PhRMA Sues Trump Administration Over Medicare Most-Favored-Nation Drug Pricing Rule

The pharmaceutical industry’s top lobby group filed a federal lawsuit on October 7, 2026, seeking to invalidate a Trump administration rule that benchmarks United States drug prices to lower costs overseas within the Medicare health insurance program. The legal challenge targets the GLOBE rule, a Centers for Medicare & Medicaid Services pricing system published the previous week to set hospital drug prices for Medicare Part B patients based on amounts paid in comparable foreign countries.

PhRMA Files Lawsuit Against Federal Health Officials

The Pharmaceutical Research and Manufacturers of America filed its complaint in the U.S. District Court for the District of Columbia. Named defendants in the lawsuit include Health Secretary Robert F. Kennedy Jr., the U.S. Department of Health and Human Services, CMS Administrator Dr. Mehmet Oz, the CMS innovation center running the pilot, and innovation center director Abe Sutton.

PhRMA General Counsel Jim Stansel stated in an interview that CMS has stretched the limited statutory authority granted by Congress to test pricing models into a wholesale rewriting of Medicare’s payment structure. Instead of testing ideas, Stansel asserted that CMS is implementing a structure that Congress has repeatedly declined to enact over the past several years.

Instead, CMS is doing exactly what Congress has declined to do multiple times over the last several years, and that’s to replace the pricing structure in Medicare with a most-favored-nation structure.

Jim Stansel, PhRMA General Counsel

Voluntary Deals Reduce Pricing Rule Reach and Savings

The pricing regime is expected to apply to a fraction of drugmakers because CMS plans to waive the requirement for manufacturers that have signed separate voluntary deals with the White House to cut prices. President Donald Trump has already secured deals with more than two dozen drugmakers, including large companies such as Pfizer, Eli Lilly, and Novo Nordisk. Consequently, the pricing model may ultimately apply to as few as four drugmakers.

The final rule also reduced federal savings estimates significantly. HHS currently projects the program will cut Medicare Part B spending by roughly $440 million over the seven-year model period, down from the $11.9 billion estimated in the proposed rule published the prior year.

PhRMA Blocks Previous Pricing Rules on Procedural Grounds

The current litigation follows a previous challenge in 2020, when PhRMA successfully blocked an earlier incarnation of most-favored-nation pricing on procedural grounds because the administration rushed the rule without a public comment period. Attorneys unaffiliated with the new litigation, such as Skadden attorney Rachel Turow, indicated that the lawsuit serves to block future price controls utilizing similar mechanisms, warning that failing to stop the process could open floodgates for future administrations.

In the finalized text of the GLOBE rule, HHS defended its authority by stating that CMS is acting within a detailed, purpose-specific statutory framework designed by Congress precisely for model tests. HHS was not immediately available for comment on the lawsuit.

Litigation Proceeds in U.S. District Court

The litigation proceeds in the U.S. District Court for the District of Columbia as legal teams prepare initial filings. Stansel noted that the lawsuit remains critical because the GLOBE rule could outlast current voluntary drugmaker deals and extend into future presidential administrations beyond Trump.