A drug-pricing order pushed by the Trump administration aims to lower what Medicare beneficiaries pay out of pocket by tying certain U.S. prices to the lower amounts paid in peer nations. The policy runs on a most-favored-nation principle, and its centerpiece is a pair of payment models that federal officials have proposed but not finalized. By the end of 2025, 16 drug manufacturers had signed voluntary most-favored-nation agreements, an early sign of traction. Whether that translates into smaller pharmacy and coinsurance bills for seniors depends on rules still being written.
What the most-favored-nation approach proposes
The core idea is comparative. Under a most-favored-nation framework, the government would benchmark what it pays for certain drugs against the lowest prices paid by a set of economically similar countries, on the theory that Americans should not shoulder far higher prices than patients abroad for the same medicines. The administration has directed federal health agencies to pursue that benchmark through Medicare, and the Centers for Medicare and Medicaid Services has taken the lead on turning the concept into workable payment rules.
Progress so far is a mix of voluntary and regulatory tracks. CMS announced a prescription drug payment model intended to move American prices toward international levels, while 16 manufacturers separately signed voluntary agreements to participate by the close of 2025. Those voluntary commitments matter because they signal industry willingness, but they are not the same as a binding, program-wide rule that would reach every beneficiary.
Drugmakers have historically resisted most-favored-nation pricing, arguing that international benchmarks import price controls set by foreign governments and could discourage research spending. That resistance is part of why the administration has leaned on a mix of voluntary agreements and demonstration models rather than a single sweeping rule, and it is a reminder that the policy still faces industry pushback and potential legal challenges before it reshapes what Medicare pays.
The framing throughout is aspirational rather than accomplished. The order aims to lower costs, and the agreements point in that direction, yet the mechanism that would actually change what a senior pays at the counter is still moving through the rulemaking pipeline.
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The GLOBE and GUARD models still on the drawing board
Two specific models carry the policy forward, and both remain proposed rather than in force. The first, known as GLOBE, targets Part B, the side of Medicare that covers drugs administered in a clinical setting, with a performance period slated to begin October 1, 2026. The second, called GUARD, targets Part D, the outpatient prescription benefit, with a start date of January 1, 2027.
Each model is designed to reach roughly 25% of beneficiaries in selected geographic areas rather than applying nationwide from day one. That limited scope reflects the test-and-measure structure federal officials favor for major payment changes, allowing the agency to compare results in participating areas against the rest of the country before any broader rollout.
The split between the two models tracks the way Medicare itself is built. Part B drugs are typically infused or injected in a doctor’s office or clinic and billed through the medical benefit, which is the terrain GLOBE would cover. Part D drugs are the pills and prescriptions a beneficiary fills at a pharmacy, the domain GUARD would target. Testing each side separately allows the agency to measure whether international benchmarks behave differently across those two very different payment channels.
Because both models are proposals, their timelines and details could shift before they take effect. A start date on paper is not a guarantee that the model launches on schedule or in its current form, and a senior counting on lower prices from GLOBE or GUARD is counting on rules that have not yet been finalized.
Where the savings would reach a senior’s wallet
The stakes are concrete because of how Medicare splits costs. Beneficiaries generally owe about 20% coinsurance on Part B services, so the price the government negotiates flows directly into what a patient pays for many clinic-administered drugs. Lowering the underlying payment, in principle, shrinks that 20% slice. The federal Medicare cost rules spell out how coinsurance and deductibles stack up, and they are the reason a pricing change on the back end can show up on a patient’s bill.
On the Part D side, the connection is less direct but still real. Out-of-pocket costs there run through a plan’s own cost-sharing design, so any savings from the GUARD model would filter through Part D drug coverage rather than landing as a simple across-the-board discount. The size and timing of any relief would vary by plan, drug, and region.
Geography introduces another wrinkle. Because both models would operate only in selected areas covering about a quarter of beneficiaries, whether a given senior sees any effect depends in part on where they live and whether their region is chosen for the demonstration. Two people on the same drug in different parts of the country could have very different experiences during the performance periods, at least until any successful model is expanded more broadly.
The open question is whether the proposals survive contact with the rulemaking process and the drug industry intact. Sixteen voluntary agreements and two proposed models represent momentum, not settled savings. Until the models are finalized and the performance periods actually begin, the promise of lower out-of-pocket costs remains a stated goal rather than a line item a beneficiary can bank on.
This article was produced with AI assistance and reviewed against primary sources by The Money Overview editorial team.
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