HHS Proposes GUARD Model to Curb Medicare Drug Cost Increases
Published Date: 12/23/2025
Proposed Rule
Summary
The GUARD Model aims to help Medicare save money by changing how drug price increases are handled for certain medicines in Part D. This new plan could lower costs while keeping or improving care for people on Medicare. Comments on this idea are open until February 23, 2026, so now’s the time to weigh in!
Analyzed Economic Effects
5 provisions identified: 3 benefits, 0 costs, 2 mixed.
New Part D Rebate Test for Medicare
CMS proposes the GUARD Model to test a new way to calculate Part D inflation rebates for certain drugs starting January 1, 2027. The test aims to see whether this alternative rebate method would reduce Medicare and taxpayer spending while preserving or enhancing quality of care for people on Medicare.
Which Drugs Are In or Out
The GUARD Model would include sole‑source Part D drugs and sole‑source biological products in specific therapeutic categories (for example, Analgesics; Anticonvulsants; Antidepressants; Antineoplastics; Antipsychotics; Antivirals; Cardiovascular Agents; Blood Glucose Regulators; Respiratory Tract/Pulmonary Agents; and others listed in the rule). The model would exclude generics and biosimilars, any sole‑source product with annual application‑level gross covered drug costs below the GUARD minimum spend threshold, and drugs subject to a negotiated maximum fair price during the price applicability period.
Manufacturers May Owe International‑Benchmark Rebates
Under GUARD, CMS would set an applicable international benchmark price for each included drug using selected reference countries and would compare that benchmark to the Medicare net price (WAC minus rebates and discounts). If the Medicare net price is greater than the applicable international benchmark, the manufacturer would be required to pay a GUARD Model rebate that is deposited into the Medicare Prescription Drug Account; CMS would waive the existing Part D inflation rebate calculation and timing provisions for amounts the GUARD rebate replaces.
International Price Benchmarking Method
CMS would use a set of reference countries (Australia; Austria; Belgium; Canada; Czech Republic; Denmark; France; Germany; Ireland; Israel; Italy; Japan; the Netherlands; Norway; South Korea; Spain; Sweden; Switzerland; and the United Kingdom) and two methods to set an international benchmark: Method I (default) is the lowest country‑level average price adjusted by GDP (PPP); Method II (updated) can use manufacturer‑submitted across‑country average net prices adjusted by GDP (PPP). The applicable benchmark would be the greater of the default and updated benchmarks when both are available.
CMS Will Track Effects on Benefits and Cost Sharing
CMS will evaluate the GUARD Model by examining Medicare net spending and additional outcomes, including whether Part D plan benefits change for GUARD drugs and whether beneficiary cost sharing for those drugs is affected. The evaluation is part of the test to see if program expenditures fall while quality of care is preserved or enhanced.
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Key Dates
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