By admin 
The pharmaceutical and biotechnology sectors are intensifying their opposition to a pair of aggressive Trump administration proposals designed to overhaul how the federal government pays for prescription drugs, signaling a protracted legal and political battle over the future of Medicare spending. These proposals, which seek to bridge the significant price gap between the United States and other developed nations, represent a fundamental shift in federal healthcare policy by moving away from market-based pricing toward an international "most-favored-nation" (MFN) benchmark. Industry trade groups, including the Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Innovation Organization (BIO), have begun articulating a robust set of grievances that serve as a roadmap for the litigation expected to follow should these programs move toward final implementation.
At the heart of the conflict are two distinct but related pilot programs orchestrated by the Center for Medicare and Medicaid Innovation (CMMI). The first, known as the Global Benchmark for Efficient Drug Pricing (GLOBE) Model, targets Medicare Part B, which covers drugs typically administered in a physician’s office or hospital outpatient setting, such as chemotherapy infusions and certain injectable biologics. The second, the Guarding U.S. Medicare Against Rising Drug Costs (GUARD) Model, focuses on Medicare Part D, the retail pharmacy benefit used by millions of seniors for daily medications. Together, the administration estimates these initiatives could slash federal spending by approximately $27 billion over a five-year period. However, the industry argues that these savings would come at a devastating cost to medical innovation and patient access to life-saving therapies.
The administration’s rationale for these models is rooted in the observation that the United States often pays more than twice as much as other wealthy nations for the exact same medications. President Trump has frequently criticized what he calls "global freeloading," where other countries utilize price controls to keep costs low, effectively forcing American consumers and taxpayers to subsidize the research and development costs for the rest of the world. The MFN approach would tie Medicare’s reimbursement rates to the lowest price paid by a group of comparable countries, including Canada, the United Kingdom, Germany, Japan, and France. By doing so, the administration aims to leverage the massive purchasing power of the U.S. government to force a downward global recalibration of drug prices.
The industry’s pushback is multifaceted, blending economic arguments with constitutional and procedural legal threats. Currently, drugmakers are in a period of strategic anticipation; because the GLOBE and GUARD models are still in the proposal and comment phase, they are not yet "ripe" for judicial review. Under the Administrative Procedure Act (APA), plaintiffs generally cannot sue to block a regulation until it is finalized and published in the Federal Register. Nevertheless, the comments currently being filed by industry lobbyists are meticulously crafted to preserve their right to challenge the models on several fronts. One primary legal argument involves the scope of the CMMI’s authority. Established under the Affordable Care Act, the CMMI was granted the power to test innovative payment and service delivery models. Industry lawyers argue that the mandatory, nationwide nature of the GLOBE and GUARD models exceeds the "pilot" or "test" authority granted by Congress, essentially claiming that the administration is attempting to legislate price controls without congressional approval.
Beyond the legal technicalities, the pharmaceutical industry is leaning heavily into the "innovation" narrative. Developing a new drug is an immensely expensive and risky endeavor, with industry-backed studies, such as those from the Tufts Center for the Study of Drug Development, estimating the cost of bringing a single drug to market at upwards of $2.6 billion. Manufacturers argue that the revenue generated from the U.S. market—the only major market without government-mandated price controls—is the primary engine for global biomedical R&D. If this revenue is curtailed by $27 billion through the GLOBE and GUARD models, they warn that venture capital will flee the biotech sector, leading to fewer clinical trials and a drought of new treatments for cancer, Alzheimer’s, and rare genetic diseases.
The GLOBE Model’s focus on Part B is particularly contentious because it disrupts the existing "Average Sales Price" (ASP) plus six percent reimbursement formula. Under the current system, doctors buy drugs and are reimbursed by Medicare at the average market price plus a small percentage to cover handling and administrative costs. The GLOBE Model would replace this with a "Target Price" based on international benchmarks. Critics within the medical community join drugmakers in worrying that if the Medicare reimbursement falls below the actual cost of purchasing the drug, physician practices—especially small oncology clinics—could face financial ruin, forcing patients to seek care in more expensive hospital settings or travel long distances for treatment.
The GUARD Model for Part D introduces a different set of complexities. Part D is currently managed by private insurance plans that negotiate discounts with manufacturers. The non-interference clause in the original Medicare Modernization Act of 2003 specifically prohibits the Secretary of Health and Human Services (HHS) from interfering in these private negotiations. Industry advocates argue that the GUARD Model is a back-door attempt to circumvent this law, potentially destabilizing the competitive bidding process that has kept Part D premiums relatively stable for over a decade. They suggest that if manufacturers are forced to lower prices to international levels for Medicare, they may compensate by raising prices for the commercial market or by delaying the launch of new drugs in the U.S. altogether.
Economic analysts have provided a mixed view of the administration’s projections. While the $27 billion in savings is a significant figure for the Medicare Trust Fund, some analysts suggest the long-term impact on the federal deficit could be offset by increased costs elsewhere in the healthcare system. For instance, if the lack of R&D leads to fewer preventative drugs, Medicare might end up paying more for hospitalizations and long-term care for chronic conditions that could have been managed with newer medications. Conversely, proponents of the MFN policy argue that the current pricing trajectory is unsustainable and that the threat to innovation is often exaggerated by an industry that spends more on marketing and stock buybacks than on fundamental research.
The political optics of this battle are equally striking. The "most-favored-nation" concept is a populist policy that breaks from traditional Republican orthodoxy, which typically favors deregulation and free-market competition. By proposing these models, the Trump administration has found itself in the unusual position of being attacked by its traditional allies in the business community while occasionally receiving cautious praise from progressive Democrats who have long championed government drug price negotiations. This realignment has created a volatile environment for drugmakers, who now find themselves fighting a two-front war against both the executive branch and a growing chorus of lawmakers in Congress who are eager to address rising out-of-pocket costs for voters.
Expert perspectives on the likely outcome of these legal challenges are divided. Some constitutional scholars point to the "non-delegation doctrine," a legal theory gaining traction in the current Supreme Court, which posits that Congress cannot delegate its core legislative functions to executive agencies. If the courts agree that the MFN models constitute a massive rewrite of Medicare law rather than a simple "demonstration project," the programs could be struck down. However, others note that the CMMI was given exceptionally broad discretion under the law, and courts often defer to the expertise of federal agencies in managing complex public programs like Medicare.
As the comment period continues, the biotech industry is also highlighting the potential impact on the "biosimilar" market. Biosimilars are lower-cost versions of complex biological drugs, and they are essential for creating sustainable competition in the Part B space. Industry experts warn that if the GLOBE Model artificially lowers the price of the original brand-name drug to international levels, the financial incentive for competitors to develop and launch biosimilars will vanish, potentially granting the original manufacturers a long-term monopoly without the pressure of market competition.
The pharmaceutical industry’s strategy is clear: delay the finalization of these rules through the administrative process and, once finalized, seek immediate injunctions in federal court. They are betting that the judicial system will view the MFN models as an overreach of executive power. Meanwhile, the administration remains firm, viewing these models as a necessary "jolt" to a system that they believe has allowed drug prices to spiral out of control for too long. Whether these programs will ever see the light of day or remain tied up in litigation for years is the multibillion-dollar question hanging over the healthcare sector. As the five-year timeline for these pilots looms, the stakes for Medicare’s fiscal health and the future of American medical innovation have never been higher. The coming months will determine if the "most-favored-nation" policy becomes a cornerstone of U.S. healthcare or a footnote in the history of administrative law.