PhRMA sues Trump administration over GLOBE rebate scheme
US pharma trade organisation PhRMA is challenging the Trump administration's GLOBE model for Most-Favoured Nation (MFN) pricing in Medicare Part B in court, accusing it of government overreach.
The lawsuit, filed in the US District Court for the District of Columbia, comes just days after the Centers for Medicare and Medicaid Services (CMS) finalised the Global Benchmark for Efficient Drug Pricing (GLOBE) model, which introduces a new method for calculating inflation rebate amounts.
GLOBE uses international drug pricing information to calculate rebates that manufacturers must pay under the Medicare Part B programme, which covers high-cost, physician-administered drugs that are often given in hospital outpatient settings.
Due to come into effect at the start of next year, GLOBE is attempting to use pricing of medicines in 19 reference countries to calculate rebates. PhRMA argues in its suit that this exceeds the authority of CMS and "effectively limits Medicare drug prices to MFN benchmarks."
Specifically, the trade organisation contends that it bypasses requirements to test a new model because it "predetermines the outcome through mandatory manufacturer rebates" and "unilaterally requires manufacturers to pay rebates that push their products below the market-pricing baseline."
Meanwhile, it unlawfully rewrites Medicare's statutory rebate framework and imposes monetary penalties that go beyond CMS' powers to implement without congressional action.
"The policy doesn't make medicines more affordable for most beneficiaries, while putting future medical innovation and patient access at risk," said Stephen Ubl, president and chief executive of PhRMA, who is stepping down and will be replaced by Eric Cantor on 9th November.
"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," said Ubl. "Patients need more choices and more breakthroughs – not government price-setting schemes that undermine both."
PhRMA also claims that it will affect investments in R&D for new medicines and undermine the US drug industry, and could lead to reduced availability of medicines for patients.
"The stability and predictability of market-based pricing is what drives American innovation and secures Americans the best patient outcomes," according to the complaint. "GLOBE would upend that stability and predictability, harming seniors and imperilling our nation's global pharmaceutical leadership."
The lawsuit comes as the validity of GLOBE is already under question, with CMS' forecasts of the resulting cost savings dramatically scaled back from when it was first proposed, in part due to a series of MFN pricing deals with dozens of the largest pharma groups that protect them from other federal drug pricing schemes. CMS is now modelling $440 million in savings compared to an original estimate of $11.9 billion.
While the impact of GLOBE may be fairly small, PhRMA is thought to be pushing back hard because it fears it could become a pathfinder programme for other MFN initiatives.
GLOBE was proposed alongside another pricing model for Medicare Part D – GUARD – which for now remains in development. Part D is an outpatient prescription drug benefit provided to more than 50 million older adults in the US.
Both sit alongside the GENEROUS model, a voluntary MFN framework for medicine manufacturers that participate in the Medicaid Drug Rebate Programme (MDRP). Manufacturers participating in the Medicaid-focused GENEROUS model receive waivers from the mandatory GLOBE requirements.
