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By Suzanne Blake
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Medicare costs could decrease under a new proposal from the Trump administration that would shift the drug payment model entirely.
The Centers for Medicare & Medicaid Services (CMS) released details of its proposal this weekend to address the high drug costs under Medicare Part B.
Why It Matters
Previously, CMS announced widespread price cuts for 15 widely used prescription drugs that treat chronic diseases, including cancer, diabetes, and asthma.
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The cuts amounted to a net savings of $12 billion from last year's Medicare spending, and seniors could experience major reductions in price.
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What To Know
The new proposed model called Global Benchmark for Efficient Drug Pricing (GLOBE) would lower spending for Medicare beneficiaries “without harming their quality of care,” according to CMS.
“As HHS Secretary, I am focused on making health care affordable – starting with the price Americans pay for prescription drugs,” said Health and Human Services Secretary Robert F. Kennedy, Jr in a statement. “On May 12, President Trump ordered an all-of-government response to the unfair gap between U.S. drug prices and what other nations pay. CMS is answering that call with two new models under Parts B and D that tie drug prices and rebates to costs in comparable countries. Americans deserve access to low-cost medicines on the same terms as other developed nations.”
Americans pay, on average, three times what other developed countries pay for the same medications, according to CMS, with Medicare Part B drug spending growing faster than other drug spending in the United States.
Drug spending in Medicare Part B was almost four times higher than drug spending across Medicare, Medicaid, and commercial insurance between 2008 and 2021.
“GLOBE would help make drugs, like life-saving cancer treatments and cutting-edge autoimmune medications, available at prices Americans can better afford,” said CMS Innovation Center Director Abe Sutton in a statement. “Americans should not have to choose between medical treatment and daily living expenses.”
The proposed GLOBE Model, if approved, would test a new rebate formula for certain separately payable Medicare Part B drugs. These are medications typically administered by doctors in health care settings.
The GLOBE inclusion criteria wouldn’t include any biosimilars and their reference biologicals once a biosimilar enters the market in the United States. Biosimilars are drugs that operate as the biologic equivalent of generics and are designed to work the same way in the body.
If passed, the GLOBE Model would operate for five years, starting on October 1, 2026, and ending on September 30, 2031.
What People Are Saying
CMS Administrator Dr. Mehmet Oz said in a statement: “For too long, the patients who use Medicare Part B and the taxpayers who fund it have been paying far more than people from comparable countries for the exact same drugs. The proposed GLOBE Model will reduce costs and improve quality of care without slowing down medical innovation. At CMS, we’re not just talking about making life more affordable. We’re delivering results.”
Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: “Getting prices down is pivotal for retirees, as Medicare out-of-pocket costs continue to rise. While Medicare Part C and Part D have out-of-pocket caps, Part B costs can escalate quickly, especially when you start talking about high-cost or experimental drugs and cancer treatments.”
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “CMS’s proposed Global Benchmark for Efficient Drug Pricing (GLOBE) Model could completely reshape how Medicare Part B pays for expensive medicines by tying rebates and benchmarks to drug prices from locations outside of the United States, aiming to lower the cost to beneficiaries while preserving the quality of care. Under the plan, about a quarter of Part B beneficiaries in defined regions could see reduced out-of-pocket costs, as manufacturers supply rebates when U.S. prices exceed those in comparable countries.”
What Happens Next
Seniors could benefit financially under the GLOBE model, which is proposed to go into effect from October 1, 2026, and end on September 30, 2031. However, it remains to be seen whether it will secure final Congressional approval.
“I do believe this proposal is likely to move forward, and for many beneficiaries, it would be a net positive. Lower drug prices mean lower out-of-pocket costs, which is the immediate and obvious benefit,” Thompson said.
“The longer-term question is more nuanced. If prices are pushed down too far, what happens to innovation? Drug development is expensive, and without sufficient financial incentive, we have to ask whether fewer life-saving treatments ultimately make it to market. The risk is that innovation slows, even as affordability improves.”
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