Trump Administration Pushes Two New Rebate Models, But Will They Help Patients?

By: Marcus J. Hopkins, Health Policy Lead Consultant, ADAP Advocacy

The Centers for Medicare and Medicaid Services (CMS) has released information about a new proposed mandatory pricing model—the Guarding U.S. Medicare Against Rising Drug Costs (GUARD) Model—that would assess the inflation rebate amounts paid for certain medications covered under Medicare Part D using a benchmark derived from international pricing information rather than using current domestic benchmarks (CMS, 2025).

Photo Source: CMS

The GUARD model is one of two pricing models being proposed by the Trump Administration—the other being the Global Benchmark for Efficient Drug Pricing (GLOBE), which would assess inflation rebates for drugs covered under Medicare Part B.

In both models, the Trump Administration plans to use modeling to employ drug “rebate models,” which are payment models ostensibly intended to lower the cost of medications by having drug manufacturers return a percentage of the purchase price to the buyers. These rebates are generally negotiated behind closed doors between payors, including pharmacy benefit managers (PBMs), insurers, and government programs, with drug manufacturers. Once those rebate amounts are set, drug manufacturers remit rebate payments to payors only after the drugs have been purchased and dispensed (SmithRx, 2025).

CMS's GUARD Model would attempt to reduce Medicare drug spending by tying prices to international benchmarks and collecting rebates from manufacturers when prices exceed those. 

Rebates, such as the proposed 340B Drug Pricing Program rebate model, can be an effective means of introducing cost savings into health care systems and indirectly helping patients, because they bring added transparency. In the case of the GUARD Model, they can also disadvantage patients. That is because the rebated price is not known at the time that the patient is dispensed the medication. Accordingly, out-of-pocket costs are calculated based on the higher "list" prices of drugs, forcing patients to pay more in deductibles, coinsurance, and copayments at the pharmacy counter.

In essence, the wider health care system may benefit from a rebate, but the patient may see no reduction in their costs. The 340B rebates differ from GUARD/GLOBE in that 340B rebates are specifically designed to be passed onto the consumer in the form of increased investment in/access to/savings for healthcare services. GUARD/GLOBE rebates are specifically designed to go to payors, with no requirements whatsoever that those revenues be reinvested or savings passed on.

Drug rebate models have been in place in the U.S. since the 1990s, with the creation of the Medicaid Prescription Drug Rebate Program (MDRP) under the Omnibus Reconciliation Act. They are also actively used in at least 31 European countries, including Italy, Portugal, Spain, France, Germany, and the United Kingdom (Vogler et al., 2012).

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The primary rationale behind these rebate models is that requiring manufacturers to pay rebates to payors incentivizes drug manufacturers to keep drug prices lower. While this might be true in nations where this is a single payor, such as those listed above, rebate models in the U.S. have objectively poorer outcomes.

Recent research from the Leonard D. Schaeffer Institute for Public Policy & Government Service out of the University of Southern California found that, on average, every $1 increase in rebates was associated with $1.17 increase in list prices, particularly for single-source drugs—a Food and Drug Administration (FDA)-approved medication available from only one manufacturer, often lacking a generic equivalent, and specifically the types of drugs that will be evaluated under both the GUARD and GLOBE models being proposed (Sood et al, 2020).

Another study examined rebates for 444 unique branded medications and found that, while drug manufacturers may increase list prices in order to offer larger rebates to payors, consumers—particularly those lacking health insurance coverage—experienced statistically significant increases in out-of-pocket costs for those medications (Yeung et al., 2021).

Decades of research confirm what people living with HIV/AIDS already know: out-of-pocket costs lead to skipped doses, delayed refills, or complete abandonment of prescriptions. 

Public health data from the Centers for Disease Control show that a significant share of people living with HIV/AIDS (PLWHA) report cost-related non-adherence. A 2019 study found that 7% of PLWHA in the U.S. reported non-adherence to prescribed dosing due to cost-related concerns, with another 4% reporting skipping doses, 4% reporting taking less medicine, and 6% reporting delaying medication purchases (Beer et al., 2019).

Sadly, PLWHA facing affordability challenges may delay or abandon medications because they are unable to afford out-of-pocket costs.  These cost-saving behaviors are directly associated with lower rates of viral suppression, poorer health outcomes, and increased strain on the healthcare system.

Research has also demonstrated that very small cost-sharing amounts can have outsized effects. Studies examining HIV prevention and treatment medications have found that prescription abandonment rates rise sharply when out-of-pocket costs increase from $0 to even $10 (Dean et al., 2024). Persistence on therapy drops as costs rise—a finding that should concern everyone.

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Put simply, when patients pay more, adherence suffers, and people's health suffers.

In order for rebates to truly result in lower costs for consumers, the U.S. would need to do away entirely with our multi-payor healthcare model, which requires different payors (both for-profit and government-based) each have to enter into pricing and rebate negotiations with drug manufacturers to set prices and rebate amounts.

Pressure campaigns are effective only when pressure is applied from all sides. While drug manufacturers are unlikely to abandon a revenue cash cow like the Medicare program, they still have non-Medicare-enrolled consumers onto whom they can push increased drug prices with few to no negative outcomes. Consumers have come to not only accept but also expect medication price inflation, especially when there are few, if any, viable comparable alternative therapies available to them.

What the GUARD and GLOBE programs are intended to do is force manufacturers to provide higher rebates for medications that CMS deems “too expensive.” This, they posit, will result in lower drug costs for seniors and those non-seniors who rely on Medicare for drug coverage. The reality is that those consumers will likely realize few, if any, net savings from these programs, so long as there are multiple payors willing to pay whatever price is needed to move medications to their customers.

Although the GUARD proposal may seem promising to some, it does not require that these rebates be automatically passed on to patients in the form of lower out-of-pocket costs. That central problem needs to be addressed before the proposal is finalized and implemented.

The proposal states that it hopes that lower GUARD prices will benefit patients. The proposal says that "[i]t is possible that in response to the alternative payments]" GUARD creates manufacturers might "reduce their net price" in an effort to reduce the GUARD Model rebate payments. If so, then there might be some chance that patients would benefit from the GUARD prices. 

But the "possibility" that GUARD "might" help patients at the pharmacy counter just is not good enough. ADAP Advocacy plans to submit public comment in response to these proposals that address the patient perspective.

Disclaimer: Guest blogs do not necessarily reflect the views of the ADAP Advocacy Association, but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about public health-related issues and updates.

References:

[1] Beer, L., Tie, Y., Weiser, J., & Shouse, R. L. (2019, December 13). Nonadherence to Any Prescribed Medication Due to Costs Among Adults with HIV Infection — United States, 2016–2017. Morbidity and Mortality Weekly Report, 68(49): 1,129-1,133 http://dx.doi.org/10.15585/mmwr.mm6849a1

[2] Centers for Medicare and Medicaid Services. (2025, December 29). GUARD (Guarding U.S. Medicare Against Rising Drug Costs) Model. United States Department of Health and Human Services: Centers for Medicare and Medicaid Services: Priorities: Overview: Innovation Models. https://www.cms.gov/priorities/innovation/innovation-models/guard

[3] Dean, L. T., Nunn, A. S., Chang, H. Y., Bakre, S., Goedel, W. C., Dawit, R., Saberi, P., Chan, P. A., & Doshi, J. A. (2024). Estimating The Impact Of Out-Of-Pocket Cost Changes On Abandonment Of HIV Pre-Exposure Prophylaxis. Health affairs (Project Hope), 43(1), 36–45. https://doi.org/10.1377/hlthaff.2023.00808

[4] SmithRx. (2025, March 21). How Drug Rebates Influence Prescription Costs for Employers. San Francisco, CA: SmithRx. https://smithrx.com/blog/how-drug-rebates-influence-prescription-costs-for-employers

[5] Sood, N., Ribero, R., Ryan, M., & Van Nuys, K. (2020, February 11). The Association Between Drug Rebates and List Prices. Los Angeles, CA: University of Southern California: Leonard D. Schaeffer Institute for Public Policy & Government Service. https://schaeffer.usc.edu/research/the-association-between-drug-rebates-and-list-prices/