Medicare GLOBE Drug Pricing Rule Shrinks as Health Costs Surge

A pricing plan that lost most of its savings

The Trump administration's best-known threat on drug prices, making drugmakers give Medicare the lowest prices charged in other wealthy countries, has produced a final rule much smaller than the proposal it came from. CMS finalized the Global Benchmark for Efficient Drug Pricing (GLOBE) model for drugs given in doctors' offices. STAT reported that it applies to only four companies and saves 96% less than the original plan.1116 Medicare actuaries now expect about $440 million in savings, down from nearly $12 billion in the proposed version.1216

GLOBE works through rebates. When a covered Part B drug costs more than a benchmark built from prices in 19 comparable countries, including Canada, Germany, Japan and the United Kingdom, the manufacturer has to pay Medicare the difference.17 The model starts January 1, 2027, and runs through March 31, 2032. It covers randomly selected areas that include about 25% of people whose main coverage is traditional Medicare. Patients in those areas could start paying less out of pocket on April 1, 2027.14

Reports differ on some details. STAT counts four affected companies, The Hill says three (down from roughly 40 under the proposal), and a Raymond James analyst put the number at fewer than five.161215 The Hill describes the $440 million as savings over seven years, while Axios says five years. That gap probably reflects whether the rebate settlement period after the model ends is counted.1215 Every outlet agrees on the scale, though: CMS estimates that GLOBE initially targets less than 1% of eligible Part B drug spending.12 Total Part B drug spending was $81.9 billion in 2025.15

Why it shrank: the deals came first

The main reason is the administration's own deal-making. Companies that signed voluntary "most-favored-nation" agreements with the White House, which include offering lower prices to state Medicaid programs, are exempt from GLOBE.1612 The final rule also excludes orphan drugs for rare diseases, plasma-derived products, some cell and gene therapies, biosimilars and their reference biologics, and drugs already chosen for Medicare price negotiation.1415

Analysts were blunt about the result. A Capital Alpha analyst called $440 million "microscopic." Raymond James noted that the White House made no big announcement, which suggests the administration knew how far the plan had been cut back.15 Physician and commentator Jesse Pines, writing in Forbes, argued that GLOBE now works more as a stick to push companies into voluntary deals than as a way to save money.19 That seems to be the best reading. The direct savings are small. GLOBE's real job is to raise the cost of staying out of the White House agreements, which are confidential.

The rule still carries real legal stakes. PhRMA, the drug industry's main trade group, sued on October 7. It argues that CMS cannot tie Part B payments to foreign prices without approval from Congress.20 Axios noted that if courts uphold GLOBE, the case for similar experiments gets stronger. The most important of these is GUARD, a proposal that would bring international benchmarks to Part D pharmacy drugs.15 A Lancet study estimated GUARD could save about $6.4 billion a year in net.13 That makes GUARD the version with real money at stake, and it is still only a proposal.11

The law that is actually saving money

The administration's most-favored-nation plans have shrunk, but the Inflation Reduction Act (IRA) keeps working. Negotiated prices for 10 drugs, including Eliquis, took effect in 2026. Prices for 15 more, including Ozempic and Wegovy, take effect in 2027.13 CMS estimates the second-round prices would have cut Medicare's net spending on those drugs by 44%, about $12 billion, if they had applied in 2024.19 The Part D out-of-pocket cap is $2,100 in 2026 and rises to $2,400 in 2027.1318

That program is losing some ground, too. The 2025 tax-and-spending law widened exemptions for rare-disease drugs, which keeps blockbusters such as Keytruda and Opdivo out of negotiation for longer. The Congressional Budget Office puts the cost to Medicare at $8.8 billion over a decade.19 Savings are also uneven: patients who already reach the annual cap do not see direct savings from negotiation.17

Lilly's obesity drugs and who pays for them

Eli Lilly was the day's other big story. A mid-stage study of its GLP-1 drug Zepbound combined with eloralintide, an experimental drug that targets the hormone amylin, showed significant weight loss in people with obesity and type 2 diabetes. However, many participants stopped treatment, which raises questions about how well people tolerate it.11 Lilly is also selling its oral GLP-1 drug, Foundayo (orforglipron), approved in April. It costs $149 a month at the lowest dose for people paying cash.2128

The cost questions matter as much as the science. Under deals with Lilly and Novo Nordisk, eligible Part D enrollees can get Wegovy, the Zepbound KwikPen and Foundayo for weight loss at $50 a month from July 2026 through December 2027. That $50 does not count toward the Part D out-of-pocket cap, and coverage after 2027 depends on a follow-on model whose start has been delayed.19 Lilly told investors that prescriptions of these drugs for obesity grew 82% in the third quarter, helped by the pills and the Medicare program.30

Employers are moving the other way. Among large employers surveyed by the Business Group on Health, coverage of GLP-1s for weight loss fell from 72% to 60% in one year, and none plan to add it for 2027.37 Marsh, the benefits consultancy formerly known as Mercer, estimates GLP-1 use alone adds about a percentage point to employer cost growth.38 The likely result: access grows for some Medicare enrollees through a temporary program while it shrinks for some workers.

Medicare Advantage: lower premiums, higher out-of-pocket costs

Medicare open enrollment, which runs through December 7, shows the same pattern of costs moving onto patients.1 CMS projects the average Medicare Advantage premium will fall from $14.37 to $12, and says more than 99% of beneficiaries will have at least one plan.5 Other numbers are less reassuring. About 3.2 million enrollees, close to 11%, have to find new plans because theirs are ending. That is the third year in a row of high turnover.6 Average in-network out-of-pocket maximums rise 9% to $6,603, and 70% of enrollees will see their cap go up.6

The number of counties with no general-enrollment Medicare Advantage drug plan grew from 123 to 193. About 638,000 beneficiaries live in those counties.5 UnitedHealth is leaving 228 counties, and Humana is dropping plans that cover roughly 600,000 members.510 At the same time, insurers are adding plans for people with chronic conditions, which bring higher federal payments.6 The low headline premium hides a market where plans are cutting benefits and pulling out of some areas.

Medicaid and the uninsured

The biggest changes in coverage are in Medicaid. Starting January 1, most adults in expansion states must show 80 hours a month of work, school or volunteering, or prove they are exempt. They will also have to confirm eligibility every six months.43 Nebraska started early. Its first figures show more than 1,000 people lost or were denied coverage from May through August, and advocates found eligible people caught up in paperwork errors.44 The Urban Institute projects that 4.9 million to 10.1 million fewer people will be enrolled in expansion coverage by 2028 from work requirements and more frequent checks combined.47 States led by California, Massachusetts and New Jersey are suing over federal guidance that they say narrows the exemption for medically frail people.47

The uninsured rate is already rising. The Commonwealth Fund found that 11.2% of working-age adults were uninsured in 2026, up from 8.9% in 2024. Half said they went without needed care because of cost.59

Hospitals and employers pass the costs on

Hospitals are feeling this directly. Kaufman Hall, a consulting firm, found daily bad-debt and charity-care costs up 15% so far in 2026. HCA said its increase in uninsured patients almost exactly matched the number who lost ACA coverage.54 One Marsh researcher explained that providers who give a lot of uncompensated care make it up by raising prices.51

Employers are absorbing those prices and passing them on to workers. WTW projects employer costs will rise 11.1% in 2027 before plan changes, the fastest pace in more than 20 years. Eighty-five percent of employers are planning or considering raising employee premium contributions by 2028.31 Other forecasts are lower but agree on the direction: Aon projects 9.5%, the Business Group on Health 9.2%, and Marsh 8.2% even after plan changes.3340 KFF found average family premiums reached $28,303 this year.33

The bottom line

Taken together, the picture is clear. The federal government's most visible drug-pricing experiment now touches only a handful of companies. Meanwhile, Medicaid cuts, out-of-pocket limits in Medicare Advantage, and employer cost shifting are moving much larger amounts of money onto patients. The IRA's negotiation program remains the one approach with lasting, documented savings. GLOBE's main significance may turn out to be the court case over whether Medicare can tie its payments to foreign prices.