PhRMA’s GLOBE Lawsuit: What the Case Could Mean for Medicare Drug Pricing

PhRMA sued the Trump administration on October 7, 2026, to stop the Medicare GLOBE Model. The case challenges CMS’s authority to tie certain Medicare Part B drug rebates to prices in other countries.

The lawsuit was filed in the U.S. District Court for the District of Columbia. PhRMA argues that CMS used a demonstration program to change Medicare’s pricing structure without approval from Congress. The administration says Congress gave CMS authority to test new payment models through the Innovation Center. www.reuters.com

The first version of GLOBE will reach fewer products than the administration originally proposed. The legal issue, however, could affect future federal pricing programs.

What GLOBE does

GLOBE is a mandatory model for certain separately payable Medicare Part B drugs and biological products. These are medicines commonly administered in a physician’s office, hospital outpatient department or other clinical setting.

CMS selected products in oncology, rheumatology, immunology, ophthalmology and endocrinology. The model generally focuses on products with annual Original Medicare spending above $100 million. www.cms.gov

CMS will use international pricing information to calculate a benchmark for selected drugs. The reference countries include Canada, Germany, France, Japan, the Netherlands, Spain, Switzerland and the United Kingdom.

The benchmark will affect the calculation of manufacturer rebates under the Medicare Part B Drug Inflation Rebate Program. CMS also says the model will reduce coinsurance for some beneficiaries and adjust Medicare payments to providers and suppliers.

GLOBE is scheduled to begin on January 1, 2027. The model will run through March 31, 2032, with rebate reconciliation continuing into 2034. Reduced beneficiary coinsurance is scheduled to begin on April 1, 2027. The model will apply in randomly selected areas covering about 25% of Original Medicare beneficiaries. www.cms.gov

The final rule excludes several categories, including orphan-only drugs, plasma-derived products, and certain cell and gene therapies. Biosimilars and their reference products are also excluded once a biosimilar enters the U.S. market. www.cms.gov

What PhRMA is arguing

PhRMA’s challenge focuses on the limits of CMS’s authority.

The trade group argues that CMS is not simply testing a payment method. In PhRMA’s view, the model changes how Medicare prices certain drugs and imposes a new rebate structure that Congress did not authorize.

The complaint also challenges mandatory participation. CMS says manufacturers must participate when their products meet the eligibility requirements and are not excluded from the model. www.cms.gov

The government relies on Section 1115A of the Social Security Act, which authorizes the Innovation Center to test payment and service-delivery models. CMS describes GLOBE as a time-limited test of an alternative rebate calculation, not a permanent change to Medicare law. www.cms.gov

The court will have to decide whether that distinction holds.

Why the 2020 case matters

This is not the first MFN pricing fight. In 2020, PhRMA successfully challenged an earlier version of an international-reference-pricing rule. That rule was blocked on procedural grounds after the administration issued it without allowing the required opportunity for public comment. www.reuters.com

CMS followed a different process this time. The agency issued a proposed rule, accepted comments and published a final rule. That may address the earlier procedural problem, though it does not settle whether CMS had authority to adopt the model itself.

The new case is likely to focus on the scope of Section 1115A, the rebate provisions of Medicare Part B and the extent to which an agency can use a demonstration program to alter the financial consequences of an existing statute.

What manufacturers should do

Manufacturers should review GLOBE in three areas.

First, they should assess the litigation. The court could suspend the model, allow it to proceed while the case continues, or strike down some provisions and leave others in place.

Second, companies should review the reporting and rebate mechanics. CMS may use manufacturer-reported international net pricing data or information from commercial sources. The final rule also includes reporting, error-review and reconciliation procedures. www.cms.gov

Third, companies should examine the commercial effect on products that may be covered. The relevant questions include pricing, contracts, provider reimbursement, beneficiary cost-sharing, launch sequencing and the relationship between U.S. and European markets.

What providers and patients should watch

CMS says GLOBE will lower coinsurance for selected Medicare beneficiaries. Providers and suppliers should watch how the model affects claims, payment calculations and patient billing.

The effect will depend on which products are selected, where the model operates and how the court treats the rule. A product’s treatment under GLOBE could also affect provider economics and manufacturer decisions in other markets.

The larger issue

The GLOBE lawsuit presents a straightforward legal question with broad consequences:

Can CMS use its model authority to test a new pricing formula when that formula changes the economics of Medicare Part B?

The answer may influence future efforts involving international reference pricing, rebates, Medicare reimbursement and federal payment models. It may also affect how manufacturers plan prices and launches across the United States and Europe.

Lanton, Lanton & Sosa Law PLLC advises pharmaceutical manufacturers, healthcare organizations and other healthcare companies on the legal and reimbursement issues behind drug pricing and market access. That includes contracts, launch planning and the commercial effects of federal pricing policy.

Ron Lanton also leads Lanton Strategies International B.V., a policy and market-access consultancy focused on life-sciences issues involving the United States and Europe. LSI’s services are not legal services.

Sources: Reuters, October 7, 2026; CMS GLOBE Model; CMS final-rule announcement; Federal Register final rule.