Pharma Lobby Sues Trump Administration Over Medicare Drug Price Cuts
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Blister packs of medication and US dollar bills illustrate prescription drug costs as PhRMA challenges the Trump administration’s proposed Medicare drug-pricing rule. Illustrative image. |
WASHINGTON — October 7, 2026
The Pharmaceutical Research and Manufacturers of America (PhRMA), the pharmaceutical industry’s leading lobbying group, has sued the Trump administration over a plan to link certain US Medicare drug prices to lower prices in other countries. The lawsuit seeks to overturn the policy, arguing that federal health officials have exceeded their legal authority.
The case, filed in the US District Court for the District of Columbia, challenges the administration’s GLOBE rule. The policy is designed to change prices for medicines administered in hospitals and covered under Medicare Part B by introducing a system based on prices paid in a group of comparable countries.
The rule is part of President Donald Trump’s broader effort to reduce prescription drug costs in the United States. Under a so-called most-favored-nation approach, prices would be benchmarked against those in other countries rather than determined solely under existing US arrangements.
PhRMA argues that the Centers for Medicare and Medicaid Services (CMS), which oversees Medicare, is using a program intended to test new payment models to make wider changes to the government’s drug-pricing system without approval from Congress.
“CMS” has authority to test certain models, PhRMA General Counsel Jim Stansel said, but he argued that the agency was effectively attempting to introduce a pricing structure that lawmakers have repeatedly declined to establish. He said the lawsuit was necessary even though the rule is expected to affect a relatively small number of manufacturers.
The group is also concerned that the policy could remain in place after separate voluntary pricing agreements between pharmaceutical companies and the White House expire. Attorney Rachel Turow, who is not involved in the case, said the challenge could also be intended to prevent future administrations from using similar regulatory methods to impose drug-price controls.
The rule’s expected impact has already been narrowed. The Centers for Medicare and Medicaid Services plans to exempt manufacturers that have reached separate voluntary agreements with the White House to reduce prices. As a result, the GLOBE policy could ultimately apply to as few as four drugmakers.
The government has also substantially reduced its estimate of the policy’s financial benefits. The Department of Health and Human Services now projects that the model will save Medicare Part B about $440 million over seven years, down from approximately $11.9 billion estimated when the proposal was first published last year.
The Department of Health and Human Services was not immediately available to comment on the lawsuit. In the finalized rule, however, the agency defended its authority, saying the model operated within a specific legal framework established by Congress for testing new approaches.
The lawsuit names Health Secretary Robert F. Kennedy Jr., the Department of Health and Human Services, CMS Administrator Mehmet Oz, CMS and officials involved in the agency’s innovation program. That program is responsible for running the drug-pricing pilot.
Trump has already reached voluntary agreements with more than two dozen pharmaceutical companies, including Pfizer, Eli Lilly and Novo Nordisk. The administration has presented such agreements as part of its effort to bring US medicine prices closer to those paid in other wealthy countries.
The dispute follows an earlier legal battle over similar pricing policies. In 2020, PhRMA successfully challenged a previous version of the most-favored-nation approach, which was invalidated on procedural grounds because the administration had moved forward without first allowing public comment.
The latest case will test the administration’s ability to use existing Medicare authorities to pursue international drug-price comparisons. Its outcome could affect not only the current GLOBE model but also the options available to future administrations seeking to lower government spending on medicines.
