The Trump administration has introduced three most-favored-nation (MFN) drug pricing initiatives designed to link U.S. pharmaceutical costs to prices paid in economically comparable countries. Most-favored-nation pricing requires manufacturers to provide rebates when U.S. prices exceed those in reference nations—a direct response to the persistent gap between U.S. drug prices and those in other developed economies. Three program have been implemented:
GENEROUS (GENErating cost Reductions fOr U.S. Medicaid) ModelGLOBE (Global Benchmark for Efficient Drug Pricing) ModelGUARD (Guarding U.S. Medicare Against Rising Drug Costs) Model
I summarize and compare each of these programs below.
GENEROUS: Medicaid’s Voluntary Option
GENEROUS (GENErating cost Reductions fOr U.S. Medicaid Model) represents the first voluntary MFN framework adopted by government payers in the U.S. Launching January 1, 2026, manufacturers can opt to enroll and negotiate uniform coverage terms directly with CMS rather than engaging with each state individually. Once CMS establishes coverage criteria (including Preferred Drug List placement and utilization management), individual states decide whether to participate and receive the MFN rebate. The program operates for five years through December 31, 2030, covering single-source and innovator multiple-source outpatient drugs across all Medicaid therapeutic categories except cell and gene therapy products. Why would a drug manufacturer decide to participate in a program that would reduce the price received?
GLOBE: Medicare Part B’s Mandatory Expansion
GLOBE (Global Benchmark for Efficient Drug Pricing Model) applies MFN pricing to Medicare Part B drugs administered in institutional settings. Unlike GENEROUS, GLOBE imposes mandatory participation on all manufacturers supplying qualifying drugs. The program launches October 1, 2026, and operates through September 30, 2031, with rebate payment and reconciliation continuing through September 2033. GLOBE targets single-source drugs and sole-source biologics within seven specific therapeutic categories that have driven Medicare Part B spending exceeding $100 million annually. Critically, GLOBE applies only to approximately 25% of Medicare Part B fee-for-service beneficiaries in randomly selected geographic areas, functioning as a structured demonstration project.
GUARD: Medicare Part D’s Comprehensive Approach
GUARD (Guarding U.S. Medicare Against Rising Drug Costs) extends MFN pricing to Medicare Part D, the outpatient prescription drug benefit, with mandatory participation for manufacturers. GUARD launches January 1, 2027, running through December 31, 2031, with payment and reconciliation continuing through 2033. The program targets sole-source drugs with gross Part D spending exceeding $69 million in 2027 (adjusted annually by the Consumer Price Index). Covering 17 therapeutic categories, GUARD applies to approximately 25% of Part D beneficiaries in randomly selected geographic areas, including both standalone Prescription Drug Plans and Medicare Advantage with Part D coverage.
Comparative Analysis
Drugs Included and Excluded
GENEROUS covers the broadest scope: all single-source and innovator multiple-source outpatient drugs within Medicaid’s formulary, except cell and gene therapy products. GLOBE targets a narrower therapeutic portfolio—7 specific categories (antigout agents, antineoplastics, blood products/modifiers, CNS agents, immunological agents, metabolic bone disease agents, and ophthalmic agents)—focusing on high-cost institutional therapies. GUARD’s intermediate scope encompasses 17 categories spanning oral and injectable medications used in community settings. All three programs exclude drugs already subject to Medicare Drug Price Negotiation under the Inflation Reduction Act.
Manufacturer Participation: Voluntary vs. Mandatory
GENEROUS’s voluntary structure fundamentally distinguishes it from its Medicare counterparts. Manufacturers can choose to enroll or remain outside the program, though enrollment offers standardized negotiation pathways and potential volume benefits. In contrast, GLOBE and GUARD impose mandatory participation requirements. All manufacturers supplying qualifying drugs must comply with rebate calculations regardless of preference—a structural choice that ensures comprehensive coverage but may face greater industry resistance and potential legal challenges.
Why would drug manufacturers decide to participate in a program that would lower prices? GENEROUS has a number of incentives. If manufacturers participate, prices are determined at a national rather than state-by-state level, prior authorization rules are prohibited, and Medicaid best price rules would no longer apply.
Reference Country Baskets
GENEROUS employs a more limited international comparison set with 8 reference countries: Canada, Denmark, France, Germany, Italy, Japan, Switzerland, and the United Kingdom. This smaller basket potentially yields more targeted benchmarking but may capture less comparative pricing data. GLOBE and GUARD both utilize an expanded 19-country OECD reference basket: Australia, Austria, Belgium, Canada, Czech Republic, Denmark, France, Germany, Ireland, Israel, Italy, Japan, Netherlands, Norway, South Korea, Spain, Sweden, Switzerland, and the United Kingdom. This broader comparison provides more robust international pricing signals and reduces vulnerability to outlier pricing in individual countries.
Reference Pricing Benchmarks and Adjustment Percentages
The programs diverge significantly in benchmark calculation methodology. GENEROUS calculates the benchmark as the second-lowest net price across its 8 reference countries, adjusted for gross domestic product at purchasing power parity (GDP PPP). Using the second-lowest price rather than the absolute minimum minimizes outlier effects while maintaining anchoring to realistic international markets.
GLOBE and GUARD each offer two calculation methods. Under Method I (Default), both programs identify the lowest country-level average price across reference countries, adjusted by GDP PPP. However, the subsequent adjustments differ: GLOBE applies a 102% adjustment to Method I benchmarks plus the Medicare Part B add-on payment (currently 6%), while GUARD applies only 102% without an add-on percentage. Under Method II (Optional), manufacturers may submit volume-weighted average net prices; GLOBE applies 105% adjustment plus the 6% add-on (updated quarterly), while GUARD applies 105% adjustment (updated annually). These upward adjustments—particularly the additional 6% add-on in GLOBE—reflect policy decisions to maintain adequate provider reimbursement while still achieving net price reductions compared to current U.S. levels. Data sources that could be used to measure ex-U.S. prices mentioned by CMS include: the IQVIA’s MIDAS, GlobalData Pharmaceutical Prices, and Eversana NAVLIN’s Price & Access database.
Rebate Calculations
Rebate mechanics differ across programs. Under GENEROUS, the supplemental rebate equals a drug’s wholesale acquisition cost minus the Guaranteed Net Unit Price (derived from the MFN benchmark) and the standard Unit Rebate Amount. GLOBE calculates rebates as the greater of: (1) the Medicare Part B payment limit minus the GLOBE benchmark, or (2) the payment limit minus inflation-adjusted payment, ensuring manufacturers pay at minimum the existing Part B inflation rebate but potentially more if international benchmarks justify higher rebates. GUARD similarly calculates rebates as the difference between Medicare net price and the GUARD benchmark, with incremental rebates applying only when exceeding existing Part D inflation rebate amounts.
Program Duration
All three programs operate with five-year performance periods. GENEROUS runs 2026-2030 as a complete five-year cycle. GLOBE and GUARD each structure their periods differently: GLOBE covers October 1, 2026 through September 30, 2031 performance, with payment continuing through September 2033; GUARD covers January 1, 2027 through December 31, 2031 performance, with payment continuing through 2033. These extensions facilitate claims processing, reconciliation, and potential dispute resolution. Importantly, all three programs retain sunset clauses—they are temporary demonstrations, not permanent statutory requirements—allowing Congress and CMS to evaluate outcomes before deciding on continuation or nationwide expansion
How do you think these three MFN program will impact the life sciences ecosystem?
