On Oct. 2, 2026, the Centers for Medicare & Medicaid Services (CMS) published the final rule for the Global Benchmark for Efficient Drug Pricing (GLOBE) Model. GLOBE is a mandatory Medicare Part B most-favored-nation (MFN) pricing model that uses international pricing benchmarks to calculate manufacturer rebates for qualifying drugs.
While the final rule narrows product eligibility, potentially affected manufacturers face reporting decisions before the performance period begins. This GT Alert summarizes the model’s principal features and considers their implications for cross-border development, licensing, acquisitions, and supply planning.
- Scope and exclusions: GLOBE applies to qualifying Part B drugs and to utilization by a selected beneficiary cohort; product exclusions and manufacturer waivers require separate assessment.
- Reporting and timing: The first voluntary reporting window, in January 2027, precedes the April 2027 performance start, making international pricing data and reporting readiness immediate considerations.
- Cross-border implications: Manufacturers should consider having their development plans and commercial agreements address the relationship among product eligibility, foreign pricing decisions, data rights, and the availability of relief after a transaction.
- Scope and eligibility: GLOBE applies to qualifying Part B, rebatable single-source drugs and sole-source biological products in specified therapeutic categories. The initial spending threshold is more than $100 million in allowed charges under Original Medicare Part B over the prescribed 12-month lookback, with subsequent inflation indexing; once satisfied, the spending criterion remains satisfied during the performance period despite a later decline. Exposure depends on eligible utilization by the selected beneficiary cohort, identified by address of record in randomly selected areas covering about 25% of Original Medicare Part B beneficiaries, not on a fixed share of U.S. sales.
- Product exclusions: The final rule adds exclusions for orphan-designated drugs whose only approved indications concern the designated rare diseases or conditions, products on the U.S. Food and Drug Administration (FDA)’s Approved Cellular and Gene Therapy Products list, and plasma-derived products. It also retains the exclusion for drugs with an effective Medicare maximum fair price (not drugs merely selected for negotiation). The list is not a substitute for a product-specific eligibility assessment.
- International benchmarks and rebates: The model draws on prices in 19 reference countries, including Australia, Canada, Czech Republic, Germany, Japan, and South Korea. Method I uses available international pricing information to identify the lowest adjusted country-level benchmark, which is generally established at a baseline and retained, subject to specified exceptions. Voluntary Method II uses manufacturer-submitted data to calculate a volume-weighted average international net-price benchmark. CMS selects the greater available benchmark before applying the associated percentage (102% where Method I is selected, 105% where Method II is selected) and the Part B add-on. All else equal, a higher resulting benchmark amount may reduce the incremental GLOBE rebate. Method II may be beneficial where the submitted volume-weighted net-price benchmark exceeds Method I; discounts may reduce or eliminate that benefit, but a lower Method II benchmark does not displace a higher available Method I benchmark. CMS invoices only the incremental GLOBE amount above the ordinary Part B inflation rebate, so manufacturers may not wish to add together overlapping gross rebate amounts.
- Implementation and reporting: The rule becomes effective Nov. 30, 2026, and the performance period runs from April 1, 2027, through March 31, 2032. The first voluntary Method II submission window is Jan. 1–30, 2027, covering fourth-quarter 2026 international sales. Method II requires a continuing data agreement, subject to applicable conditions and termination provisions, and timely submissions from all manufacturers of the relevant model drug that CMS accepts as complete and valid; unavailable data may be addressed through documented explanations and reasonable assumptions, subject to CMS review.
- Waiver for GENEROUS program participation: In the final-rule preamble, CMS states its intent to use its Section 1115A(d)(1) waiver authority to waive mandatory GLOBE participation for an applicable calendar quarter in which a manufacturer participates in the GENEROUS Model, its separate voluntary Medicaid model, with the waivers provided for in GENEROUS participation agreements, while expressly declining to codify manufacturer exemptions in the GLOBE regulatory text. The waiver applies to the manufacturer, not just to the drugs covered under the GENEROUS program. The waiver applies on a calendar quarter basis. Participation waivers are distinct from product exclusions, and an MFN agreement and GENEROUS participation are different instruments. Companies may wish to establish the scope and duration of relief from the operative documents, together with applicable regulatory and statutory conditions, and should not assume that it continues beyond GENEROUS’s scheduled December 2030 end.
- Litigation: The filing of PhRMA’s challenge in PhRMA v. Kennedy, No. 1:26-cv-03498 (D.D.C. filed Oct. 7, 2026), does not itself stay implementation.
- Manufacturers considering Method II may wish to preserve fourth-quarter 2026 international sales data and prepare for the Jan. 1–30, 2027, submission window.
- Development and commercial teams should consider mapping marketed and pipeline assets against eligibility criteria and estimating Part B use by the beneficiary cohort (about 25% of Original Medicare Part B beneficiaries), refining it when CMS publishes area information by Jan. 16, 2027.
- Licensing and transaction teams may wish to review data rights and cost allocation and build required consents and notices into signing and closing checklists.
GLOBE Final Rule: Key Features
Development and Lifecycle Planning
For pipeline assets that may launch during the performance period, the assessment might address the anticipated U.S. indication and presentation, not only its current status; a newly launched product is deferred only until CMS can identify its specified amount, so that deferral is temporary. Approval of a non-orphan indication may remove an orphan-only exclusion, although the remaining conditions would still apply, and a new formulation or route might be evaluated under the billing-code and international-analog rules rather than assumed to be treated separately. Manufacturers may wish to test a launch sequence chosen for pricing reasons against the evidence each market requires for approval and reimbursement. Because Method I is generally fixed at a baseline, a later foreign price reduction may not be assumed to reset it, although Method II, utilization, and other pricing commitments might still change exposure. A product-and-price map identifying anticipated indications, presentations, foreign analogs, and relevant pricing and reimbursement dates may support a coordinated development and commercialization assessment.
Territorial Licenses and Transactions
Where different parties control U.S. and foreign commercialization, the license might distinguish the party responsible for a governmental payment from the party bearing its economic cost. Parties may wish to assess whether information rights provide the detail, timing, permitted uses, and correction support needed for reporting. Manufacturers should consider reviewing existing agreements to determine whether rebates may reduce defined net sales, royalties, or profit shares. New or amended agreements may wish to address cost allocation, offsets, verification, dispute resolution, and each party’s cooperation in supporting explanations and reasonable assumptions concerning unavailable data. Where another party is also a manufacturer of the model drug for CMS purposes, its missing or deficient submission prevents a Method II benchmark for that quarter, so reporting covenants and remedies for that failure may belong in the agreement. These terms should also remain consistent with development and commercialization covenants, confidentiality restrictions, mandatory local pricing rules, and competition law (for example, through clean-team or third-party aggregation protocols).
In a license, divestiture, or change of control, the parties’ obligations, information rights, and relief may require separate analysis. The disclosed agreement between the U.S. Department of Health and Human Services (HHS) and Eli Lilly – made publicly available through Public Citizen’s Freedom of Information Act Request – restricts assignment without consent but contains a separate change-of-ownership mechanism involving notice deadlines tied to both execution of the transaction obligation and the effective date of the ownership change, together with automatic assignment to the new owner. These Lilly-specific provisions illustrate why companies may wish to assess required notices and consents during transaction planning. Where material assumptions remain unresolved, transaction documents may provide for closing conditions, notice covenants, transition assistance, and allocation of financial risk; neither those protections nor a seller’s representation that a product is covered by its agreement establishes a buyer’s entitlement to governmental relief.
Transaction documents might distinguish international sales-data periods, U.S. utilization periods, and invoicing and reconciliation, and as well as allocate data delivery, submissions, corrections, and associated costs without assuming that the invoice date determines who bears the exposure. Where a transaction valuation assumes continued GENEROUS relief, the agreement might address the consequences of its reduction, termination, or expiration during the relevant valuation period, without assuming renewal or extension. These allocations do not change which manufacturer is responsible to CMS.
Clinical and Commercial Supply
A Sept. 23, 2026, Bureau of Industry and Security notice added heading 9903.04.70, with no additional Section 232 duty, for covered articles solely for use in clinical trials, research and development, or other non-commercial applications. That treatment does not establish how commercial supply will be treated after approval. Before relying on origin-based treatment for listed specialty categories (Japan is a qualifying origin) or on company-specific relief, sponsors may wish to confirm the manufacturing process, importer, intended use, and documentation against the applicable instruments and approval conditions; a later change of manufacturing site or origin may change that treatment. A manufacturing transfer also requires regulatory assessment of comparability and validation (for biologics, see FDA’s Q5E guidance).
Immediate Considerations
Before committing to a development plan, license, acquisition, or manufacturing transfer, management should consider distinguishing assumptions supported by existing rights from those requiring further data, consent, amendment, or regulatory confirmation, and identifying who is responsible for resolving each.