Biotech Groups Sue Again to Stop Medicare's GLOBE Drug-Pricing Model
Three biotech trade groups filed suit in San Francisco to block CMS's GLOBE Medicare Part B pricing model before its first rebates arrive. The fight is over agency authority, but the model they sued has shrunk to a fraction of what they first opposed.
Three of the biotech industry's biggest trade groups went back to court on Friday to stop the Trump administration's most aggressive Medicare drug-pricing experiment. The trade associations sued HHS Secretary Robert F. Kennedy Jr. in federal court in San Francisco, asking a judge to declare the CMS GLOBE model unlawful, vacate it, and permanently block its enforcement.
It is the second such suit in a month. PhRMA filed its own challenge against the same model in Washington on October 7. Now BIO, Biocom California and California Life Sciences have opened a second front, and the overlap of the two cases gives the industry two chances to find a judge willing to halt the program before rebates start flowing.
What GLOBE does
GLOBE, short for Global Benchmark for Efficient Drug Pricing, is a mandatory Medicare Part B model that ties manufacturer rebates to prices paid in 19 other countries. The rule was finalized on October 2 and takes effect November 30, with rebates and lower coinsurance beginning April 1, 2027 and the last performance year ending in March 2032. Unlike earlier payment experiments, it also reaches Medicare Advantage, not just Original Medicare, and it applies to randomly selected ZIP-code areas that together hold roughly a quarter of the Part B population.
The industry's core objection is that CMS never had the power to build it. The complaint advances three counts: that GLOBE exceeds the Innovation Center's statutory authority to test payment models, that it violates the Constitution's Appropriations Clause, and that it runs afoul of separation-of-powers limits on delegation. "By finalizing the GLOBE model, CMS crossed the limits Congress placed on its authority," said Joe Franklin, BIO's chief legal and policy officer.
A model that shrank on the way to the courthouse
The odd feature of this fight is how much smaller the target has become. The model CMS proposed in early 2026 promised to save roughly $2.3 billion a year in Part B spending. The final rule books about $80 million a year instead, a reduction of more than 96 percent. Medicare Advantage savings fell from a proposed $7.5 billion over the model's life to $288 million, and Part B net savings now amount to $440 million after a $147 million premium offset. CMS itself estimates that only about 0.3 percent of beneficiaries in covered areas would see any change in out-of-pocket costs, since most people in those ZIP codes carry supplemental coverage that already absorbs Part B coinsurance.
Manufacturer exposure collapsed for the same reason. The final rule started with 19 drugmakers in the model, but waivers tied to the administration's separate voluntary GENEROUS Medicaid program cut that number to four. The complaint points to public reporting that 27 manufacturers signed individual pricing deals with the administration between September 2025 and August 2026, most of them routing most-favored-nation prices to Medicaid rather than Medicare. In other words, the industry negotiated most of what GLOBE would have forced, then sued over the smaller model left standing.
That dynamic gives the legal challenge an awkward shape. The trade groups argue the model is unlawful regardless of size, and California Life Sciences chief executive Mike Guerra added a broader policy argument about who bears the cost. "We must address the glut of health insurance-owned middlemen who drive massive costs to our health care system and patients," he said. But a judge weighing irreparable harm will notice that a program covering four manufacturers and $80 million in annual savings looks very different from the $2.3 billion threat the industry originally faced. PhRMA's president Stephen J. Ubl kept the argument on pure legality: "GLOBE is unlawful and clearly exceeds CMS' authority."
The calendar is the pressure point
Timing frames everything. GLOBE becomes effective November 30, but no rebate changes hands until April 1, 2027. Any court order vacating the model before that April date would erase it before the first dollar moves, which is precisely the window the two lawsuits aim to occupy. The stakes extend past GLOBE itself: the same question about CMS's test-model authority hangs over GUARD, the companion Part D model CMS proposed in December 2025 and has not finalized. A ruling against GLOBE could shape, or sink, that program too.
CMS, for its part, will argue that Congress created the Innovation Center precisely to test ideas like this one, and that the statutory savings targets were goals, not binding promises. The agency has not yet filed a response in either case. With effective date three weeks away and the first rebates less than five months out, the two suits put a narrow runway under a policy the administration has cast as a centerpiece of its drug-pricing agenda. Whoever moves first on the docket, in San Francisco or Washington, will likely decide whether GLOBE ever pays a rebate at all.
