The Trump administration will soon implement two mandatory demonstration projects models in Medicare called GLOBE and GUARD that tie prescription drug prices to lower international benchmarks. Because drug manufacturers participating in a voluntary model in Medicaid called GENEROUS are exempted from GLOBE and GUARD, the projected cost savings are expected to drop by at least 71% compared to original estimates.

Internal correspondence from the Centers for Medicare and Medicaid Services obtained by Endpoint News through a freedom of information act request confirms that pharmaceutical companies that volunteer to take part in the GENEROUS model to reduce drug prices in Medicaid are spared from engaging in the parallel mandatory pilots in Medicare, GLOBE and GUARD.

A recently published Lancet study shows what the financial implications are for GLOBE and GUARD if 17 large pharmaceutical manufacturers, who signed deals with the Trump administration to be included in the GENEROUS demonstration project, get exempted. More than 71% of the projected cost savings disappear. This number is likely greater now than that an additional nine companies have joined the list of signatories. Without any exemptions, the programs were estimated to annually save Medicare’s Part B (physician-administered drugs) and Part D (outpatient pharmaceuticals), $5.2 billion and $6.4 billion, respectively.

GENEROUS Model in Medicaid

Under the Affordable Care Act, CMS can authorize the Center for Medicare and Medicaid Innovation to develop and test innovative payment models to reduce program expenditures in Medicaid or Medicare while preserving or enhancing the quality of care. Medicaid is the main public program providing health insurance coverage for low-resourced individuals; Medicare insures people over 65 and certain disabled individuals.

CMS announced last November a drug payment model designed to make so-called most-favored nation prices available to state Medicaid programs. Referred to as the “GENErating cost Reductions fOr U.S. Medicaid Model” or GENEROUS, the initiative — which aims to reduce Medicaid drug spending and improve uniformity of patient access to medications — is supposed to run from 2026 through 2030. Participation is voluntary, for both manufacturers and state Medicaid agencies. States will be able to access MFN level prices for drugs that they deem will offer them greater savings than what they currently achieve via conventional statutory and supplemental rebates. The benchmark prices are intended to be the second -lowest among a basket of eight comparator countries: Canada, Denmark, France, Germany, Italy, Japan, Switzerland and the United Kingdom.

The White House announced this week that 50 states have agreed to participate in GENEROUS. It should be noted, however, that these agreements are only letters of intent to participate in the demonstration project. The 50 states have not signed finalized, binding operational agreements. The deadline for this is Sept. 30.

GENEROUS is still shrouded in some degree of mystery. It isn’t clear, for example, how the agency is addressing the considerable challenges of developing MFN price indices. Identifying what foreign countries actually pay in terms of net prices isn’t simple. Frankly, there is no reliable way to do so. Most comparator countries don’t disclose net prices. And in the case of France, the French Senate voted to block pharmaceutical net price transparency to protect its healthcare system from the spillover effects of the MFN policy. Other countries such as Spain are following suit, passing laws to ensure that the steep discounts they negotiate stay hidden from view from any entity like CMS that is trying to establish international reference indices.

Moreover, companies appear to be offering only a limited number of their prescription medications to Medicaid at MFN prices. Conspicuously, GLP-1 medications appear to be excepted, which significantly reduces estimated savings.

GLOBE and GUARD Models in Medicare

CMS announced a mandatory Global Benchmark for Efficient Drug Pricing model in December 2025, aimed at lowering Medicare Part B (physician-administered) drug costs, specifically with respect to an estimated 80 medications that meet eligibility criteria. The model will deploy MFN price indices to calculate manufacturer rebates owed to CMS if United States prices exceed the benchmark. CMS says it’s applying the lowest net international prices to compute rebates. The planned start date is Oct. 1, 2026 and GLOBE will run for five years.

Analogous to GLOBE, CMS proposed a mandatory drug payment model called the Guarding U.S. Medicare Against Rising Drug Costs or GUARD in December 2025. It’s a five-year initiative starting in January 2027, which targets high-cost Medicare Part D pharmaceuticals by linking their prices to international benchmarks. The consulting firm Avalere health estimates than GUARD could impact more than 170 drugs.

All of the countries included in the GENEROUS model basket of comparators also in GLOBE and GUARD. Rounding out the list of 19 are: Australia, Austria, Belgium, Czech Republic, Ireland, Israel, Netherlands, Norway, South Korea, Spain and Sweden.

Notably, GLOBE and GUARD are pilots that only affect approximately 25% of Medicare beneficiaries in select geographic areas. These have yet to be determined. Contrary to GENEROUS where Medicaid enrollees won’t see lower co-payments as their cost-sharing is nominal to begin with, Medicare beneficiaries could see reduced co-payments (10% instead of the standard 20%) for eligible Part B medicines.

The Trump administration has made bold claims about how much GLOBE and GUARD will save Medicare. But most of those vanish once the exemptions are accounted for.