CMS Releases MFN Drug Pricing Models for Medicare Parts B and D and Medicaid Amid Trump Administration’s Push for Direct-to-Consumer Strategy

On December 19, 2025, the Centers for Medicare & Medicaid Services (CMS) released GLOBE (Global Benchmark for Efficient Drug Pricing Model) and GUARD (Guarding U.S. Medicare Against Rising Drug Costs) Models—two drug pricing initiatives designed to incorporate Most-Favored Nation (MFN) pricing into the Medicare Parts B and D programs. If finalized, the models would impose additional mandatory rebates on certain manufacturers of high-cost single-source drugs and sole-source biological products that are not already subject to Medicare Drug Price Negotiation program and could go into effect in 2026. This release follows CMS’s November introduction of the GENEROUS Model (GENErating cost Reductions fOr U.S. Medicaid), a voluntary MFN framework for manufacturers participating in the Medicaid Drug Rebate Program (MDRP), which is currently accepting enrollment.

Collectively, these three MFN initiatives mark a significant advancement in President Trump’s efforts to reduce drug costs and reshape global drug pricing policy. The model rollout coincides with the upcoming launch of TrumpRx on January 1, 2026, which is expected to implement the President’s plans to advance direct-to-consumer (DTC) drug purchasing by partnering with drug manufacturers to sell drugs directly to patients at discounted prices, bypassing insurance. The newly-released MFN models could provide insight into the Administration’s strategy for TrumpRx and other future reforms, consistent with the President’s May Executive Order signaling an intent to use DTC initiatives to deliver drugs at MFN prices. Major manufacturers, including Pfizer, Eli Lilly, GSK, Gilead and Merck have already announced deals with the administration to match MFN prices.¹

If implemented, these drug pricing reforms would likely create significant pressure on manufacturers’ gross-to-net revenue and may affect downstream international drug access. Manufacturers should assess how MFN pricing may impact their portfolios, model potential revenue implications, consider alternative commercial strategies, and monitor ongoing regulatory and legal developments. These policies are likely to face industry opposition and legal challenges, similar to those encountered under the first Trump Administration’s MFN proposals—the International Pricing Index (IPI) Model and the Most Favored Nation Model—both of which were ultimately halted.

Below is a high-level summary of the Administration’s MFN Models. For more information, interested parties can find the proposed rules for GLOBE here and GUARD here, as well as corresponding press releases here and here. GLOBE and Guard models are expected to be published in the Federal Register on December 23, 2025. Comments may be submitted within 60 days of publication and will be due on February 23, 2026.

Additional information on the GENEROUS Model can be found here, with details about manufacturer participation found in the Request for Applications linked here.

I. GLOBE Model (Medicare Part B)

Scope: All manufacturers that supply qualifying Medicare Part B GLOBE Model drugs must participate in the model’s mandatory rebating requirements. GLOBE Model drugs are classified as single-source drugs and sole-source biological products that drive annual Medicare spending that exceeds $100 million during a 12-month period. Only drugs and biologics included and invoiced for under the Medicare Part B Drug Inflation Rebate Program will fall within the scope of the Model. CMS limits the model to products that fall into seven categories.² Drugs subject to the Medicare Drug Price Negotiation Maximum Fair Price (MFP), as established by the Inflation Reduction Act of 2022, are excluded, along with products lacking a calculated Average Sales Price (ASP), 340B units, and discarded units.

Before implementation, CMS will randomly select geographic areas for participation, targeting approximately 25% of Medicare Part B fee-for-service (FFS) beneficiaries. Selection will be based of Zip Code Tabulation Areas (ZCTAs), a geographic unit created by the U.S. Census Bureau as a general areal representation of the most frequently occurring ZIP Codes in a location.

MFN Pricing Benchmark and Rebate Calculations: CMS will use the greater of either the Method I or Method II benchmark to set the GLOBE Model Benchmark for determining the required rebate amount. To calculate, CMS would adjust the selected benchmark by an applicable threshold percentage (102% for Method I and 105% for Method II) and incorporate the Medicare Part B add-on payment (currently 6% for most drugs and biologics).

• Method I (Default): Using existing international drug pricing data sources (e.g., IQVIA MIDAS®, Global Data POLI or Eversana NAVLIN), CMS will determine the lowest country-level average price among a set of 19 reference countries,³ with adjustments for country-specific Gross-Domestic Product at Purchasing Power Parity (GDP (PPP)). The benchmark will be set at the beginning of the model and held constant throughout the model period. 
• Method II (Voluntary): CMS will use the volume-weighted average of the manufacturer’s net pricing for sales across the 19 reference countries based on data that is voluntarily reported by the manufacturer, with adjustments for GDP (PPP). The benchmark will be updated quarterly if acceptable data is voluntarily submitted by the manufacturer.

The GLOBE Model per unit rebate amount would then be calculated as the greater of: 1) the difference between the Medicare Part B inflation rebate amount paid during the applicable quarter and the per unit GLOBE Model Benchmark amount, or 2) the difference between the Medicare Part B inflation rebate amount during the applicable quarter and the inflation-adjusted payment (i.e., the price projected under inflation-aligned growth). Therefore, at a minimum, the manufacturer would need to pay at least the existing inflation rebate, but potentially more if the international benchmark is lower than the inflation-adjusted benchmark. The total GLOBE Model rebate amount would then be calculated by multiplying the per unit GLOBE Model rebate amount by the total number of GLOBE Model billing units for the drug for the applicable calendar quarter.

Beneficiary Co-insurance: The Model’s coinsurance adjustment caps beneficiary cost-sharing at 20% of the international benchmark price, rather than 20% of the higher U.S. payment amount, intending to provide lower out-of-pocket costs. Medicare compensates for this reduction by increasing its own payment to providers.

Model Duration: CMS proposes a seven-year test period, consisting of a five-year performance period (October 1, 2026 – September 30, 2031) during which rebate adjustments would apply, and a seven-year payment period (October 1, 2026 – September 2033) for rebate invoicing, collection and reconciliation.

Government Price Reporting  and Interactions with Other Federal Healthcare Programs: GLOBE Model rebates would be excluded from Medicaid Best Price (BP) and Average Manufacturer Price (AMP). However, CMS explicitly acknowledges that there may be downstream indirect impacts to BP and AMP that effect Medicaid rebating and ASP determinations if manufacturers reduce prices to purchasers in order to lower the amount of GLOBE model rebates they would owe. Additionally, while 340B billing units are excluded from classification as GLOBE model drugs, impacts to BP and AMP may also impact the 340B Ceiling Price.

Proposed Model Measurement and Evaluation: CMS will evaluate the success of the GLOBE Model and its potential for nationwide expansion using specified measures. These include, among others, impacts on Medicare net savings, patient quality of care, manufacturer and market behavior, patient cost sharing, stakeholder responses, drug access and utilization, and downstream effects on health services.

Enforcement: CMS may impose a civil monetary penalty (CMP) equal to 125% of the incremental GLOBE Model rebate amount required. Manufacturers would be responsible for paying the total incremental GLOBE Model rebate amount in addition to any CMP assessed for late payment. This penalty would be separate from and in addition to any civil money owed under the Part B Inflation Rebate Program. CMS has indicated it is evaluating all available options to ensure timely compliance, including potential referrals to the Department of Justice, Department of the Treasury, and/or HHS OIG for further review and investigation.

II. GUARD Model (Medicare Part D)

Scope: All manufacturers that supply qualifying GUARD Model drugs must participate in the model’s mandatory rebate requirements. GUARD model drugs are classified as sole-source drugs that are included and invoiced for under the Medicare Part D Drug Inflation Rebate program. CMS proposes to limit the model to those drugs with a total gross Part D spending that exceeds a minimum threshold, set at $69 million for 2027. In subsequent years, this threshold would increase annually based on the percentage change in the Consumer Price Index for All Urban Consumers (CPI-U) over the 12-month period ending in June of the previous year. Drugs that are subject to the Medicare Drug Price Negotiation maximum fair price (MFP) will be excluded from the program, as well as generics, biosimilars and 340B units. CMS limits the model to products that fall into 17 specified categories.⁴

Before implementation, CMS will randomly select geographic areas for participation, targeting approximately 25% of Medicare Part D beneficiaries, including both those enrolled in standalone Part D plans (PDPs) and Medicare Advantage-Part D (MA-PD) plans. Selection will be based of ZCTAs.

MFN Pricing Benchmark and Rebate Calculations: CMS will use the greater of either the Model I benchmark or Model II benchmark to set the GLOBE Model Benchmark for determining the required rebate amount. To calculate, CMS would adjust the selected benchmark by an applicable threshold percentage (102% for Method I and 105% for Method II).

• Method I (Default): Using existing international drug pricing data sources (e.g., IQVIA MIDAS®, Global Data POLI or Eversana NAVLIN), CMS will determine the lowest country-level average price of a drug across the average prices for each reference country⁵ where an international product analog is sold, with adjustments for country-specific GDP (PPP). The default international benchmark will be set at the beginning of the model and held constant throughout the model period.
• Method II (Updated): CMS will use a volume-weighted average net price across the 19 reference countries where international analogs are sold based on data voluntarily reported by the manufacturer and determined acceptable, with adjustments for country-specific GDP (PPP). The updated international benchmark can be set annually for each performance year if the manufacturer chooses to submit data.

The GUARD Model per unit rebate amount would then be calculated as the difference between a drug’s “performance year Medicare net price” and the selected GUARD Model benchmark. To calculate the “performance year Medicare net price” for a drug, CMS will calculate a “performance year aggregate gross price” using a drug’s Wholesale Acquisition Cost (WAC) and then subtract any manufacturer rebates and discounts. The rebate and discount amounts would be derived respectively from detailed DIR172 reported by Part D plan sponsors and from manufacturers via the Manufacturer Discount Program. CMS would then find the “performance year Medicare net price” by dividing the performance year aggregate net price by the sum of the total quantity dispensed across all PDE records associated with the specific GUARD Model drug during the performance year. The GUARD Model rebate amount would apply only where this rebate amount exceeds the rebate amount owed under the Medicare Part D Inflation Rebate Program, with the difference between the two called the “incremental” Guard Model rebate. The total GUARD Model amount would then be calculated by multiplying the per unit rebate by the total units of the GUARD Model drug dispensed to beneficiaries under Medicare Part D.

Beneficiary Co-insurance: The Model does not include an explicit mechanism for adjusting coinsurance rates, though coinsurance rates may be lowered indirectly if manufacturers respond by reducing their Medicare net prices to lower rebate liability.

Model Duration: CMS proposes a seven-year overall test period consisting of five performance years (2027-2031) during which rebates apply and seven payment years (2027-2033) for calculating, invoicing, collecting, and reconciling rebates.

Government Price Reporting and Interactions with Other Federal Healthcare Programs: CMS’s proposal does not indicate how the GUARD Model will impact Medicaid Best Price nor other government price reporting requirements. As with the GLOBE Model, 340B billing units would be removed from the GUARD Model.

Proposed Model Measurement and Evaluation: CMS will evaluate the success of the GUARD Model and its potential for nationwide expansion using specified measures. These include, among others, impacts on Medicare net savings, patient quality of care, manufacturer and market behavior, patient cost sharing, stakeholder responses, drug access and utilization, and downstream effects on health services.

Enforcement: CMS may impose a CMP equal to 125% of the rebate amount for each GUARD Model Drug and performance year in which a manufacturer fails to pay the required rebate. This enforcement mechanism aligns with existing Medicare Part D Inflation Rebate Program penalties. Manufacturers would be responsible for paying the total incremental GUARD Model rebate amount in addition to any CMP assessed for late payment. CMS has indicated it is evaluating all available options to ensure timely compliance, including potential referrals to the Department of Justice, Department of the Treasury, and/or HHS OIG for further review and investigation.

III. GENEROUS Model (Medicaid)

Scope: Manufacturers that have an active rebate agreement through the Medicaid Drug Rebate Program will be permitted to enroll in this voluntary model which will apply to “single source and innovator multiple source drugs of all associated labeler codes of the manufacturer.”

Participating manufacturers will negotiate uniform coverage criteria with CMS for each of their model drugs, including Preferred Drug List (PDL) placement and utilization management (UM) criteria (e.g., step therapy, quantity limits). CMS will share these coverage terms with states which at that point may individually choose to participate in the model for a specific drug and receive the MFN price in exchange for honoring the coverage terms. The states will execute the MFN price through a supplemental rebate agreement (SRA) with the manufacturer. This new negotiation model presents a significant shift from the current supplemental rebating structure, where manufacturers must negotiate with each state individually rather than setting a uniform coverage policy with CMS.

MFN Pricing Benchmark and Rebate Calculations: Enrolled manufacturers would be required to submit international pricing information to CMS for calculating MFN pricing for drugs in the program (first data submission is due 30 days after enrollment). The MFN benchmark price would be calculated as the second lowest country-specific manufacturer-reported net price adjusted by GDP (PPP) across a list of 8 reference countries.⁶ This foreign price benchmark would be determined at the NDC-9 level and reflect the average price over the previous 12-month period with deductions for discounts, rebates, and price concessions given by the manufacturer.

Supplemental rebate amounts owed under the model would be paid out quarterly and would equal a drug’s wholesale acquisition cost (WAC) minus the Guaranteed Net Unit Price (GNUP) and the standard Unit Rebate Amount (URA). The GNUP would be determined based on the MFN price. CMS indicates that it may allow for the GNUP to reflect “unique manufacturer costs relating to the storage, handling, or distribution.”

Model Duration: CMS will test the model across a five-year period, beginning January 1, 2026, through December 31, 2030.

Enrollment: Manufacturers should submit applications for enrollment in the Model between now and March 31, 2026. CMS negotiations with manufacturers and the execution of manufacturer participation agreements will take place from December through June 30, 2026.

Best Price Impact: CMS specifies that the supplement rebates provided under the model will not change or affect the calculation of Medicaid Best Price

Data Confidentiality: CMS indicates that while it may release pricing information that has been previously made public, manufacturers may specify information that they consider proprietary and confidential and CMS will seek to refrain from sharing without express written consent.

IV. Conclusion

Overall, the Trump Administration seeks significant drug pricing reforms that could alter manufacturer drug pricing strategy and the drug supply chain. The Goodwin Center for Market Access and Pricing (GMAP) will continue to monitor activity from the Administration related to drug pricing reform. Our prior articles on the Medicare Part B Inflation Rebate Program can be found here, with information on the Part D Inflation Rebate Program here. Please reach out to the authors of this alert or the Goodwin lawyer with whom you typically consult if you have any questions.