchmark, if any) multiplied by the total number of units of the GUARD Model drug dispensed under Part D and covered by Part D plan sponsors in GUARD geographic areas during the performance year. If the per-unit GUARD Model rebate exceeds the per-unit Part D inflation rebate amount, CMS would instead apply the GUARD Model rebate amount.

d. Reference Countries and Sources of ex-U.S. Pricing Data

The reference countries for purposes of GLOBE and GUARD are: Australia, Austria, Belgium, Canada, Czech Republic, Denmark, France, Germany, Ireland, Israel, Italy, Japan, the Netherlands, Norway, South Korea, Spain, Sweden, Switzerland, and the United Kingdom.

CMS identifies three potential data sources for information about ex-U.S. pricing for relevant countries: the IQVIA's MIDAS, GlobalData Pharmaceutical Prices, and Eversana NAVLIN's Price & Access database.

e. Enforcement and Civil Monetary Penalties

Both Proposed Payment Models would impose a civil monetary penalty (“CMP”) on manufacturers that fail to timely pay the calculated rebates. The CMP would equal 125 percent of the assessed GLOBE or GUARD Model rebate amount.

II. Voluntary GLP-1 Demonstration

CMMI also is proposing a voluntary Medicaid and Medicare Part D payment model, under Section 1115 of the Social Security Act, to test whether expanded coverage of weight-management medications, when paired with healthy lifestyle supports, preserves quality of care while reducing program expenditures. As part of the model, CMS will negotiate certain key terms with eligible manufacturers that opt in, including: (1) guaranteed net pricing and potential out-of-pocket limits for beneficiaries; (2) standardized coverage criteria (e.g., body mass index (“BMI”) threshold and/or metabolic dysfunction) and prior authorization aligned to Food and Drug Administration (“FDA”) labeling; and (3) manufacturer-provided “lifestyle support” offerings (i.e., programs that will support medication adherence and augment GLP-1 effectiveness).⁷ States and Part D sponsors may opt into the BALANCE Model by executing a State Agreement or Part D Contract Addendum with CMS, respectively, and adopt the negotiated terms through Supplemental Rebate Agreements (in the case of state Medicaid programs) or Contract Addendums (in the case of Part D).

Eligible manufacturers for initial negotiations are manufacturers that market, or expect to market by January 1, 2027, an “eligible product.” To qualify, the product must: (1) have an active ingredient that has been approved by the FDA for weight management (or products with the same active ingredient that have been previously approved for weight management or that have an active ingredient that is expected to be approved by the FDA for weight management by no later than January 1, 2027); (2) be, or act as, a gastric inhibitory polypeptide receptor agonist, glucagon‐like peptide‐1 (“GLP‐1”) receptor agonist, glucagon receptor agonist, or any combination thereof; and (3) have clinical evidence that, at an FDA-approved dose, the product reduces body weight by at least 9.5% on average according to the primary or secondary endpoint in a randomized clinical trial.

As noted, RFAs are due January 8, 2026. The model pre-implementation period runs from January 12, 2026 through February 5, 2026. During this model pre-implementation period, CMS will negotiate key terms with each eligible manufacturer; if an agreement between the parties is reached, the manufacturer will sign a Participation Agreement to formally become a participant in the BALANCE Model. The payment model will commence on May 1, 2026 for Medicaid and January 1, 2027 for Medicare Part D, and will continue until December 31, 2031.

We will continue to monitor developments around the Proposed Payment Models and the BALANCE Model, as well as reactions from industry, patients, and other stakeholders and broader efforts by the administration regarding drug pricing. Contact the authors, or your usual Ropes & Gray advisor, with any questions.