Stakeholders Challenge CMS International Reference Pricing Models for Medicare Drugs
Multiple organizations submitted comments opposing CMS's proposed GLOBE and GUARD models, which would tie Medicare drug reimbursement to international reference prices. Critics argue the models function as price controls that could undermine pharmaceutical innovation.
Multiple stakeholder organizations submitted comments to the Centers for Medicare & Medicaid Services on February 23, 2026, challenging the proposed Global Benchmark for Efficient Drug Pricing (GLOBE) Model and the Guarding U.S. Medicare Against Rising Drug Costs (GUARD) Model. The comments were addressed to the Administrator of the Centers for Medicare and Medicaid Services.
The GUARD model would assess most favored nation-based rebates from manufacturers for certain Medicare Part D drugs if prices exceed those paid in a group of developed countries. Participation in the model would be mandatory for eligible manufacturers, and the program would be implemented across randomly selected geographic areas encompassing approximately 25 percent of Medicare Part D beneficiaries. Eligible drugs include sole-source drugs and sole-source biologics with over $69 million in annual Part D spending, with limited exemptions.
Manufacturers have two options for calculating the most favored nation pricing benchmark. CMS may use the lowest price among the reference countries, based on publicly available and proprietary data. Alternatively, manufacturers may choose to submit international net pricing data, in which case the benchmark would be based on the volume-weighted average among the reference countries. The reference countries include 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.
The model is scheduled to begin on January 1, 2027, and conclude on December 31, 2031, with rebate invoicing and reconciliation extending into 2033. The GUARD model includes important exclusions, as its rebates do not affect plan or pharmacy payments under Part D and do not apply to the 340B program.
Commenters raised concerns that the models effectively operate as price controls by tying Medicare drug reimbursement to prices set in foreign health systems that rely heavily on government mandates instead of market competition. Nearly all the reference countries used to establish the model's benchmarks employ aggressive government price controls that result in delayed patient access to new therapies.
Many of the 19 OECD reference countries identified in the proposed rules employ centralized price-setting mechanisms, health technology assessment frameworks that explicitly ration patient care based on Quality Adjusted Life Years, and other barriers that deny basic intellectual property protections and market access. Sixteen of the nineteen reference countries rely on QALYs, either directly or indirectly, to determine whether and how to reimburse innovative medicines.
Foreign pricing systems do not reflect the true value of medical innovation or the costs associated with bringing new therapies to market. Foreign governments can demand prices that cover only the marginal cost of production, not the far greater sunk costs from years of research and development. Once a medicine is already produced, manufacturers are better off selling even at a price just above marginal cost than they are not selling at all, notwithstanding the reality that such a price does not represent a true return on investment.
Comment letters addressed multiple technical and policy issues. For the GLOBE model, commenters addressed alternative approaches for reporting, invoicing, and reconciliation, audit and record retention parameters for manufacturers, and applying the 6 percent add-on. For the GUARD model, commenters addressed adoption of alternative definition of Medicare Part D net price.
Both models raised common concerns including establishment and updating of benchmark, approach to selection of geographic areas, mandatory manufacturer participation and inclusion/exclusion criteria, proposed severability policies, measurement of International Reference Prices, solicitation on Purchasing Power Parity and GDP adjustments in the benchmark price process, and conflicting assumptions in the Regulatory Impact Analyses. Commenters also questioned claims that the models will promote more aggressive industry negotiation, lower launch prices, and shift utilization.
One organization urged CMS to withdraw the proposed rules entirely, arguing the proposals would undermine American medical innovation, reduce patient access to lifesaving therapies, and exceed CMS's legal authority. Concerns were particularly acute with respect to the development of medicines for rare diseases, serious mental illnesses, and other conditions with significant unmet medical needs.