The CMS Office of the Actuary now expects the GLOBE Model to save Original Medicare $298 million over its life, about 3.5% of the $8.4 billion the same office projected for the December 2025 proposal (CMS final rule, October 2026). Most of the gap comes from outside the rule: manufacturers in the voluntary GENEROUS Medicaid model get waivers, which CMS estimates leaves 4 of 19 drugmakers inside a model it calls mandatory.

CMS announced the final rule on September 30, and it publishes in the Federal Register today. Its design survives intact: for single-source Part B drugs above $100 million in annual Original Medicare spending, manufacturers rebate the gap between Medicare's payment and an international benchmark, for beneficiaries in randomly chosen ZIP Code Tabulation Areas holding about 25% of Original Medicare Part B enrollees. Launch moves from October 2026 to January 1, 2027, with the performance period running to March 31, 2032.

Key Takeaways

  • $80 million a year is the final annualized savings estimate, down from $2.3 billion in the proposal; Medicare Advantage savings fall from $7.5 billion to $288 million and Medicaid savings from about $1.0 billion to $39 million.
  • 40, then 19, then 4: the proposal's burden estimate assumed 40 manufacturers, new exclusions for orphan-only, cell and gene therapy, and plasma-derived drugs cut that to 19, and GENEROUS waivers leave an estimated four.
  • 68% below 2024 ASPs is where international benchmarks sat on average for potential model drugs, a figure CMS treats as an upper bound and haircuts by up to 60% for manufacturer-reported net prices.
  • $90 million in 2028 MA payment savings exceed the $58 million Original Medicare saves that year, because the rate book passes lower fee-for-service spending into MA benchmarks while MA claims stay outside the model.
  • Under 1% of non-dual, non-340B Original Medicare Part B drug spending is targeted once the 25% geography applies, from about 3% of 2024 spending before it.

Where the Proposed $8.4 Billion Went: Exclusions, Waivers and a Later Start

The proposal's regulatory impact analysis projected $8.4 billion in Original Medicare Part B savings, $7.5 billion in Medicare Advantage savings and almost $1.0 billion for Medicaid, or about $2.3 billion a year. In the final analysis those figures land at $298 million, $288 million and $39 million. After a $147 million Part B premium offset, total federal savings come to $440 million across 2027 to 2032 (CMS final rule, Table 13). That proposal had scored a five-year performance period starting October 1, 2026 (Hogan Lovells, December 2025).

CMS lists three changes without splitting the drop among them. Three new exclusions remove drugs whose only approved indications are rare diseases, products on FDA's cell and gene therapy list, and plasma-derived products. Launch slips one quarter. The largest change is a scoring assumption: manufacturers that signed GENEROUS participation agreements by August 17, 2026 are assumed to receive waivers from GLOBE. On the illustrative 2024 drug list, that takes the participant count from 19 to four.

GENEROUS launched in January 2026 as a voluntary Medicaid model in which manufacturers report international net prices and states invoice supplemental rebates quarterly. CMS grants the waiver under GENEROUS's own authority, so it never went through notice and comment, and the agency declined to write manufacturer exemptions into the GLOBE regulation.

Administration framing did not shrink with the score. "Medicare Part B patients and American taxpayers have paid significantly more for prescription medications than people in comparable countries," Administrator Mehmet Oz said in the release (CMS, September 30, 2026). Commenters were less settled: of 151 letters on the proposal, 63 were negative, 82 mixed and six positive, and 69 came from pharma and biotech (Simon-Kucher, April 2026).

The Rebate Formula, the Coinsurance Cut and the MA Rate Book

The per-unit rebate is the greater of two gaps, measured from Medicare's specified amount: one down to the GLOBE benchmark, the other down to the inflation-adjusted payment amount that already drives the IRA Part B inflation rebate. GLOBE collects only the increment above the inflation rebate. That benchmark is itself the greater of two numbers. Method I is the lowest country-level price among 19 reference countries, adjusted for GDP per capita at purchasing power parity using World Bank data. Method II is the manufacturer's volume-weighted net price across those countries, reported voluntarily.

That second option hands manufacturers the lever. A manufacturer reports exactly when its average net price sits above the lowest-country figure, and CMS's illustration puts that at $160 against a $100 Method I benchmark. OACT therefore cuts the rebate by 10% in 2027, rising 10 points a year to 60% by 2032, against benchmarks that averaged 68% below 2024 ASPs (CMS final rule, Tables 11 and 12).

Beneficiary coinsurance moves through the existing inflation-rebate mechanism: 20% of the benchmark divided by the quarterly payment amount. Payment stays at ASP plus 6%, so at the average 68% gap the arithmetic takes coinsurance on a model drug from 20% of the payment amount to roughly 6%. Most beneficiaries carry supplemental coverage, so much of that reduction accrues to Medigap policies in the selected ZIP areas and to Medicaid, with dual eligibles expected to account for 30% of it. Total Original Medicare cost-sharing savings come to $50 million over the model.

Medicare Advantage is excluded, and in-network MA coinsurance on these drugs is capped at the non-model ASP-file percentage. The rate book is not excluded. The fee-for-service component of MA rates is projected national per-capita spending times a county cost index, so GLOBE's rebates lower benchmarks from 2028 rate development onward. CMS projects $90 million in MA payment savings in 2028 against $58 million in Original Medicare benefit savings.

With 34 million MA enrollees expected in 2027, 47.4% of Medicare (CMS, September 28, 2026), that works out to about $2.65 per member per year of benchmark with no matching drop in plans' Part B drug costs. CMS books the gap as $23 million in lost supplemental benefits.

GLOBE's footprint also shrinks as negotiation grows. Drugs with an IRA maximum fair price are excluded, and CMS expects GLOBE drugs to fall from about 3% to about 2% of non-dual, non-340B Original Medicare Part B drug spending by the end of the window, as the third negotiation cycle brings Part B drugs in.

A Quarterly Waiver Under a Rate Book Set Once a Year

The waiver applies for each calendar quarter in which a manufacturer participates in GENEROUS. A manufacturer that leaves GENEROUS is back in GLOBE for any quarter it sits outside, and one that joins drops out. CMS says plainly that "changes in the mix of manufacturers participating in GENEROUS would affect these estimates." The set of rebated drugs becomes a quarterly variable set by participation decisions in a different program, which no rulemaking can lock.

MA rate setting cannot follow that variable. GLOBE enters MA rates with the 2028 rate announcement in April 2027, the same month beneficiary coinsurance reductions begin, so OACT has to project its effect before a single quarter of beneficiary-side claims exists. Even the final rule's projection rests on an August 2026 participation snapshot. A manufacturer exit in mid-2027 moves Original Medicare spending after benchmarks are fixed. That error stays in MA payment until a later rate year's projection corrects it.

The two big haircuts also run against the policy they serve. The 60% Method II assumption scores manufacturers revealing their international net prices, and the waiver scores manufacturers signing Medicaid most-favored-nation agreements. Both are outcomes the administration says it wants, and each one CMS counts reduces GLOBE's rebates by the same amount. Total federal savings already fall from $143 million in 2029 to $26 million in 2032, and it falls further if more manufacturers do what CMS is asking them to do.

Further Reading

Sources

  1. CMS, Global Benchmark for Efficient Drug Pricing (GLOBE) Model final rule, CMS-5545-F (Federal Register public inspection, scheduled for publication October 2, 2026)
  2. CMS, CMS Finalizes New Mandatory Drug Payment Model to Deliver Lower Drug Prices for Beneficiaries in Original Medicare Part B (September 30, 2026)
  3. CMS Innovation Center, GLOBE Model overview
  4. CMS Innovation Center, GENEROUS Model overview
  5. CMS, Medicare Advantage and Medicare Prescription Drug Programs Expected to Remain Stable in 2027 (September 28, 2026)
  6. CMS, GLOBE Model proposed rule (Federal Register, December 23, 2025)
  7. Hogan Lovells, CMS issues mandatory Medicare models implementing most favored nation drug pricing (December 2025)
  8. Simon-Kucher, analysis of stakeholder comments on the proposed GLOBE Model (April 14, 2026)
  9. World Bank, World Development Indicators