PhRMA Sues Over a Medicare Price Test Courts Blocked

PhRMA sued the Trump administration on October 7 to stop GLOBE, a Medicare Part B pricing model due to start in 2027. The brand-drug trade group told a Washington federal court that the Centers for Medicare & Medicaid Services has no power to tie clinic-drug rebates to prices paid in 19 other countries, a policy known as most-favored-nation pricing.

In 2020, three federal courts blocked a similar rule after the agency skipped public comment. GLOBE closed that gap with a full comment period, so this case is the statutory fight those judges never decided.

The 2020 MFN Rule Died on Procedure

The first Trump term tried to reset what Medicare pays for drugs given in a doctor’s office by matching those payments to the lowest price in a group of peer countries. The interim final rule landed on November 27, 2020, and was set to start on January 1, 2021. PhRMA, cancer clinics, and infusion centers filed a 2020 complaint in Maryland federal court a week later, arguing both that CMS lacked power and that the agency had skipped notice and comment.

Judges never had to decide the power question. On December 23, 2020, U.S. District Judge Catherine Blake in Maryland issued a 14-day nationwide pause, finding the rush to skip comment violated the Administrative Procedure Act. On December 28, Judge Vince Chhabria in Northern California granted a preliminary injunction on the same ground and vacated the rule pending a proper comment period. A third court, in New York, blocked the rule as to Regeneron’s Eylea. The January 1, 2021, start date came and went with the policy frozen.

HOW MFN GOT TO THIS DOCKET

1. November 27, 2020: CMS publishes an interim final most-favored-nation rule for high-spend Part B drugs, set to start January 1, 2021, without a standard comment period.
2. December 4, 2020: PhRMA and provider groups sue in Maryland, claiming the rule exceeds CMS power and skips required process.
3. December 23, 2020: Judge Catherine Blake issues a nationwide 14-day pause, holding that the agency failed notice and comment.
4. December 28, 2020: Judge Vince Chhabria grants a preliminary injunction and vacates the rule pending comment, so the 2020 model never takes effect.
5. December 23, 2025: CMS proposes GLOBE as a new mandatory Innovation Center model after a full notice-and-comment process.
6. October 2, 2026: CMS publishes the GLOBE Model final rule at 91 Fed. Reg. 62,936.
7. October 7, 2026: PhRMA files case 1:26-cv-03498 in the U.S. District Court for the District of Columbia, asking the court to vacate GLOBE in full.

The new complaint names Health Secretary Robert F. Kennedy Jr., CMS Administrator Mehmet Oz, Innovation Center Director Abe Sutton, and their agencies. It tells the court the 2020 episode still matters because three district courts “swiftly invalidated” that rule, and because Congress has looked at most-favored-nation bills and has not enacted them.

GLOBE Turns Foreign Prices Into Part B Rebates

GLOBE is the Global Benchmark for Efficient Drug Pricing Model, a mandatory test under Section 1115A of the Social Security Act, the Innovation Center statute. CMS will assess a rebate for certain Part B drugs when Original Medicare’s price sits above a benchmark drawn from economically similar countries. The money goes to the Supplementary Medical Insurance Trust Fund. In selected ZIP codes, the patient’s coinsurance is supposed to fall with that net price.

The agency’s own model page says Americans pay more than four times as much for brand-name prescription drugs as people in other developed countries, and that Part B drug spending has grown faster than national drug spending. GLOBE is aimed at clinic drugs, cancer therapies and medicines for autoimmune disease and arthritis, not pills picked up at a pharmacy.

Eligible products are single-source drugs and sole-source biologics in oncology, rheumatology, immunology, ophthalmology, and endocrinology whose Original Medicare spending tops $100 million in a year. The benchmark can come from manufacturer-reported net prices abroad or from commercial data for 19 countries, a basket that includes Canada, Germany, Japan, and the United Kingdom. CMS explains how the GLOBE rebate is calculated as an alternative to the existing Part B inflation rebate, not as a new copay program sitting beside it.

The model launches on January 1, 2027, and runs through March 31, 2032, with rebate invoices continuing into 2034. Reduced coinsurance is scheduled from April 1, 2027, to March 31, 2032. The first performance year was moved from October 1, 2026, to April 1, 2027. About 25% of Original Medicare Part B patients in selected areas are in the test cohort. Manufacturers in the model must take part unless they are excluded; they may send in foreign net-price data if they want CMS to use their numbers.

Four Manufacturers Remain After the Carve-Outs

The proposed rule, published December 23, 2025, sketched a much larger program. CMS put projected Part B savings at about $11.9 billion and counted about 40 manufacturers of 2024 Part B rebatable drugs as in range. The final rule, released September 30 and published October 2, added exclusions and a path out for firms already in a separate Medicaid model, GENEROUS.

HOW THE FINAL RULE SHRANK GLOBE

CMS now estimates the program will cut Medicare Part B spending by about $440 million over the 7-year model period, and that “the number of remaining manufacturers of GLOBE Model drugs would be four.” The agency did not name those companies, and it noted the expected consolidation of two of them. Other exclusions already in the proposal still apply, including drugs with a maximum fair price under Medicare negotiation and products that drop out of the Part B inflation-rebate program. Biosimilars and their reference biologics drop out once a biosimilar enters the U.S. market.

On August 31, 2026, the administration said 26 manufacturers had signed most-favored-nation agreements, a group it said accounts for 89% of the branded drug market. Those deals pair Medicaid price cuts with other terms. CMS intends to waive GLOBE’s mandate, quarter by quarter, for manufacturers in GENEROUS during the same quarter, and it did not write that waiver into the GLOBE regulations. Large firms that signed, including Pfizer and Eli Lilly, are expected to use that path.

Why PhRMA Sued a Program That Barely Applies

The leftover footprint is small enough that a suit over current Part B bills looks odd next to those 26 deals. Members already accepted Medicaid most-favored-nation terms as the price of staying out of the Medicare test. The trade group is still trying to kill the mandatory version, and the timing is the legal clock, not the 2027 copay.

GLOBE is unlawful and clearly exceeds CMS’ authority. The policy doesn’t make medicines more affordable for most beneficiaries, while putting future medical innovation and patient access at risk. We share the administration’s goal of ensuring Americans can access and afford their medicines, but CMS cannot rewrite the law and bypass Congress to impose foreign price controls. Patients need more choices and more breakthroughs, not government price-setting schemes that undermine both.

Stephen J. Ubl, president and CEO, PhRMA, October 7, 2026 statement

PhRMA also said the carve-outs “are time-limited” to a five-year period “and they are not codified in the rule itself, such that CMS could seek to revoke them.” That is the live wire under the voluntary bargains. GENEROUS waivers run by calendar quarter. CMS kept the power to pull them. Jim Stansel, PhRMA’s general counsel, said Congress gave CMS “a little bit of authority to test models,” and that the agency is doing what Congress has declined to do: replace Medicare’s pricing structure with a most-favored-nation one. He said the case still matters with a small reach because GLOBE could outlast the voluntary deals and could extend beyond this administration.

HHS has not issued a public response to the complaint. In the final rule, CMS wrote that it is acting inside a purpose-specific framework Congress designed for this kind of model test, and it called GLOBE a “novel application” of Section 1115A, language PhRMA quotes back at the agency as proof the power is new.

PhRMA Says a Test Law Cannot Set Drug Prices

The 68-page complaint asks for a declaration that GLOBE is unlawful, an order setting the rule aside, a delay of its effective date, and a bar on enforcement. The effective date of the rule is November 30, 2026. The legal theory is that a “test” statute cannot carry a nationwide price rule Congress would not pass.

WHAT THE COMPLAINT ASKS THE COURT TO ACCEPT

• No real test: Mandatory manufacturer rebates predetermine the outcome, so GLOBE does not “test” a payment or care model the way Section 1115A requires.
• A rewritten rebate law: The model adds rebate duties and civil money penalties that the Medicare statute does not authorize, instead of waiving a requirement already on the books.
• Major questions: Importing price caps from 19 countries is a decision of vast economic and political weight, and Congress did not hide that power in what four justices once called a “minor” and “ancillary” provision.
• QALY import: Congress barred Medicare from using quality-adjusted life years to set payment, and PhRMA says the foreign benchmarks rest on that measure in whole or in part.
• Separation of powers: If Section 1115A can do this, PhRMA argues, the Innovation Center can rewrite Medicare without a new statute.

The filing leans on recent Supreme Court cases that reject big agency moves built on thin clauses, including West Virginia v. EPA and Biden v. Nebraska. It also notes CMS has not finalized another Section 1115A model like this one, aside from the 2020 attempt courts stopped. That is the historical hinge. The 2020 loss was about process. This docket is built so process is no longer the easy off-ramp.

Most Part B Patients Would Not See Lower Copays

CMS says GLOBE will lower out-of-pocket costs for people with Original Medicare Part B who get model drugs in the selected areas, while providers’ payments are adjusted so the coinsurance cut does not strand the clinic. PhRMA’s numbers on who actually benefits are much smaller, and they describe the proposed rule, which was broader than the final.

WHO WOULD FEEL A PRICE CHANGE

• Clinic drugs only: Part B here means medicines given in a doctor’s office or hospital outpatient department, not retail pharmacy fills under Part D.
• A quarter of the map: CMS put about 25% of Original Medicare Part B patients in the selected geography, not the full program.
• A thin copay slice: PhRMA says 0.3 percent of Part B patients would have seen lower out-of-pocket costs under the proposed rule, and even fewer under the final rule.
• The price gap CMS cites: The agency says Americans pay more than four times as much for brand-name drugs as people in other developed countries.

Those two patient figures are not the same cut of the program. The 25% share is the test geography. The 0.3% share is PhRMA’s count of people who would have seen a lower copay under the wider proposal. With four manufacturers left, the set of clinic days that actually get a cheaper coinsurance line is smaller still. For everyone else on Part B, GLOBE does not change the bill. For the leftover companies, a loss in court would still lock in a rebate formula they did not bargain for in the Medicaid deals.

A Court Win Would Outlast the Medicaid Bargains

The 26 voluntary agreements buy peace on Medicaid pricing for a defined term. They do not repeal Section 1115A, and they do not bind a later secretary. If GLOBE stands, CMS keeps a working method for turning foreign list or net prices into a Medicare rebate, even if today’s waivers cover almost the whole branded market. If PhRMA wins, the Innovation Center’s room to run a mandatory price test shrinks, and the next most-favored-nation effort has to go back to Congress or to a different statute.

That is why a four-manufacturer model is in federal court. The complaint asks the court to declare GLOBE unlawful and vacate it in full. Voluntary data collection is due to start on January 1, 2027, and reduced copays, if the model survives, would not begin until April 1, 2027.

Disclaimer: This article is news reporting and analysis of a federal lawsuit and a Medicare payment model, and it is for information only. It is not legal advice, medical advice, or guidance on Medicare coverage, drug costs, or any investment decision. Readers who need advice on a claim, a Medicare benefit, or a treatment should consult a licensed attorney, a Medicare counselor, or a clinician before acting. Figures, party names, and case status reflect the public record on the dates named above and may change as the court and CMS act.