Most Favored Nation Drug Pricing: What Hospital Leaders Need to Know Before 2027
On October 2, 2026, CMS released the final rule for a new Medicare payment model built on a simple idea. If Medicare pays more for a drug than comparable countries do, the manufacturer owes a rebate. It is the latest step in a wave of Most Favored Nation Drug Pricing policy.
If you run a rural hospital pharmacy, you may wonder what this means for your budget, your billing, and your 340B program. The short answer is that hospitals are not the target, but the changes still deserve a look. This guide breaks it down in plain English, using federal sources.
Most Favored Nation Drug Pricing
The idea behind Most Favored Nation Drug Pricing is easy to state. The U.S. should pay no more for a medicine than comparable countries do. CMS says Americans pay more than four times as much for brand-name prescription drugs as people in other developed countries. MFN drug pricing policies try to close that gap.
MFN is not a single rule. It is a mix of efforts, including CMS payment models and pricing agreements the administration has announced with some drugmakers. This post focuses on the Medicare piece, since that is where hospitals feel it most.
International Reference Pricing 101
The main tool is international reference pricing. Regulators pick a group of countries, look at what drugs sell for there, and use those prices as a benchmark. CMS's model includes 19 countries, including Canada, Germany, Japan, and the United Kingdom. CMS adjusts prices for differences in each country's economy.
CMS chose countries that belong to the OECD and have an economy that is large enough and wealthy enough to compare with the United States. Under one method, CMS estimates the lowest international price. Under another, it uses an average of net prices that manufacturers voluntarily report.
The Most Favored Nation Drug Pricing Model for Medicare: GLOBE
CMS calls the Part B version of the Most Favored Nation Drug Pricing model for Medicare as the Global Benchmark for Efficient Drug Pricing (GLOBE) Model. It is mandatory for manufacturers of eligible drugs. Here is how it works:
Who participates: Drug manufacturers, not hospitals or clinicians.
Which drugs: Certain high-spend, single-source drugs and sole-source biologics given in clinical settings. Classes include oncology, rheumatology, immunology, ophthalmology, and endocrinology, with annual Original Medicare spending above $100 million.
What happens: If Medicare's price exceeds the international benchmark, the manufacturer pays a rebate to Medicare.
Who benefits: Patients in the model group, about 25 percent of Original Medicare Part B beneficiaries in randomly selected ZIP code areas, can get reduced coinsurance. Medicare Advantage is not included.
Key Dates to Mark
January 1, 2027: The model launches.
By January 16, 2027: CMS publishes the list of model ZIP codes.
April 1, 2027: Reduced coinsurance for GLOBE drugs begins.
March 31, 2032: The performance period ends.
CMS also plans to publish and update the list of GLOBE drugs every quarter. Manufacturer rebates go to the Medicare trust fund, and CMS will invoice them quarterly. CMS adds that all Medicare beneficiaries could see lower Part B premiums if the model produces savings.
Other Medicare Drug Pricing Moves to Watch
GLOBE is not only a part of the Most Favored Nation Drug Pricing model. CMS has proposed a similar model, called GUARD, for Part D. It has also announced a voluntary Medicaid model called GENEROUS. Check CMS for the latest status of each, because timelines for proposed and voluntary models can shift.
GLOBE itself tests a different way to calculate the Part B inflation rebate. It does not replace that program. Together, these efforts signal that Medicare drug pricing is entering a period of change.
MFN Drug Pricing for Hospitals: What Changes and What Does Not
Here is how Most Favored Nation Drug Pricing affects hospitals.
What Stays the Same
According to the CMS FAQ, providers are not participants in GLOBE, and they will not see a cut to the Medicare allowed amount. When a patient qualifies for reduced coinsurance, Medicare's payment is adjusted upward so the allowed amount holds steady.
CMS gives an example. With a $100 allowed amount and 10 percent coinsurance, the provider receives $90 from Medicare, and the patient pays $10. No separate billing system is required.
What to Watch
The quarterly list of GLOBE drugs, published by CMS
The ZIP code list, which helps you anticipate which patients qualify
Coinsurance collected up front, since a partial refund may be needed if you collect too much
Shifts in drug supply or prescribing patterns, which CMS says it will monitor, including moves from Part B to Part D
Where MFN Drug Pricing and 340B Meet
The 340B program is a different aspect. HRSA runs it, and qualifying hospitals use it to purchase covered outpatient medications at set ceiling prices. GLOBE is a Medicare payment model that works through manufacturer rebates and patient coinsurance. The CMS materials describe no change to 340B pricing, so track the two separately.
Orphan drugs remain a special case for critical access hospitals, rural referral centers, and sole community hospitals. HRSA says manufacturers are not required to offer 340B pricing on orphan drugs to these hospitals, though they may choose to. As the Medicare landscape evolves, it is wise to keep watching manufacturer discretionary pricing policies.
A Timeline-Based Game Plan for Rural Hospitals
Before January 1, 2027. Brief your pharmacy, billing, and finance teams on GLOBE. Review which of your Part B drugs fall in the targeted therapeutic classes.
In early 2027. Check the ZIP code list and the quarterly drug list. Make sure front-desk and billing staff know that coinsurance may differ for some patients.
All year long. Keep 340B records audit-ready and your orphan drug pricing list current. Policy news changes fast, but good housekeeping always pays off. A short monthly check-in between pharmacy, billing, and compliance is often enough to catch surprises early.
Steady Pricing Support in a Shifting Policy Landscape
New federal drug pricing models come and go. A well-run 340B orphan drug program stays a reliable way to find savings, whichever way policy turns.
340B Orphan Drug Solutions is a consulting firm built for rural safety-net hospitals. Founder Dr. Lisa Nezneski, PharmD, BCPS, and her team build orphan drug lists around your facility type, connect them to your split-billing process, and update them as manufacturer pricing changes.
Learn more about the orphan drug exclusion and our orphan drug consulting services.
Stay Ahead of the Next Drug Pricing Change
Policy news moves fast, and your pharmacy team should not have to chase every update alone. Contact us to talk through how today's drug pricing changes fit with your 340B and orphan drug strategy.
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