PhRMA sues CMS to challenge the legality of the GLOBE drug model
- The Pharmaceutical Research and Manufacturers of America (PhRMA) filed a lawsuit in the U.S.
- The litigation marks a significant escalation in the pharmaceutical industry's opposition to federal efforts to regulate drug costs.
- Finalized by the administration in late October, the GLOBE model targets therapies administered in healthcare settings under Medicare Part B.
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The Pharmaceutical Research and Manufacturers of America (PhRMA) filed a lawsuit in the U.S.
The litigation marks a significant escalation in the pharmaceutical industry’s opposition to federal efforts to regulate drug costs. PhRMA asserts that the Centers for Medicare & Medicaid Services (CMS) lacks the statutory authority to implement the GLOBE model, arguing that the program effectively rewrites federal rebate laws and imposes price-setting policies that Congress never authorized. The trade group further contends that the rule raises constitutional concerns regarding the separation of powers.
Implementation of the GLOBE Model
Finalized by the administration in late October, the GLOBE model targets therapies administered in healthcare settings under Medicare Part B. Under the framework, regulators will establish benchmarks for drug prices by analyzing costs paid in a basket of high-income countries. While this specific model is new, the administration has previously secured public commitments from several major drugmakers to adopt MFN pricing across their portfolios in exchange for immunity from certain drug import tariffs.
CMS maintains that the program will provide financial relief to Medicare beneficiaries without compromising the quality of care. According to the agency, the model is designed to offer lower coinsurance for patients from April 1, 2027, through March 31, 2032. The program includes specific exclusions, notably omitting biosimilars once they become available, as well as orphan drugs, plasma-derived products, and certain cell and gene therapies.
Industry Concerns on Innovation and Access
PhRMA argues that the GLOBE model will have negligible benefits for the majority of patients, estimating that only 0.3% of Medicare Part B beneficiaries would see lower out-of-pocket costs. The trade group also warned that the use of international pricing benchmarks—specifically those that rely on quality-adjusted life years (QALYs)—could prove discriminatory against patients living with disabilities, rare diseases, or chronic conditions.
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 Ubl, outgoing president and CEO of PhRMA
Beyond immediate patient impact, the industry group contends that the shift toward government-imposed price controls will stifle investment in domestic research and development. This legal challenge follows a string of industry efforts to push back against federal cost-containment measures, including ongoing litigation against the Biden-era Inflation Reduction Act (IRA).
Eric Cantor Succeeds Stephen Ubl as PhRMA Leader
The lawsuit arrives at a time of transition for the pharmaceutical lobby. Stephen Ubl, who has led PhRMA for over a decade, is preparing to step down. The organization has named Eric Cantor, the former House majority leader who served from 2011 to 2014, as his successor, with the transition scheduled for November 9.
The industry's legal situation is complex. In August, the U.S. Court of Appeals for the Fifth Circuit affirmed a lower court ruling that dismissed PhRMA’s challenge to the constitutionality of the IRA’s drug price negotiation provisions. The court determined that participation in the Medicare and Medicaid programs is voluntary, a ruling that countered the industry’s claim that manufacturers were being coerced into accepting government-set prices.