Big Pharma Sues to Stop Trump’s GLOBE Rule Tying Medicare Drug Payments to Foreign Prices

The drug industry’s top lobbying group is suing the Trump administration to stop Medicare from tying what it pays for certain drugs to the far lower prices charged in other wealthy countries. The Pharmaceutical Research and Manufacturers of America, known as PhRMA, filed suit on October 7 in the U.S. District Court for the District of Columbia, a week after the Centers for Medicare & Medicaid Services finalized the rule.

The target is the Global Benchmark for Efficient Drug Pricing Model, or GLOBE, which brings President Trump’s most-favored-nation drug pricing principle into Medicare Part B. In effect, the industry is arguing that Medicare may not use what the rest of the world pays as a yardstick for what Americans pay.

What GLOBE does

CMS announced the final rule on September 30. Medicare Part B covers drugs that clinicians typically administer in a doctor’s office or outpatient setting, including expensive biologics used in cancer care, rheumatology, immunology, ophthalmology and endocrinology. GLOBE changes how the Part B inflation rebate is calculated for certain of those drugs: instead of the standard formula, manufacturers must pay rebates when their U.S. prices exceed a benchmark built from prices in 19 economically comparable countries, including Canada, the United Kingdom, Germany, France and Japan.

According to CMS, the model is mandatory, runs from January 1, 2027, through March 31, 2032, and applies in a randomly selected set of geographic areas covering about 25% of Original Medicare beneficiaries. Selected beneficiaries may see lower out-of-pocket costs starting April 1, 2027. Medical Daily reported that CMS’s own example shows coinsurance falling from 20% to 10%, so a patient who would have paid $20 on a $100 allowed amount would pay $10.

CMS Administrator Dr. Mehmet Oz framed the rule around fairness: “Medicare Part B patients and American taxpayers have paid significantly more for prescription medications.” The agency’s announcement noted that Americans pay more than four times as much for brand-name prescription drugs as people in other developed countries.

That is the heart of the issue. For decades, other governments have used their buying power to hold prices down, and American patients and taxpayers have carried a far larger share of what the industry earns. GLOBE asks a basic question: if a drugmaker can sell a medicine profitably in Toronto or Tokyo, why should Medicare pay several times as much for it?

What PhRMA argues

PhRMA’s lawsuit, which names HHS Secretary Robert F. Kennedy Jr., asks the court to declare GLOBE unlawful and set it aside. The group argues that CMS is stretching its authority to test payment models into what AJMC described as “nationwide price setting policies that Congress never authorized,” that the model rewrites Medicare’s statutory rebate framework, expands civil monetary penalties beyond the agency’s power, and raises separation-of-powers concerns. It also argues that GLOBE is not a real experiment because it “predetermines the outcome through mandatory manufacturer rebates.”

“GLOBE is unlawful and clearly exceeds CMS’ authority,” PhRMA president and CEO Stephen J. Ubl said. “CMS cannot rewrite the law and bypass Congress to impose foreign price controls.” He added that the policy “doesn’t make medicines more affordable for most beneficiaries.”

CMS anticipated the challenge. In the final rule, according to AJMC, the agency wrote that “disagreement with payment policy does not establish a constitutional violation.” As of October 8, according to Medical Daily, CMS and HHS had not publicly responded to the lawsuit itself.

A narrower rule than first proposed

To be fair to the industry’s critique, the final version of GLOBE is far smaller than the original proposal. Medical Daily, citing Reuters, reported that estimated federal savings fell from about $11.9 billion under the proposal to about $440 million over seven years. The law firm Goodwin estimated that the number of manufacturers expected to be affected dropped from about 40 to about four, largely because companies that joined a voluntary most-favored-nation pricing arrangement in Medicaid were exempted. CMS estimates beneficiaries would save about $111 million. The model also excludes biosimilars and their reference products after a biosimilar launches, orphan-only drugs, plasma-derived products and certain cell and gene therapies.

Patient advocates have criticized those carve-outs from the other direction. Merith Basey of Patients For Affordable Drugs said drugmakers secured exemptions that dramatically shrink GLOBE’s reach.

But that cuts against the lawsuit, not for it. According to AJMC, citing The Hill, the administration excused nearly all drugmakers from GLOBE; the few that remain are companies that did not sign most-favored-nation pricing agreements in Medicaid. What remains is a limited test aimed at a handful of companies, and PhRMA went to court within a week to stop even that. The fight is less about this rule’s dollars than about the principle: whether Medicare may benchmark American prices against what the rest of the developed world pays. If that principle survives in court, it can be expanded. If it falls, the old arrangement stays in place.

What comes next

The rule takes legal effect on November 30, 2026, and the model begins January 1, 2027. No hearing date had been reported as of October 8. The case arrives as PhRMA changes leadership: former House Majority Leader Eric Cantor is set to succeed Ubl as CEO on November 9. In August, the Fifth Circuit affirmed a ruling rejecting a PhRMA constitutional challenge to Medicare drug price negotiation under the Inflation Reduction Act.

If the industry’s prices were fair, it would not need a federal judge to keep Medicare from comparing them to what everyone else pays.

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