PhRMA challenges GLOBE drug pricing rule as lawsuit raises questions over QALY-based benchmarks

PhRMA has filed a lawsuit challenging CMS’s GLOBE model, arguing that the agency has exceeded its authority by linking Medicare drug rebates to international prices. The complaint also challenges the use of benchmarks drawn from countries that incorporate quality-adjusted life years into reimbursement decisions.

The Baseline

• PhRMA is asking a federal court to set aside GLOBE, the mandatory Medicare Part B model that uses international drug prices to calculate manufacturer rebates.
• The complaint challenges CMS’s model-testing authority and argues that overseas benchmarks indirectly import QALY-based decision-making into Medicare.
• CMS maintains that the model falls within its statutory authority and uses observed international prices without adopting a QALY-based reimbursement formula.

The Pharmaceutical Research and Manufacturers of America (PhRMA) has filed a lawsuit challenging the Global Benchmark for Efficient Drug Pricing (GLOBE) model, escalating industry opposition to the US administration’s Most-Favored-Nation (MFN) drug pricing policy.

Filed on October 7, 2026, in the US District Court for the District of Columbia, the complaint argues that the Centers for Medicare & Medicaid Services (CMS) lacks congressional authorization to introduce the model. PhRMA is asking the court to declare the rule unlawful, set it aside and prevent its implementation.

GLOBE, finalized at the beginning of October, uses prices from 19 reference countries to calculate rebates for eligible Medicare Part B medicines. CMS describes the model as a test of whether an alternative rebate calculation can reduce spending while preserving or improving quality of care. The model is scheduled to launch on January 1, 2027, with its five-year performance period beginning on April 1.

A potential legal challenge was among the uncertainties highlighted by Tim Wright (Genesis Research Group) in a recent video interview with The Evidence Base. Speaking before the filing, Wright recalled an earlier assessment that GLOBE and its Medicare Part D counterpart, GUARD (Guarding US Medicare Against Rising Drug Costs), could be “kicked out into the long grass,” although he expected the models would “probably get put into practice.”

Challenging CMS’s authority

Stephen Ubl (PhRMA), President and CEO, said in the announcement accompanying the lawsuit:

“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.”

Central to the complaint is whether GLOBE falls within the CMS Innovation Center’s model-testing authority. PhRMA argues that the underlying legislation “does not provide carte blanche to rewrite the Medicare program to fit policy priorities that Congress has not authorized.”

Its challenge centers on three arguments:

• Whether GLOBE constitutes a genuine experiment, given that mandatory rebates would automatically reduce government spending.
• How far CMS can alter existing legislation, including Medicare’s rebate arrangements and civil monetary penalties.
• Where agency powers end and congressional authority begins, raising constitutional questions about who can authorize changes of this scope.

CMS maintains that Congress has authorized it to test innovative payment models and waive Medicare requirements where necessary. It characterizes GLOBE as limited in duration and geographic scope.

QALYs and international price benchmarks

The complaint also questions whether international reference pricing imports the assessment methods that shape overseas prices. PhRMA points to statutory restrictions on using quality-adjusted life years (QALYs), or similar measures that discount the value of life because of disability, as a threshold for determining Medicare coverage, reimbursement or incentive programs.

According to the complaint, 15 of GLOBE’s 19 reference countries use QALYs, formally or informally, to set pharmaceutical reimbursement rates. PhRMA argues that these approaches disadvantage people with disabilities and chronic illnesses, and that incorporating the resulting prices into Medicare rebates breaches those restrictions.

“GLOBE thus imports the use of QALYs from those countries through its rebate calculation formula,” the complaint states.

CMS maintains that GLOBE “does not establish a QALY-based reimbursement formula,” distinguishing observed international prices from health outcome measures used as coverage or reimbursement thresholds.

Wider concerns over affordability and innovation

PhRMA also questions the benefit to patients, arguing that most Medicare Part B beneficiaries have supplemental coverage and would see no direct change in out-of-pocket drug costs. CMS presents GLOBE as an effort to reduce Medicare spending and lower coinsurance while protecting quality of care.

The organization had previously raised concerns about both GLOBE and GUARD when the proposed rules were announced in December 2025. They warned that the policies would “siphon billions from US medicine R&D,” arguing that international price controls would weaken US pharmaceutical leadership amid growing competition from China.

The legal action follows setbacks for the pharmaceutical industry in challenges to US drug pricing policies, including Medicare drug price negotiations introduced under the 2022 Inflation Reduction Act (IRA). In August 2026, a federal appeals court upheld a ruling against PhRMA and its co-plaintiffs, rejecting their argument that manufacturers are effectively compelled to participate in the negotiation program.

PhRMA is also preparing for a leadership transition, having named former US House Majority Leader Eric Cantor as its next president and CEO on September 29. Cantor will take up the role on November 9, succeeding Ubl, who has led the organization since 2015 and will continue as a strategic adviser.