Trump Administration Launches Medicare Drug Price International Benchmarking Plan, Expected to Save $440 Million
nashnova research
The Trump administration formally launched "Globe," a plan to benchmark Medicare payments for select high-cost drugs against prices in 19 peer nations starting January 1; but sweeping exemptions slashed projected seven-year savings from $11.9 billion to just $440 million, leaving only four manufacturers covered.
What does the Globe plan actually do?
It targets Medicare Part B drugs — expensive medications injected or infused by a doctor or hospital on-site, not pills patients take at home.
The core mechanism: link what U.S. Medicare pays for these drugs to prices in 19 countries with comparable economies. This means → if the same drug sells for less in Europe or Japan, Medicare would pay closer to that lower price.
Takeda's Entyvio, used to treat Crohn's disease and ulcerative colitis, is a key example.
How did $11.9 billion shrink to $440 million?
Compared with last December's initial proposal, the final rule's scope narrowed dramatically: rare-disease drugs and certain others were exempted after public comment.
Products from drugmakers that struck price-cut deals with the White House are also exempt — over 20 companies have signed so far. Firms participating in a separate Medicaid pilot can likewise opt out.
In plain terms = exemption after exemption stacked up until only four manufacturers remained covered. Washington University law professor Rachel Sachs said the plan's scope and potential impact "have shrunk significantly."
What strategy are drugmakers using to dodge it?
Dr. Thomas Hwang of Harvard Medical School noted that some companies joined the Medicaid-focused alternative pilot to secure Globe exemptions.
This means → because Medicaid's patient base is far smaller than Medicare's, firms concede on the smaller pool to avoid forced price cuts on the larger one.
His words: "Companies give ground where the cost is smallest to avoid being forced to compromise where the cost is greatest."
How is the pharmaceutical industry responding?
PhRMA spokesperson Chanse Jones called the plan an overreach of agency authority.
The industry's core argument: importing foreign pricing amounts to government price controls and "will delay, limit, or deny patients' access to new therapies."
In plain terms = drugmakers' concern goes beyond immediate price cuts. Once "international benchmarking" becomes a routine tool, long-term pricing power shifts from companies to government.
How far can this plan go?
Globe runs as a five-year pilot through the Medicare Innovation Center. If it demonstrates savings without sacrificing care quality, it could be expanded nationwide.
CMS Administrator Dr. Mehmet Oz said Medicare Part B patients and U.S. taxpayers have long paid far more for prescription drugs than peers in comparable countries; this pilot aims to find a new path to lower costs.
Yet analysts are broadly cautious — whether Globe survives legal challenges is the variable that will ultimately determine its real impact.
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