Here's the basic problem: Americans pay wildly more for prescription drugs than everyone else in the developed world. Medicare spending keeps climbing. And federal health officials are tired of it.

The Centers for Medicare & Medicaid Services rolled out two mandatory payment models on Monday that try to solve this by tying U.S. drug prices to what other wealthy countries actually pay. If a drug costs way more here than abroad, manufacturers would owe rebates to Medicare. The goal is lowering out-of-pocket costs for patients without sacrificing quality of care.

The first model, called GUARD (Guarding U.S. Medicare Against Rising Drug Costs), focuses on Medicare Part D drugs, the retail prescriptions older adults pick up at pharmacies. It would launch January 1, 2027, and run through December 31, 2031, with rebate reconciliation stretching into 2033. Public comments on the proposal are due by February 23, 2026.

CMS points to some pretty stark numbers to justify this. Gross Part D drug spending jumped from $121 billion in 2014 to $276 billion in 2023. That's nearly 10% annual growth, and by 2024, Part D represented roughly 30% of total U.S. drug spending.

The problem isn't just the price tags. High drug costs force older adults to skip doses or cut pills in half, which leads to worse health outcomes and ultimately higher costs down the line through hospitalizations and emergency care. GUARD would adjust inflation rebate calculations to reflect international pricing, bringing down net costs for certain medications and potentially improving medication adherence.

The second model, GLOBE (Global Benchmark for Efficient Drug Pricing), applies similar international pricing benchmarks to Medicare Part B drugs. These are typically administered in doctors' offices, hospitals, or clinical settings rather than picked up at a pharmacy. Think cancer treatments, autoimmune disease therapies, arthritis medications, and other drugs for chronic conditions.

GLOBE would start earlier, on October 1, 2026, and run through 2031, with reconciliation also continuing into 2033. Like GUARD, it requires manufacturer rebates when U.S. prices exceed what comparable countries pay.

CMS notes that Americans frequently pay three times more than patients in other developed nations for identical medications. Part B drug spending has grown even faster than overall national drug spending, making it a particularly urgent target.

Both models would establish benchmarks using manufacturer-reported international pricing data or other available sources. When U.S. prices exceed those benchmarks, manufacturers pay rebates that flow into the Medicare Supplementary Medical Insurance Trust Fund.

The proposals target medications where U.S. prices significantly exceed those in economically comparable countries, a gap CMS says has widened over time. Whether pharmaceutical companies will fight these models aggressively or accept them as inevitable remains to be seen, but the comment period should provide some early signals.