The pharmaceutical industry has opened a new legal battle with the Trump administration over a Medicare drug-pricing initiative that would tie the prices paid for certain medicines in the United States to lower prices in other countries.
The Pharmaceutical Research and Manufacturers of America (PhRMA), the industry’s leading trade group, filed a lawsuit in federal court in Washington, D.C., seeking to overturn the administration’s GLOBE pricing rule.
The policy is designed to test a so-called “most-favored-nation” approach within Medicare Part B. Under the model, prices for certain drugs administered in hospitals would be influenced by what comparable countries pay for the same medicines.
At the heart of the industry’s challenge is whether the Centers for Medicare & Medicaid Services (CMS) has the legal authority to reshape Medicare’s drug-pricing system through a demonstration program without explicit approval from Congress.
PhRMA argues that Congress gave CMS authority to experiment with payment models, not to fundamentally replace the existing Medicare pricing framework.
The group’s general counsel, Jim Stansel, said the legal challenge remains important even though the final version of the policy is expected to affect relatively few manufacturers.
The administration has carved out drugmakers that have entered separate voluntary pricing agreements with the White House. As a result, the GLOBE model could eventually cover only a handful of pharmaceutical companies.
Industry officials nevertheless fear the policy could establish a precedent that survives beyond the current administration. They argue that a future government could rely on the same mechanism to impose broader drug-price controls.
The lawsuit names Health Secretary Robert F. Kennedy Jr., the Department of Health and Human Services, CMS and senior officials overseeing the pricing initiative as defendants.
The administration has defended the rule, maintaining that CMS is operating within authority specifically provided by Congress for testing new Medicare payment models.
Medicare provides health coverage to roughly 70 million Americans who are either 65 or older or qualify because of disabilities.
The pricing initiative has also been significantly scaled back from the administration’s original projections. HHS now estimates that the seven-year model could save Medicare Part B about $440 million. The agency had previously projected savings of approximately $11.9 billion under its proposed version.
The dispute is not the industry’s first confrontation with a Trump administration over international drug-price comparisons.
PhRMA successfully challenged an earlier most-favored-nation pricing proposal in 2020. That effort was blocked after a federal judge found procedural problems, including the administration’s failure to provide the public with the required opportunity to comment before moving ahead.
Trump has separately reached voluntary pricing agreements with more than two dozen pharmaceutical companies, including major manufacturers such as Pfizer, Eli Lilly and Novo Nordisk.
The new lawsuit now puts the administration’s revised approach under judicial scrutiny, with the pharmaceutical industry seeking to prevent what it sees as a potentially far-reaching expansion of Medicare’s authority to control drug prices.
