GUARDs, GLOBEs and BALANCEs: CMS intros three unexpected weapons in the fight against Medicare drug costs

As CMS looks to the future of drug pricing for Medicare beneficiaries, a clear need to battle spending in Part B and Part D surfaces. Between the tens of billions of dollars spent by Part B on drugs and the hundred-plus billion spent on Part D, costs have never been higher. Of course, the increase in those enrolled is a mild contributor, but the real issue is the cost of the drugs themselves. The most recent data we have is from 2023, where $276 billion dollars was spent on Part D prescription drugs.

If you ever have created a budget before, you know its much easier to reduce spending than it is to pull in more revenue. And that is exactly what CMS is aiming to do with three new mandatory experimental drug cost models: GLOBE, GUARD, and BALANCE.

Didn’t we just act to reduce inflation?

We did, back in 2022. This iteration of price control was based on the rate of inflation, and required drug manufacturers to give rebates back to Medicare if the manufacturers charged more than the rate of inflation for any one drug. And that worked, to an extent, to keep the problem from getting any worse. But as stated before, drug costs are just too high in the first place, and their rate of inflation is just icing on the medication cost cake.

Then there was the price negotiations, where individual drugs were cherrypicked and a negotiation occurred between the federal government and the manufacturers. Which again, helped somewhat. Over the course of four years, drugs were selected and negotiated, with the first round of finalized lower prices implemented in January of 2026. But again, this did not address the overarching problem and only helped beneficiaries taking those particular drugs. And once that drug has a generic or biosimilar available? Forget it.

So CMS came up with something new to tackle the high costs of prescription drugs for Medicare and Medicaid beneficiaries, but this time turned their focus outside of US borders.

How will GLOBE work?

So if you understand how the Inflation Reduction Act used the rate of inflation to control drug costs, you already understand most of what the Global Benchmark for Efficient Drug Pricing Model (“GLOBE Model”) will do for Part B drug spending. But instead of using the rate of inflation as the benchmark to determine when manufacturers will be paying out rebates, this model would use international pricing data instead. Then, if a drug costs more than that price in other economically similar countries, the manufacturer would have to give a rebate back to Medicare Part B. CMS is banking that instead of paying these rebates, manufacturers will simply reduce their prices to the global benchmark.

If implemented, CMS estimates this will save $11.9 billion in Medicare Part B net spending, including $8.4 billion in Medicare Part B FFS, $7.5 billion in Medicare Advantage savings, and $4 billion in premium offset impacts. This will only apply to drugs in specific therapeutic areas: oncology, immunology, rheumatology, endocrinology, and ophthalmology.

How will GUARD work?

The proposed Guarding U.S. Medicare Against Rising Drug Costs (GUARD) Model would work just about the same for Part D as GLOBE did for Part B, except for some minor tweaks. More therapeutic areas will be involved: Analgesics; Anticonvulsants; Antidepressants; Antimigraine Agents; Antineoplastics; Antipsychotics; Antivirals; Bipolar Agents; Blood Glucose Regulators; Cardiovascular Agents; Central Nervous System Agents; Gastrointestinal Agents; Genetic or Enzyme or Protein Disorder: Replacement or Modifiers or Treatment; Immunological Agents; Metabolic Bone Disease Agents; Ophthalmic Agents; and Respiratory Tract/Pulmonary Agents. And the manufacturer discounts and rebates already in place will be taken into account when placing the international benchmark price head to head with the price in the US. Then, same rules apply: Medicare will be paid a rebate if that price is found to be higher than the price in other similar countries.

How will BALANCE work?

The Better Approaches to Lifestyle and Nutrition for Comprehensive hEalth, or BALANCE Model, will tackle the GLP-1 portion of the drug cost conundrum. CMS will use its power on behalf of Part D and Medicaid to negotiate cost and coverage terms with GLP-1 manufacturers. This savings would be passed on to the consumer. BALANCE would also open up GLP-1s to be covered by Part D and Medicaid to the 70% of adults in the US who are clinically overweight or obese.

If made permanent, this model would be a historical change for Part D. Since its birth in 2006 with the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), Part D has been prohibited from covering prescriptions for weight management. At the time, it was seen as a cost cutting measure. But CMS is changing the script, predicting the decrease in obesity would prevent or absolve more costly treatments needed from the side effects of obesity, such as high blood pressure or type 2 diabetes.

Specifically in Michigan, this would directly conflict with current Medicaid rules that went into effect this year. Right now, Medicaid beneficiaries must be morbidly obese, have unsuccessfully other methods for treatments, and be taking a GLP-1 to avoid bariatric surgery in order to get coverage through Medicaid. Diabetes prescription is unaffected.

When does this all start?

Remember, at this point these models are only experimental, and will only be implemented in some randomly selected ZIP codes throughout the US. The GLOBE and GUARD models will apply to approximately 25% of beneficiaries, so if any ZIP codes you work in are selected, it is important you understand the implications (or not, if you work in one ZIP that will have this program and one that will not) to your clients. Those interested in taking a GLP-1 but saw cost as a barrier will surely come to you after hearing the BALANCE news.

CMS plans to start GLOBE this October, and allow it to run for seven years. GUARD is planned to start in January of 2027 and run for five years, with payments and processing ending through 2033. BALANCE will work a little differently, as this program is not mandatory. CMS will accept applications from state Medicaid agencies until May of this year, and Part D plans will see the changes if participating in January of 2027, with testing concluding in December 2031.

Why do all this?

Well, CMS is worried drug prices are driving up the costs for just about everything else in the Medicare world: premiums, copays, coinsurance---you name it, it probably comes back in some capacity to an increase in drug prices. And why does that cost not just stay with those taking these drugs? Because eventually, if a drug’s price is too high, beneficiaries will just go without, and let the cards fall as they may. They wind up needing more intensive care, and the price of health care goes up again as more treatments are needed. That is, if the beneficiary doesn’t lose her life in the process of DIYing medication costs by taking a little of this and none of that.

CMS sees lowering costs for drugs as the simplest way to give Medicare beneficiaries better care overall—cheaper costs means better utilization, which means better outcomes, which means less high-cost utilization, which means lower costs. The cycle repeats, beneficiaries (and therefore health insurance agents) win.

But is it crazy enough to work?

That remains to be seen, of course. As you might recall with the IRA, drug manufacturers don’t like the feds trying to influence prices too much. Multiple lawsuits through multiple courts popped up for months after the announcement of drug price negotiations, each with their own spin on how limiting drug costs was unconstitutional. But we already know the end to that story. And again, this might not even affect your beneficiaries at all, as these will only be applied to some areas as for 5-7 years. But, if this does become set in stone at some point, you might find it a little bit easier to sell Medicare Advantage plans or Part D plans in the upcoming years.