Newsletter · · Ashutosh Agarwal

Pharma Tariffs Take Effect While GLOBE Pricing Model Shrinks and Medicare Advantage Reshuffles - Healthcare Policy: Drug Pricing, IRA & Managed Care - Week of October 3, 2026

Healthcare Policy: Drug Pricing, IRA & Managed Care for the week of October 3, 2026. Podcast synthesis on the Section 232 pharma tariffs taking effect with exemptions decided case by case, CMS finalizing the GLOBE international reference pricing model with expected savings cut from $11.9 billion to $400 million as most-favored-nation deal signers are excluded, and a second straight year of Medicare Advantage upheaval with twelve insurers exiting, enrollment caps, HCSC halving its footprint, and a debate over whether the shakeout is ending or entering a second act.

Healthcare Policy: Drug Pricing, IRA & Managed Care

Week of October 3, 2026: Pharma Tariffs Take Effect While GLOBE Pricing Model Shrinks and Medicare Advantage Reshuffles

Intro

Three things happened this week that we had been waiting on, and none of them went quite as people expected.

First, the pharmaceutical tariffs took effect on September 29. But the rules for who gets out of paying them are still unclear. Second, Medicare's big experiment in tying drug prices to what other countries pay (called GLOBE) was finalized. It now covers so few companies that its expected savings fell by about 97%. Third, on October 1 insurers were finally allowed to talk publicly about their 2027 Medicare Advantage plans. The picture is a second straight year of upheaval, although the insurance brokers who sell these plans think the worst is behind us.

Underneath all three is the same pattern. The administration's threats on drug pricing have mostly done their job by pushing companies into voluntary deals. In Medicare Advantage, meanwhile, the money is tight enough that insurers are deciding where they simply won't do business.

TL;DR

  • GLOBE is now mostly leverage, not policy. CMS finalized its international reference pricing model for Medicare Part B drugs. Because companies that signed most-favored-nation (MFN) deals are excluded, only about four manufacturers are still covered. Expected savings fell from $11.9 billion to $400 million over seven years (Pink Sheet's Drug Fix).
  • Tariffs are live, but exemptions are case by case. The rest of the Section 232 pharmaceutical tariffs took effect September 29. Guidance tells companies that think they qualify for an exemption to email Commerce. No timeline and no appeals process were set (BioCentury, Simply Trade).
  • Medicare Advantage: a second year of disruption. Around 3 million seniors, possibly more, will have to change plans for 2027. Twelve insurers are leaving the market. About five dozen plans have capped enrollment. HCSC is cutting its Medicare Advantage footprint in half, just a year after paying $3.3 billion for Cigna's Medicare business.

What's new

1. CMS finalizes GLOBE, and it has been shrunk to almost nothing

Podcast: Citeline Podcasts, Drug Fix: CMS Finalizes GLOBE Model And US FDA Adcomm, Personnel Changes (Oct 2) Speakers: Kathy Kelly, Derek Ingerie and Sue Sutter of the Pink Sheet (journalists / pundit)

GLOBE is a required (not optional) Medicare test. It ties what Medicare pays for Part B drugs, the ones given in a doctor's office or clinic, to prices abroad. The final rule excludes every company taking part in "GENEROUS," a separate model under which companies agree to MFN pricing in Medicaid. Kelly explained that this "leaves only about four manufacturers left who would be covered." Based on information in the rule, those appear to be Biogen (and its Japanese subsidiary), Takeda and Daiichi Sankyo.

Several other categories are also excluded: orphan-only drugs, drugs that already face generic or biosimilar competition, and drugs that already have a Medicare-negotiated price. The result: CMS now expects GLOBE "to save $400 million over the seven years," compared with "projected savings of 11.9 billion" in the December proposal.

Kelly's view is that GLOBE and its Part D sibling, GUARD, "were basically being used as leverage by the administration to bring manufacturers to the table," and "that tactic seems to have worked." There is a detail worth watching. The exemption applies only in quarters when a company is actually in GENEROUS. GENEROUS currently ends in September 2030, while GLOBE runs to March 2032. Unless GENEROUS is extended, there's a window where "all of the generous participants could be subject to Globe." That could keep companies from walking away from their deals once President Trump leaves office.

On GUARD, Kelly expects it may be delayed until after the midterms, because the proposed rule admitted it "will save Medicare money, but it will actually raise costs for beneficiaries."

Why it matters: For large drugmakers with MFN deals, the worst-case version of international reference pricing is now off the table, at least through 2030. The pressure falls on the handful of companies without deals, mainly mid-sized and foreign firms.

2. Pharma tariffs are in effect, and exemptions are being decided by email

Podcasts: BioCentury This Week, Ep. 389 – IgA nephropathy, Overton hearing, reverse mergers' new look (Sep 29); Simply Trade, My Boy Only Breaks His Favorite Toys: Trade Uncertainty and Customs Readiness (Oct 2) Speakers: BioCentury's Steve, the show's policy reporter (journalist / pundit); Simply Trade host Cindy (customs practitioner)

The guidance came out late, only after BioCentury pointed out it was missing. Steve says it "leaves a lot of questions unaddressed." Some products are exempt automatically, "but many won't" be. Companies that think they qualify but don't get an automatic exemption were given "an email address and some questions" to answer. Decisions will be made "on a case-by-case basis by commerce and in consultation with other government agencies, including HHS." It isn't clear whether there is any appeal. He expects this to raise costs most for "small companies and mid-sized companies," especially those importing from China, Australia and Canada.

On the customs side, Simply Trade confirmed that the Section 232 pharmaceutical tariffs "took effect in part in July 31st and the remainder September 29th, 2026." Importers must now report the tariff number "regardless of whether the duty amount was zero." That means every pharma shipment gets logged, even ones that owe nothing.

Why it matters: The large companies with MFN or onshoring deals look protected. The risk is mostly with smaller importers, which now face an undefined process that could take a long time.

3. The 2027 Medicare Advantage map is out: fewer PPOs, more caps, more special-needs plans

Podcasts: Becker's Healthcare Podcast, Medicare Advantage Shifts and AI's Growing Role in Health Insurance with Jakob Emerson (Oct 1); Crain's Daily Gist, Illinois has talent. Does it have the capital to keep it? (Oct 2) Speakers: Jakob Emerson, Becker's payer reporter (journalist / pundit); Crain's John Aspland (journalist)

October 1 is the first day insurers can publicly discuss their 2027 plans. Emerson called it "essentially a parallel to what happened last year." Last year about one in ten Medicare Advantage members, "close to 3 million people," had to switch because their plan disappeared. Early estimates for 2027 are "around there, maybe even a little bit higher."

The playbook he describes:

  • Moving members from PPOs to HMOs. HMOs limit you to an in-network set of doctors, which gives the insurer more control over costs. "The PPO of the past is definitely disappearing."
  • Cutting extras like gym memberships and meal cards. Dental, vision and hearing coverage are staying.
  • Cutting broker commissions.
  • Capping enrollment, which is new this year. "About five dozen or so plans" have capped how many members they'll accept, which means "literally turning members away."
  • Growing special-needs plans (SNPs). These cover people eligible for both Medicare and Medicaid ("dual eligibles") or people with serious chronic illness. "It's a lot more profitable for them."

Twelve insurers are leaving Medicare Advantage for 2027. Eight of them are owned in whole or in part by hospital systems. Emerson notes that many hospital systems added health plans in the late '90s and early 2000s to diversify revenue, and "that's not their core strength." Some of these plans have only "10, 15,000" members.

The biggest single pullback is Health Care Service Corp. (HCSC), which runs Blue Cross Blue Shield plans in five states. Crain's reports it will go from 950 counties to 450 and from 31 states to 24. That comes "just one year after HCSC made a massive push" by buying Cigna's Medicare business for $3.3 billion. The reasons Crain's gives for the industry-wide retreat: "surging medical costs, lower federal payment rates, and reduced quality bonuses from Medicare's star ratings system."

Why it matters: National insurers are trading membership growth for margin, and regional and hospital-owned plans are leaving. Seniors are being pushed toward narrower HMOs and special-needs plans, and the plans left standing are picking up members whether they want them or not (see the debate below).

4. The regional plans say they're absorbing the exits and paying for someone else's risk scores

Podcast: Becker's Payer Issues Podcast, Medicare Advantage Market Disruption and the Future of Risk Adjustment with Ceci Connolly (Sep 30) Speaker: Ceci Connolly, CEO of the Alliance of Community Health Plans (ACHP) (industry insider; trade group for nonprofit regional plans)

ACHP's research with HealthScape found that in 2026 there was "a 10% decline in nationwide MA plan count," affecting 4.6 million beneficiaries who were told their plan was going away. ACHP's nonprofit members picked up many of them. Connolly says that's harder than it sounds, because the incoming members are often sicker and arrive "very abruptly." Network Health in Wisconsin saw what she called "this mini tsunami coming" and had to overhaul its infrastructure.

Her sharpest point was about risk adjustment, the system that pays plans more for sicker members. ACHP found "outliers that are collecting billions dollars more. That's billions, B as in boy." She said: "One or two of the national publicly traded companies are having significantly higher scores." Her fix is an "inferred risk model" that would "take the coders out of the equation." It would set payments from doctor visits, filled prescriptions and lab work, rather than from diagnoses that coders add to the record. "Risk adjustment was designed not as a profit center for big insurers."

Asked whether more exits are coming: "Yes, in a word." Her reasoning: "Those publicly traded companies, they answer to Wall Street. Our member plans, they answer to Main Street." She noted that ACHP plans are "thrilled if they have a 1% to 2% margin." Two small regulatory wins from CMS: plans can now cap enrollment in some cases, and they get some flexibility on risk adjustment for new members whose records they "may not … see … for up to 18 months."

Why it matters: This is a direct, on-the-record shot at the risk-scoring practices of the largest publicly traded Medicare Advantage insurers. If CMS moves toward an inferred-risk model, coding-heavy business models would lose the most.

5. Medicaid and the ACA: the coverage losses get closer

Podcasts: Becker's Payer Issues Podcast, Karen Ignagni on Affordability, Medicaid and the Future of Health Insurance (Sep 29); Tradeoffs, With Millions Expected to Lose Coverage, States Look for New Ways to Prevent Medical Debt (Sep 30); Health Care Rounds, The Trust-First Model Transforming Medicaid Care w/ Dr. Toyin Ajayi & Mike Roaldi, Cityblock (Oct 2) Speakers: Karen Ignagni, CEO of EmblemHealth and former head of AHIP (operator); Dr. Toyin Ajayi and Mike Roaldi of Cityblock Health (operators); Tradeoffs host Dan Gorenstein and Stanford economist Neil Mahoney (pundit / academic)

Tradeoffs set out the scale: "as many as 5.8 million folks could drop their Obamacare plans this year" after enhanced federal subsidies lapsed, and "millions more are expected to go uninsured" under the new Medicaid rules starting next year.

Ignagni noted that the administration recently announced $500 checks to nearly 1 million Americans in states that use the federal exchange. Her response: "The question is whether that is adequate." She called it "the kitchen table test for many families." Her bigger point was about who is losing coverage: "the subsidies were going to working families. Many of them are healthcare workers. They work in nursing homes. They work in home health." Cutting their coverage, she said, is "penny wise and pound foolish."

On Medicaid work requirements, EmblemHealth is making "a full court press." The problem, she said, is that "it's very, very unclear as to which individuals can get exemptions. For example, on work requirements, if you have cancer, you don't have an automatic" exemption. She expects "a number of people falling out" and more hospital bad debt.

Cityblock offered an operator's view from inside Medicaid. The last national round of eligibility checks removed "on the order of 15 to 20 million people." Roaldi said his company will feel less of the impact because its members "tend to be more acute, a higher percentage of them are going to be exempt from those work requirements." Ajayi said she isn't worried about the mechanics. She is worried that the cuts "came out of a budgetary decision" because health costs are "outpacing GDP growth and wage growth."

Why it matters: Medicaid insurers with healthier, working-age expansion members face the biggest membership losses in 2027. Plans serving the sickest members may come through relatively well. Hospitals take the bad debt either way.

The debate

Is the Medicare Advantage shakeout ending, or just starting its second act?

"The worst is behind us." The case comes from the people who sell these plans. On The Seven Figures Or Bust Podcast, Episode 277 – Several Carriers Recommission Plans In Many States! (Sep 30), the broker hosts (insiders on the sales side, with an obvious interest in the outcome) say "the two biggest carriers in the industry this month announced that they are recommissioning plans all across the country." In other words, they are paying brokers to sell plans they had stopped paying on. The host checked one carrier's 2027 lineup and found "a reduction in total plans that are non-commissionable by 19.5%." His reading is that cutting commissions was always a temporary step: carriers stop paying on a plan, then either close it or "slash benefits and recommission." He thinks "the worst of it is probably over when it comes to … the lasting aftereffects of the Inflation Reduction Act." He says there are "probably 3 states right now" in "really bad shape" and "47 that are in really good shape."

"It's happening again, and in some ways it's worse." Emerson (Becker's) expects plan terminations at or above last year's roughly 3 million, plus something new: enrollment caps at about five dozen plans. Connolly (ACHP) answered "Yes, in a word" when asked about more exits, and expects publicly traded insurers to keep cutting "until we can do some right sizing here on the policy side." HCSC cutting its footprint in half is the strongest evidence for this side. On Bright Spots in Healthcare, 2027 Medicare Advantage Strategy: What Plans Are Changing Now for 2029 Stars (Sep 29), an industry quality executive (pundit / vendor) described a new mood: "Four stars is good enough … We've got the membership we want." That's a sign plans are no longer chasing growth.

Our read: The two sides fit together. Insurers are bringing back broker commissions on plans they have already made less generous. So distribution is recovering, but the benefits seniors get are not. Margins are being repaired at the expense of benefits.

Is MFN pricing real pressure, or mostly a show?

"It worked, and the rules are now for show." The Pink Sheet team says the MFN deals took most of the force out of GLOBE. Ingerie's theory is that the rule was published to keep drug pricing in the news ahead of the midterms: "just publish it … even if it's sort of, it's not, it's pointless." On Telltales, Three Times GDP (Sep 30), the investor hosts (pundits) pushed back on the White House claim that MFN deals cover 90% of drug spending: "the White House has said this 90% figure, which is not correct, but … it's a large amount."

"It's real, and it's damaging." On Pharmaceutical Executive, A Leadership Call to Action for Biotech (Sep 30), the guest, a biotech leader promoting a new book (pundit / industry voice), called most-favored-nation pricing a "catastrophic approach to innovation" and the IRA "really damaging." He argued that politicians "cannot treat the industry as a political pinata just to get votes for one or two cycles when our drug discovery lasts 10 years."

The operator in the middle. Brian Hilberdink, President of US Human Pharma at Boehringer Ingelheim (operator), on Citeline's Strategic Intent (Sep 28), said BI was "one of the, you know, 17 companies that were approached by the administration for that initial MFN deal." He added that it's "the only company that's had three products negotiated through the IRA" Medicare process. He sees the real pressure outside the US: "nobody quite has that crystal ball yet of how things are going to play out … when we truly do have these kind of MFN bound launches." At home, "it is business as usual." His more telling comment was about how launches have changed: "10 years ago, it was kind of the default from plans was to cover the drug and then you negotiate. Now … the drug is blocked until you negotiate."

The names in play

  • Eli Lilly (LLY): Two clinical updates. On Squawk on the Street, 10AM Hour … New Eli Lilly Weight-Loss Data 9/30/26 (Sep 30), CNBC reported that Lilly's amylin-plus-tirzepatide combination produced "up to roughly 23 percent" weight loss at 48 weeks. That compares with "nearly 15 percent" for high-dose tirzepatide alone, in patients with obesity and type 2 diabetes. Side effects were higher, and Phase 3 trials start at year-end. Separately, on This Week in Cardiology, Oct 02 2026 (Oct 2), the cardiologist host (clinician / pundit) covered the 2,400-patient TRIUMPH-1 trial of retatrutide, published in the New England Journal of Medicine. It showed "a 24-25% reduction in body weight versus 4% for placebo," along with a 10 mmHg drop in systolic blood pressure. He also flagged a resting heart rate rise of "7 and 9 beats per minute in the highest doses," which "should give us pause" in patients with weak heart pumping function (heart failure with reduced ejection fraction).
  • Novo Nordisk (NVO): On STAT's The Readout Loud, 415: Mistrust in science and a juicy gene-editing lawsuit (Oct 1), reporter Elaine (journalist) described Novo's marketing shift. It now runs ads with slogans like "Live Lighter" and "Summer Glow Up" because "insurance coverage has stalled," and it is selling more directly to patients. Squawk on the Street also reported Novo data from Ro's telehealth platform showing patients can switch from injections to the Wegovy pill and keep losing weight over three months.
  • UnitedHealth / Optum (UNH): Emerson (Becker's) says UnitedHealthcare's AI assistant "Avery," which it calls "their answer to Siri," can call the doctor and book appointments for members. The target is 20 million members by year-end, out of more than 50 million.
  • CVS / Aetna (CVS): Aetna is building a similar AI navigator but is "a little bit behind," and "CVS … wouldn't tell us how many members have access to it" (Becker's).
  • Humana (HUM): Consumer podcast Friends Talk Money, Medicare Open Enrollment 2027 … (Part 1 of 3) (Sep 28), said "Humana is cutting 336,000 plan participants just in Illinois" (pundit; we couldn't confirm the figure elsewhere this week, and the same show's Part 2 gave a different national number).
  • Cigna (CI): It sold its Medicare business to HCSC for $3.3 billion a year ago, and HCSC is now cutting that footprint in half. Cigna got out at a good time.
  • Biogen, Takeda, Daiichi Sankyo: According to the final rule, these appear to be among the last companies still subject to GLOBE (Pink Sheet).
  • Boehringer Ingelheim (private): Covered by the MFN and IRA comments above. On This Week in Cardiology, its GLP-1/glucagon drug survodutide showed only "8% and 9%" weight loss against 4% for placebo in SYNCHRONIZE-2.

Read-throughs

  • PBMs (pharmacy benefit managers, the companies that run drug benefits for insurers and employers): Hilberdink welcomed "some of the PBM reform that's happening" and greater price transparency, and said the relationship with PBMs and payers, long "transactional and adversarial," is "evolving." On 13th & Park, Leslie Norwalk: Inside the Rooms Where America's Health Decisions Get Made (Oct 1), Leslie Norwalk (former insider; helped implement Part D at CMS) defended the original design. PBMs were the obvious way to deliver the benefit, and Part D "came in the first 10 years at about half the price of what they originally scored" ($535 billion). She acknowledged PBMs "have become controversial." Ignagni (EmblemHealth) went after the drugmakers instead, saying they earn "profits in the 20 to 25% range." She proposed that hospitals and pharma face a medical loss ratio (MLR) rule like insurers do. An MLR requires a minimum share of revenue to be spent on care.
  • Biosimilars / generics: GLOBE excludes drugs that already face generic or biosimilar competition. Once a cheaper copy exists, the drug falls out of international reference pricing. That is a modest plus for originators facing loss of exclusivity, since they avoid a second price cut. The podcasts didn't discuss generic tariff treatment this week.
  • Ex-US: MFN is changing how drugs launch abroad. Hilberdink says BI is "working with payers in other marketplaces" to keep launching outside the US. BioCentury expects tariff exemptions to be hardest for products made in China, Australia and Canada. On Sinica, From Barefoot Doctors to Biologics (Sep 29), the guest noted China is producing "very cheap GLP-1s," which has led Lilly to sign multi-billion-dollar licensing deals with Chinese companies. Novo also signed a $300 million upfront deal (up to $2.6 billion total) for a once-weekly GLP-1/GIP pill that hasn't been tested in humans yet (On The Pen GLP-1 News, They TRIPLED Wegovy Dose, Does it Beat Zepbound?, Oct 1).
  • Medicaid / exchange insurers: Expect 5.8 million possible ACA drop-offs, plus Medicaid work requirements whose exemptions remain unclear. On The Clark Howard Podcast, Health Insurance Sticker Shock (Oct 2), Howard (consumer pundit) expects exchange premiums up "20% next year" in states where many people are dropping coverage, and "10 or so percent" elsewhere. When healthier people leave, the remaining members are sicker. That pushes premiums up and drives more people out.
  • Optum-style services: UnitedHealth's AI navigator rollout and Aetna's version point to a widening technology gap. Emerson: "they're the only ones that can invest in this kind of technology … that's more bad news for the small guys." Cityblock's Roaldi made the case that value-based care, where providers are paid for results rather than per visit, matters more now: "There's no incentive to commit fraud in value-based care. There's every incentive to keep members enrolled."
  • Hospitals (HCA, THC, UHS): Ignagni went after hospital pricing. She cited a Yale study in JAMA finding rising unit prices "fueled 90% of the growth in expenditures from 2011 to 24." She also pointed to "hospitals that are over 400% of Medicare." Hospital-owned health plans are leaving Medicare Advantage (eight of the twelve exits). Both Ignagni and Tradeoffs expect more bad debt as coverage losses build. Tradeoffs and KFF Health News' new "Hidden Help" series looks at state efforts to make hospitals automatically discount or forgive bills. If that spreads, hospitals would collect less from patients.
  • GLP-1 exposure: The Medicare GLP-1 "bridge" program, which charges a $50 monthly copay compared with $500+ otherwise and runs through 2027, came up on clinician podcasts this week, including The Dr. Francavilla Show, Wegovy, Zepbound and Obesity Care for Older Adults (Sep 28). For Part D plans, the next wave of more effective drugs (retatrutide, amylin combinations) keeps cost pressure on through 2027 and beyond. Novo moving toward direct-to-consumer sales shows that private coverage for obesity drugs is not growing.

What changed

  • Tariffs: scheduled → in effect. Last week the September 29 date was pending and guidance hadn't been issued. Now the tariffs are live, and guidance is out but incomplete, with exemptions decided case by case through Commerce and HHS.
  • GLOBE: threat → mostly symbolic. Expected savings fell from $11.9 billion to $400 million, with about four manufacturers still covered. This confirms that the MFN deals signed in recent months were the administration's real goal.
  • Medicare Advantage: projections → public landscape. Last week's plan cuts are now confirmed and larger. Twelve insurers are exiting, about five dozen plans have enrollment caps, and HCSC is cutting its footprint by more than half. The new counter-signal is that the two biggest carriers are paying brokers again.
  • Risk adjustment: After a quiet stretch, RADV audits (CMS's reviews checking whether diagnoses that raised a plan's payments are backed by medical records) are back in the conversation. On Becker's Payer Issues Podcast, Beyond Star Ratings: What High-Performing Medicare Advantage Plans Do Differently (Sep 28), an industry consultant (pundit) said CMS is expanding RADV audits. For 2027 it is keeping the 2024 risk model but excluding diagnoses from audio-only visits and most "unlinked chart review records." CMS also "removed 11 measures" from Star ratings to put more weight on outcomes and patient experience.
  • Still quiet: The IRA negotiation and the 2028 selected drug list, the "pill penalty" fix, and the 2027 Star ratings release itself got no real podcast discussion this week.