PhRMA Sues Trump Administration Over GLOBE Most-Favored-Nation Medicare Drug Pricing Model, Citing Statutory Overreach

The Pharmaceutical Research and Manufacturers of America (PhRMA) filed a lawsuit on October 7, 2026, in the U.S. District Court for the District of Columbia challenging the Centers for Medicare & Medicaid Services (CMS) Global Benchmark for Efficient Drug Pricing (GLOBE) model. This mandatory demonstration under Medicare Part B ties certain drug rebates to international reference prices from 19 OECD countries, effectively implementing a most-favored-nation (MFN) pricing approach.

PhRMA argues that CMS exceeds its authority under Section 1115A of the Social Security Act by using limited demonstration powers to impose nationwide price controls that Congress has repeatedly declined to authorize. The complaint alleges the model predetermines outcomes through mandatory rebates, rewrites Medicare’s statutory rebate framework, expands civil monetary penalties beyond statutory limits, and raises separation-of-powers concerns. PhRMA President and CEO Stephen J. Ubl stated the policy “doesn’t make medicines more affordable for most beneficiaries, while putting future medical innovation and patient access at risk,” while noting shared goals of affordability but insisting CMS cannot bypass Congress to import foreign price controls.

The GLOBE rule, finalized September 30, 2026, and set to begin January 1, 2027, applies to a subset of separately payable Part B drugs in randomly selected geographic areas covering about 25% of Original Medicare beneficiaries. It excludes orphan drugs, plasma-derived products, and certain cell/gene therapies. CMS now projects savings of roughly $440 million over seven years—sharply lower than the $11.9 billion estimated in the proposed rule—due in part to broad exemptions for manufacturers that signed voluntary MFN pricing agreements with the Trump administration, including Pfizer, Merck, and GlaxoSmithKline.

This marks PhRMA’s latest legal challenge to MFN-style policies; a 2020 iteration was blocked on procedural grounds after a successful prior suit. Industry observers note the current suit’s strategic importance despite GLOBE’s limited immediate scope, as it could establish precedent against mandatory international benchmarking that might outlast voluntary deals or extend to future administrations. The litigation intersects broader debates on U.S. drug affordability, innovation incentives, and the balance between executive regulatory authority and congressional intent, with potential ripple effects on patient access to new therapies if pricing stability is disrupted.

Defendants include HHS Secretary Robert F. Kennedy Jr., CMS, and innovation center officials. PhRMA seeks declaratory and injunctive relief to vacate the rule.