Biotech groups file 2nd suit to block Medicare GLOBE model

Three biotech trade groups that say they speak for more than one third of America’s biotech companies sued on Nov. 6 to stop GLOBE, Medicare’s mandatory Part B drug pricing model. It is the second federal suit against the model, and it landed 24 days before the rule takes effect on Nov. 30.

The Biotechnology Innovation Organization (BIO), Biocom California and California Life Sciences filed the 47 page complaint in the U.S. District Court for the Northern District of California as case 3:26-cv-13372. They ask the court to “declare GLOBE unlawful, vacate it, and permanently enjoin its enforcement.” HHS Secretary Robert F. Kennedy Jr. is the lead defendant. BIO announced the suit the same day.

The three counts

Count I says the rule exceeds CMS’s authority to test payment and service delivery models. That authority covers models that address a defined population with deficits in care, and the groups argue GLOBE does neither. Count II says GLOBE violates the Appropriations Clause and related statutes. Count III says it breaks separation of powers and nondelegation principles.

The groups say GLOBE makes drugmakers rebate the gap between U.S. Part B prices and prices in 19 other countries. “By finalizing the GLOBE model, CMS crossed the limits Congress placed on its authority,” said Joe Franklin, BIO’s chief legal and policy officer.

The complaint says GLOBE covers randomly selected ZIP code areas that hold about 25% of the Medicare Part B population. Most beneficiaries there pay no Part B coinsurance because supplemental coverage pays it, the groups argue. They add that “CMS does not dispute commenters’ estimate that only about 0.3% of beneficiaries would see any change in out-of-pocket costs under GLOBE,” citing the rule at 91 Fed. Reg. 62,982.

A smaller model than first proposed

CMS finalized GLOBE in the Federal Register on Oct. 2. The model starts Jan. 1, 2027. Rebates and lower coinsurance begin April 1, 2027, and the last performance year ends March 31, 2032.

The final rule counts 19 manufacturers at the start. Waivers for drugmakers in the voluntary GENEROUS Medicaid model cut that to four. CMS now expects about $80 million a year in Part B savings, down from about $2.3 billion in the proposal, as we reported on Oct. 27. The complaint says 27 manufacturers signed individual pricing deals with the administration from September 2025 through August 2026, and cites public reporting that those deals route most favored nation prices to Medicaid through GENEROUS.

PhRMA sued first

PhRMA filed its own challenge in the U.S. District Court for the District of Columbia on Oct. 7, five days after the rule published. That case is 1:26-cv-03498. PhRMA asks the court to declare GLOBE unlawful and vacate it in full. “GLOBE is unlawful and clearly exceeds CMS’ authority,” said Stephen J. Ubl, PhRMA’s president and CEO.

Two courts on two coasts now hold the same question about how far CMS’s Innovation Center can go in setting drug prices through a test model.

Why it matters: GLOBE reaches Medicare Advantage as well as Original Medicare. CMS put Medicare Advantage savings at $288 million over the life of the model, down from $7.5 billion proposed, and Part B net savings at $440 million after a $147 million premium offset. A court order that vacates GLOBE before April 1, 2027 would end the model before the first rebate is paid. The same question about CMS’s test model authority hangs over GUARD, the Part D companion model CMS proposed in December 2025 and has not finalized.

The suit also shows where the industry wants the cost fight to go. “We must address the glut of health insurance-owned middlemen who drive massive costs to our health care system and patients,” said Mike Guerra, president and CEO of California Life Sciences. Payers that own pharmacy benefit managers are the target of that line.