Article 34 · Drug pricing
Medicare's new drug rebate test starts January 1st, and 2027 drug prices are the open question
Medicare, the US government health insurance program, starts a five-year test on January 1st, 2027 that ties some drug rebates to prices abroad. Our brief maps how drugmakers could respond.
What Medicare is paying for
Medicare is the US government health insurance program. The Centers for Medicare & Medicaid Services (CMS), a federal agency, runs it. Part B of Medicare covers drugs that clinicians give in doctors' offices and hospitals. CMS says Part B drug spending grew nearly four times as fast as drug spending across all payers between 2008 and 2021. It cites the Office of the Assistant Secretary for Planning and Evaluation at the Department of Health and Human Services.
On September 30th, 2026, CMS finalized a test called GLOBE, short for Global Benchmark for Efficient Drug Pricing. CMS Administrator Dr. Mehmet Oz leads the agency. GLOBE changes how CMS calculates the inflation rebate that drugmakers owe on certain Part B drugs. The new formula uses prices in a set of economically comparable countries as its benchmark. CMS says Americans pay more than four times as much for brand-name prescription drugs as people in other developed countries.
The test runs from January 1st, 2027 to March 31st, 2032. It applies to patients in a randomly selected set of areas, about 25% of Medicare beneficiaries who have Original Medicare as their primary coverage. CMS says selected patients may see lower out-of-pocket costs from April 1st, 2027. The final rule leaves out orphan-only drugs, plasma-derived products and certain cell and gene therapies.
Where launch prices stand
The test targets a price problem that is not shrinking. ICER, a US group that assesses whether drugs are worth their price, and West Health, a nonprofit, report that the median annual net launch price of a new drug reached $257,000 in 2025. Net means after rebates and discounts. That is 35% above $190,000 in 2022. Figure 1 shows both years.
The only dip came between 2024 and 2025, a drop of 2%. About one in four drugs launched in 2025 carried a net price above $500,000. Another 34% launched between $200,000 and $500,000. ICER and West Health conclude that US policy changes under recent administrations seem to have been ineffective, pharmaphorum, a trade publication, reports.
The CMS announcement describes a rebate formula. It mentions no cap on what a drugmaker can charge at launch.
Median annual net launch price of a new US drug
After rebates and discounts, US dollars
A second front: pharmacy middlemen
Pharmacy benefit managers (PBMs) run drug benefits for insurers and negotiate rebates with drugmakers. In late October 2026, Representative James Comer, a Kentucky Republican who chairs the House Committee on Oversight and Government Reform, sent letters to the three largest PBMs. They are CVS Caremark, OptumRx and Express Scripts.
Comer says independent pharmacies saw an unusual surge in burdensome audits after many backed his bill, the Pharmacists Fight Back Act. The bipartisan bill would require PBMs in the Federal Employees Health Benefits Program to reimburse pharmacies fairly for the actual cost of medicines and pay a reasonable dispensing fee. STAT, a health news outlet, reported the probe on October 26th, 2026.
The probe concerns audits and pharmacy pay. It does not concern Part B drug prices. Our brief asks whether it grows into a second front that lands in the same contracting season as GLOBE.
What the brief maps
The brief asks whether drugmakers and insurers finish their 2027 pricing deals before GLOBE takes effect. No source we reviewed shows how manufacturers are timing their 2027 prices. That timing is a modeled possibility, not a reported fact.
If nothing unusual happens, the calmer versions of 2027 look alike. Manufacturers and PBMs finish their deals on schedule. The PBM probe stays in committee or slips. Launch price growth cools, though the calm versions do not agree on a rate. Patients see little direct relief.
The rougher versions start when the pressures overlap. Deals get rushed and repriced after the fact, or the PBM probe widens while insurers and pharmacies are still negotiating. In those versions launch prices keep rising.
Dates to watch
These dates come from the brief. Each resolves on a public page, so any reader can check the result.
- January 1st, 2027GLOBE begins.
- April 1st, 2027Selected patients may begin to see lower out-of-pocket costs.
- April 30th, 2027CMS's second-quarter average sales price file, a public list of Part B drug prices, shows whether launch price growth cooled.
- June 30th, 2027Congress.gov shows whether a PBM audit or compliance bill has passed at least one chamber.
- September 30th, 2027The House Oversight Committee says whether its PBM probe has widened to rebate restructuring or copay cards.