GUARD (Guarding U.S. Medicare Against Rising Drug Costs) Model

Background

Medicare prescription drug costs continue to skyrocket, with total Part D gross drug spending jumping from $121 billion in 2014 to $276 billion in 2023, an increase of nearly 10% annually. In 2024, Part D drug spending made up about 30% of overall gross drug spending in the United States.

Older adults who rely on these medications often experience financial strain and may deviate from prescribed care by skipping or cutting dosages to save money at the expense of their health. This, in turn, can result in greater severity of their conditions and higher-cost care episodes including emergency care and hospitalization. GUARD would reduce Medicare Part D drug spending for certain drugs on the Part D inflation rebate program drug list.

Aims

GUARD aims to:

• Reduce Medicare Part D prescription drug spending
• Potentially help make prescription drug coverage more affordable for people with Medicare Part D, enabling them to follow their prescribed care for optimal health outcomes and thus improve the quality of their care.

Innovation

GUARD would test changes to the calculation of the Medicare Part D inflation rebate amount that would modify the net price of certain drugs covered under Medicare Part D to reflect what other economically comparable countries pay.

Design

Under GUARD:

• CMS would test an alternative calculation for manufacturer rebates under the Medicare Part D Inflation Rebate Program that uses a benchmark derived from international pricing information instead of the current domestic benchmark.
• The new benchmark would be based on either manufacturer-reported international pricing information or available information to CMS for countries that meet certain GDP per capital and real economy size thresholds.
• Rebates paid by manufacturers would continue to be sent directly to the Medicare Supplementary Medical Insurance Trust Fund.

Participants in the model would be manufacturers of drugs covered by Medicare Part D.

How would rebates be calculated?

CMS would calculate the Medicare Part D inflation rebate amount using a benchmark derived from international pricing information instead of the current domestic benchmark. The benchmark would be based on either manufacturer-reported international pricing information or available information to CMS for countries that meet certain gross domestic product per capita and minimum real economy size thresholds.

What medications would be covered by the GUARD Model?

The GUARD Model would test changes to the Part D inflation rebate calculation for certain Part D drugs in the Medicare Part D Drug Inflation Rebate Program, including sole-source drugs and sole-source biologics that are in specific therapeutic categories. The following therapeutic categories are included in the Model: Analgesics; Anticonvulsants; Antidepressants; Antimigraine Agents; Antineoplastics; Antipsychotics; Antivirals; Bipolar Agents; Blood Glucose Regulators; Cardiovascular Agents; Central Nervous System Agents; Gastrointestinal Agents; Genetic or Enzyme or Protein Disorder: Replacement or Modifiers or Treatment; Immunological Agents; Metabolic Bone Disease Agents; Ophthalmic Agents; and Respiratory Tract/Pulmonary Agents.

Where would GUARD operate?

The model would be implemented in randomly selected geographic areas representing 25% of people who have a Medicare Part D plan.

Would this model qualify as an Advanced or Merit-based Incentive Payment System Alternative Payment Model (MIPS APM)?

No, health care providers would not be participants in the model and therefore it would not qualify as an Advanced or MIPS APM under the Quality Payment Program. 

• Press Release: GUARD Model
• Notice of Proposed Rulemaking