How MFN pricing in the final GLOBE Model will affect beneficiary OOP costs

Avalere Health’s recently updated analysis of 2023 Medicare Current Beneficiary Survey data suggests that the Global Benchmark for Efficient Drug Pricing (GLOBE) Model would have a very limited impact on OOP costs. We found that:

• Among fee-for-service (FFS) beneficiaries who used GLOBE-eligible drugs, less than 3,000 have standard Part B OOP cost-sharing exposure because they do not have supplemental insurance.
• When accounting for the GLOBE Model’s application to approximately 25% of Part B FFS beneficiaries, this number falls to fewer than 700 beneficiaries.
• Only approximately 0.0025% of all FFS beneficiaries would likely directly benefit from reductions in OOP cost liability under the finalized GLOBE rule.

Background

On September 30, the Centers for Medicare and Medicaid Services (CMS) finalized the parameters of the GLOBE Model, which will incorporate Most Favored Nation (MFN) pricing into Medicare Part B. GLOBE is part of a broader initiative by the Trump administration to advance MFN drug pricing, which aligns US drug prices with those paid in economically comparable countries.

Under the GLOBE Model, which will launch on January 1, 2027, eligible drugs’ average sales prices (ASPs) will be compared to international benchmark prices, and CMS will require rebates to make up the difference. CMS will require manufacturers of eligible Part B drugs to participate, subject to applicable waivers and exemptions. The model will apply to Medicare FFS beneficiaries in selected geographic areas representing approximately 25% of eligible Part B beneficiaries. Beneficiary cost sharing will be calculated based on the GLOBE benchmark price.

The final rule substantially modified drug eligibility compared to the proposed rule. Under the proposed rule, the model excluded biosimilars and their reference biological products once a biosimilar enters the market, as well as drugs with a negotiated maximum fair price in effect. The final rule excludes these products, as well as those with orphan-only indications, certain cell and gene therapies, and plasma-derived products. In the preamble to the final rule, CMS also states that it intends to waive GLOBE participation for manufacturers participating in a Medicaid-focused MFN model, the GENErating cost Reductions fOr US Medicaid (GENEROUS) Model. As a result, only three products may remain eligible based on 2024 drug spending.¹ Combined with additional changes that reduced the model’s scope, estimated savings from the model decreased from $11.9 billion in the proposed rule to $440 million in the final rule.

With the release of the final rule, Avalere Health updated a previous analysis to illustrate how MFN pricing in the GLOBE Model could affect OOP costs for Medicare FFS beneficiaries. The analysis focused on the share of FFS beneficiaries who use the three eligible drugs and the extent to which they would have direct exposure to changes in cost-sharing liability, based on whether they had supplemental coverage that could reduce or eliminate their OOP costs. Avalere Health estimated utilization and supplemental coverage among a representative sample of 25% of beneficiaries that are eligible for the model.

Findings

Avalere Health found that only 0.0025% of all FFS beneficiaries would likely be directly exposed to changes in OOP cost liability under the finalized GLOBE Model methodology, assuming the model applied to three Part B drugs that would be eligible based on the final rule.

In 2023, less than 1% of FFS beneficiaries (about 32,000) used any of the eligible drugs. Among beneficiaries who used eligible drugs, most had supplemental coverage (e.g., Medicaid, employer-sponsored insurance, or Medigap) that covered the standard 20% Part B coinsurance. Only about 7% of FFS beneficiaries using any of the three eligible drugs (less than 3,000 people) lacked any form of supplemental insurance.

After accounting for the GLOBE Model’s design limiting applicability to certain geographic areas, fewer than 700 FFS beneficiaries (0.0025%) would likely experience cost-sharing liability changes under the model.

Conclusion

Avalere Health’s analysis suggests that the finalized GLOBE Model would result in limited direct OOP savings for Medicare FFS beneficiaries. This reflects the small share of beneficiaries using drugs eligible under the finalized model and the widespread enrollment in supplemental coverage that limits Part B cost-sharing exposure.

Methodology

Avalere Health updated its analysis of potential beneficiary OOP exposure under the finalized GLOBE Model. The analysis examined use of three Part B drugs identified in the GLOBE Model final rule’s illustrative list that meet the final rule’s eligibility criteria. We used 2023 Medicare Current Beneficiary Survey cost and utilization files to identify Medicare FFS beneficiaries with supplemental coverage and to link beneficiaries to utilization of these specific eligible Part B drugs. Avalere Health also considered the final rule’s exclusions for certain rare disease drugs, cell and gene therapies, and plasma-derived products.

The analytic sample was limited to beneficiaries with 12 months of continuous enrollment in Medicare Parts A and B and no enrollment in a Medicare Advantage plan at any point during the survey year. Beneficiaries were attributed to a source of supplemental coverage if they had more than six months of enrollment in a given coverage type during the survey year. When beneficiaries had more than one source of supplemental coverage, a single source was assigned using the following hierarchy: (1) Employer-sponsored insurance, (2) Medicaid, (3) Medigap, (4) no supplemental coverage, and (5) other coverage.

Survey weights were applied to extrapolate beneficiary counts to the national Medicare FFS population.

Learn more

To learn more about how Avalere Health can support your strategic planning around MFN drug pricing policies, connect with us.

Funding for this research was provided by PhRMA; Avalere Health retained full editorial control.

1. Based on the Table 4 of the final rule, “Illustrative GLOBE Model Drug HCPCS Level II Codes List,” only three products remained in scope for the analysis after accounting for expected GENEROUS Model waivers and exclusions related to biosimilar market entry under the final rule.