Do you get the feeling we’re being deluged with news from the federal government on health regulation? That’s because we are. On December 23, the Centers for Medicare and Medicaid Services (CMS) got into the act again, announcing two new major demonstration projects that seek to cut pharmaceutical costs.
The Medicare Guarding US Medicare Against Rising Drug Costs (GUARD) and the Global Benchmark for Efficient Drug Pricing (GLOBE) models are further expansions of the Trump administration’s obsession with a Most Favored Nation (MFN) pricing approach. It has been openly discussed by the Trump administration since the President’s first term.
Whereas GUARD addresses Medicare part D covered products, GLOBE is focused on lowering the price of part B products. Biologic products are involved in both the GUARD and GLOBE models; the former includes small molecules as well. The notification language for both are identical in that they seek to avoid entangling biologics with existing biosimilar competition. Instead, eligible products are “single-source” agents only. However, like the Medicare Fair Price (MFP) provisions of the Inflation Reduction Act, this approach does not eliminate the likelihood that significant reductions in revenues of today’s single-source biologics will likely deter biosimilar development for these biologic targets tomorrow. Importantly, drugs already subject to MFP negotiations are exempted from eligibility in GLOBE and GUARD.
According to CMS, the GLOBE demonstration program will begin in October 2026 and continue for 5 years. It will be a mandatory project covering randomly selected geographic regions that will represent one-quarter of the total Medicare fee-for-service population. The GUARD demonstration program, also with mandatory participation, will begin in January 2027 and also continue for 5 years. It will cover geographic regions that represent 25% of Medicare part D plan membership.
More on the International Drug Pricing Benchmark
In terms of the MFN approach, the GUARD and GLOBE demonstration projects are consistent: They leverage an international drug pricing benchmark as a reference for drug reimbursement. It is based on drug payments in countries with a per capita gross domestic product that is within 60% of the US, and with an economy at least $400 billion in size. That includes countries like Australia, the United Kingdom, Israel, Denmark, among several others.
Another question regarding the international drug pricing benchmark is how often it might be recalculated. One of the most obvious responses by pharmaceutical manufacturers is to raise their prices in other countries, thus raising the indexed price of a drug. Also, if the pharmaceutical industry is successful in delaying the launch of these MFN-based demonstration projects, it may have ample time to boost global prices a bit. I would imagine that a 5-year demonstration period will capture this trend. One thing can be sure—prices in other countries will not be going down, unless new biosimilars are introduced!
Biosimilar Price Competition and MFN Pricing
Will the MFN approach result in lower prices than simply facilitating existing biosimilar competition and speeding its arrival? Whereas a drug like adalimumab is primarily covered under part D and would fall under the GUARD model, provider-administered agents like natalizumab would be administered by a provider and fall under part B.
The two cases can be very different in terms of pricing competitiveness. In the adalimumab case, intense competition has led to prices that are a small fraction of the original WAC price. For natalizumab, only Tyruko competes with the reference product Tysabri, and thus the wholesale average cost (WAC) difference between the biosimilar and the reference product is only 20% (based on a Drugs.com comparison). If Medicare MFP is any reference, we may be seeing one-third lower prices under GLOBE and GUARD compared with current WAC prices.
Average Sales Price Considerations in GLOBE
Under the GLOBE part B model, an important question arises as to whether it might affect or even replace average sales price (ASP)–based reimbursement for buy-and-bill products. Upon further reading, the notification specified that would not be the case. It would work as follows: The drug manufacturer would pay a rebate to the government to account for any differences between the international index price and CMS’s purchase price. This reconciliation would be made after the provider’s buy-and-bill (and reimbursement) transaction is completed. Simply put, the provider’s payment is unaffected by the later rebate. It may not be so simple, however. The ASP is supposed to incorporate all discounts and rebates. There seems to be no provision in GLOBE that the new potentially large rebates associated with eligible biologics will not be incorporated into the ASP price (thus driving it, and provider reimbursements, down).
In Other Biosimilar News
Amneal Biosciences announced on December 22 that it received FDA approval for its denosumab biosimilar denosumab-mobz to be sold under the names Boncresa and Oziltus (referencing Prolia and Xgeva, respectively). Amneal is partnered with mAbxience (which is majority owned by Fresenius Kabi) on this biosimilar; Amneal is responsible for commercialization rights in the US. This is the eighth denosumab approval in the US.
This article was written by our Director of Content, Stanton Mehr. Stan is has been writing commentary and reporting news about the biosimilar industry since the submission of the first biosimilar 351(k) application to the FDA 12 years ago. Since that time, BR&R has been tracking the US biosimilar marketplace, with the industry’s original, comprehensive and updated database of biosimilar filings with the FDA.Â
