PhRMA Sues to Block CMS Most Favored Nation Model for Part B

The Pharmaceutical Research and Manufacturers of America (PhRMA) filed a lawsuit Wednesday in the US District Court for the District of Columbia challenging the CMS Global Benchmark for Efficient Drug Pricing (GLOBE) model, a "most favored nation" (MFN) pricing policy for Medicare Part B.^1,2 CMS finalized the model last week, and it is set to take effect January 1, 2027.³

PhRMA Says CMS Exceeded Its Authority

The complaint argues that GLOBE is unlawful and exceeds the statutory authority of CMS.² PhRMA contends the agency is using limited demonstration model authority to impose "nationwide price setting policies that Congress never authorized."¹ The group also says the model rewrites Medicare's statutory rebate framework, expands civil monetary penalties beyond CMS' authority, and raises constitutional concerns about the separation of powers.

PhRMA further argues that GLOBE does not test new ways to deliver care or pay providers. Instead, it says, the model "predetermines the outcome through mandatory manufacturer rebates."² The lawsuit asks the court to declare GLOBE unlawful and vacate the rule in its entirety.

GLOBE tests an alternative way to calculate rebates under the Medicare Part B Drug Inflation Rebate Program, using an international benchmark instead of the current domestic one.³ Reference prices come from 19 countries, including Canada, Germany, Japan, and the United Kingdom, and manufacturers would pay rebates to CMS that effectively limit Medicare drug prices to those benchmarks. Part B covers therapies given in health care settings.¹

Participation is mandatory for manufacturers of eligible drugs, which are single-source drugs and sole-source biologics in oncology, rheumatology, immunology, ophthalmology, and endocrinology with annual Medicare spending above $100 million.³ The model applies to randomly selected geographic areas covering about 25% of beneficiaries with original Medicare. CMS projects lower out-of-pocket costs without reduced quality, with reduced coinsurance running from April 1, 2027, to March 31, 2032.^1,3 The program will exclude biosimilars and their reference products once biosimilars are available, as well as orphan-only drugs, plasma-derived products, and some cell and gene therapies.

Industry Warns of Limited Patient Benefit

PhRMA predicted that only 0.3% of Part B beneficiaries would have lower out-of-pocket costs under the proposed rule, with even fewer benefiting under the final version.¹ The group also cautioned that price controls could reduce investment in US research and development. It objected to benchmarks that rely on countries using quality-adjusted life-years, alleging the method can discriminate against people with disabilities, chronic conditions, and rare diseases.

Stephen J. Ubl, PhRMA's president and CEO, said in a statement that the policy "doesn't make medicines more affordable for most beneficiaries."² He added that PhRMA shares the administration's goal of affordable access, but that "CMS cannot rewrite the law and bypass Congress to impose foreign price controls."

The pilot itself is not expected to have much effect because the administration exempted all but 3 or 4 companies in return for their agreement to charge MFN prices in Medicaid, The Hill reported.² PhRMA does not call those Medicaid deals price controls. The group says voluntary agreements are acceptable but mandatory participation is not.

Many drugmakers have also struck public agreements with the White House pledging MFN pricing, along with manufacturing and research commitments, in exchange for broad immunity from drug import tariffs.¹ CMS anticipated litigation in the final rule, writing that "disagreement with payment policy does not establish a constitutional violation."²

Lawsuit Adds a New Front to PhRMA's Drug Pricing Litigation

CMS announced GLOBE in December alongside a similar Medicare Part D model, known as GUARD, which has yet to be finalized.¹ The new suit follows a setback in August, when the US Court of Appeals for the Fifth Circuit affirmed a lower court ruling rejecting PhRMA's constitutional challenge to Inflation Reduction Act price negotiations. The court relied largely on its finding that participation in Medicare and Medicaid is voluntary.

The filing also comes as PhRMA prepares for a leadership change. Ubl is leaving after more than a decade, and former House Majority Leader Eric Cantor will become CEO effective November 9.

References

1. Kansteiner F. PhRMA launches new legal challenge as CMS brings 'most favored nation' pricing to Medicare Part B. Fierce Pharma. October 8, 2026. Accessed October 8, 2026. https://www.fiercepharma.com/pharma/phrma-launches-new-legal-challenge-cms-brings-most-favored-nation-pricing-medicare-part-b
2. Choi J, Weixel N. Drugmakers challenge Trump admin pilot program. The Hill. October 7, 2026. Accessed October 8, 2026. https://thehill.com/newsletters/healthcare/6135281-drugmakers-challenge-trump-admin-pilot-program/
3. Grossi G. CMS finalizes mandatory GLOBE model to test lower Part B drug costs. AJMC^®. October 1, 2026. Accessed October 8, 2026. https://www.ajmc.com/view/cms-finalizes-mandatory-globe-model-to-test-lower-part-b-drug-costs