Health Care Watch: January 26, 2026
The following Federal Health Policy (FHP) Strategies Weekly Health Care Watch provides a summary of legislative and regulatory health care activities from January 18 – January 25. Where available, hyperlinks are included to the relevant documents. Please let us know if you have any questions or would like additional information on the items below.
FEDERAL HEALTH POLICY STRATEGIES UPDATE
We are pleased to announce that Jennifer Friedman has been promoted from Senior Vice President to Principal.
LEGISLATIVE UPDATE
FY 2026 Funding Bill
On January 20, House and Senate appropriators reached a bipartisan agreement on a fiscal year (FY) 2026 bill to fund the U.S. Department of Health & Human Services (HHS), setting discretionary funding at $116.6 billion – largely flat compared to FY 2025 – and rejecting proposed budget cuts and departmental reorganization plans.
On January 22, the House passed a multi-department FY2026 funding bill by a bipartisan 341–88 vote, advancing legislation that maintains funding for major public health agencies and includes bipartisan health policy provisions related to Medicare payment policies, including a two-year extension of telehealth flexibilities, and pharmacy benefit manager (PBM) practices. Many Senate Democrats have stated they will oppose the bill if it includes funding for ICE, making its passage far from certain. Government funding for many departments, including HHS and its agencies, expires on January 30.
House
On January 16, Energy & Commerce Committee Chairman Brett Guthrie (R-KY) and Reps. John Joyce (R-PA) and Morgan Griffith (R-VA) sent a letter to Minnesota Governor Tim Walz (D) and Temporary State Commissioner of Human Services Shireen Gandhi requesting communications, documents, and information related to Medicaid fraud, waste, and abuse. The request follows actions by the Centers for Medicare & Medicaid Services (CMS) auditing the state Medicaid program, freezing provider enrollment, and deferring payments on 14 high-risk programs. The lawmakers asked for a response by January 30.
On January 21, the Budget Committee held a hearing titled Reverse the Curse: Skyrocketing Health Care Costs and America’s Fiscal Future. The hearing examined the impact rising health care spending has on the national debt and economic outlook.
On January 21, the Judiciary Committee released a report concluding that CVS Health’s PBM, CVS Caremark, may have violated federal antitrust laws by using its pharmacy network contracts to restrict independent pharmacies from working with third-party pharmaceutical hub services. The Committee found that internal company documents showed that CVS changed network rules after studying competing hub models, potentially limiting competition and consumer access to lower-cost specialty medications.
On January 22, the Energy & Commerce Committee’s Health Subcommittee held a hearing titled Lowering Health Care Costs for All Americans: An Examination of Health Insurance Affordability. Witnesses included CEOs from UnitedHealth Group, CVS Health Group, Cigna Health Group, Elevance Health, and Ascendiun. Our summary of the hearing can be found here.
On January 22, the Ways & Means Committee held a hearing with health insurance executives. Witnesses included CEOs from UnitedHealth Group, CVS Health Group, Cigna Health Group, Elevance Health, and Ascendiun. Our summary of the hearing can be found here.
The House is in recess until February 2. The chamber may have to return early if the Senate passes a funding bill.
Senate
On January 21, Finance Committee Ranking Member Ron Wyden (D-OR) and 19 Democratic colleagues sent a letter to HHS Secretary Robert F. Kennedy, Jr., seeking information about HHS’ decision to abruptly terminate and then reinstate nearly $2 billion in congressionally appropriated grants administered by the Substance Abuse and Mental Health Services Administration (SAMHSA). The letter followed HHS’ announcement on January 13 to cancel more than 2,000 active SAMHSA grants supporting substance use disorder and mental health services, before reversing the decision on January 14.
REGULATORY UPDATE
On January 20, the Food & Drug Administration (FDA) released draft guidance on the use of minimal residual disease (MRD) and complete response (CR) endpoints in clinical trials supporting accelerated approval of multiple myeloma therapies. The guidance defines MRD as MRD negativity rate assessed in bone marrow by flow cytometry or sequencing in patients who have achieved CR or stringent CR. It provides recommendations for sponsors about how these endpoints may be used in trials for drug and biological products intended to treat multiple myeloma.
On January 21, FDA announced initial results from its ImportShield Program, launched in August 2025 to modernize oversight of imported products at U.S. ports of entry. FDA reported that the centralized program increased processing speed by 66%, expanded monthly review capacity by 33%, and reduced staff hours by approximately 20% by consolidating regional import review teams into a single national operation and enhancing information-sharing across ports.
On January 21, FDA issued a Request for Information (RFI) seeking public input on labeling and preventing cross-contact of gluten in packaged foods, with a focus on non-wheat gluten-containing grains such as rye and barley and on oats affected by cross-contact. FDA stated the RFI is intended to address data gaps related to adverse reactions, labeling practices, and ingredient disclosure to inform future gluten-related labeling priorities and potential regulatory actions, particularly for consumers with celiac disease.
On January 23, HHS announced it has ended the permitted use of human fetal tissue derived from elective abortions in HHS-funded research. HHS stated the policy applies across grants, contracts, and programs administered by the Department and supersedes prior National Institutes of Health (NIH) guidance. NIH is applying the policy to its intramural research program and all extramural research awards, including grants, cooperative agreements, and research and development contracts, with HHS indicating a shift toward alternative research models such as organoids, tissue chips, and computational biology.
WHITE HOUSE
On January 21, HHS Secretary Kennedy launched the nationwide “Take Back Your Health” tour in Pennsylvania, holding events at the State capitol and meeting with family farmers. HHS stated the events focused on the new Dietary Guidelines for Americans, food and nutrition policy, rural health priorities, and administration initiatives related to prescription drug pricing and public health.
On January 22, HHS announced the addition of former United States Attorney Scott Brady to the HHS Office of General Counsel to support Department-wide efforts to combat fraud. HHS stated Brady will focus on health care fraud, grant fraud, and federal program integrity as part of a broader initiative to strengthen enforcement and oversight across HHS programs.
On January 22, the Department of State and HHS issued a joint statement announcing the United States is terminating its membership in the World Health Organization (WHO). The Departments cited concerns related to WHO governance, pandemic response, political influence, and information-sharing practices, and stated that U.S. engagement with WHO going forward will be limited to actions necessary to effectuate withdrawal and protect public health.
On January 23, Vice President JD Vance announced that the United States will expand restrictions on non-military foreign assistance to bar funding for organizations that work on or promote abortion, diversity, equity and inclusion, or transgender-related policies abroad.
RULES AT THE WHITE HOUSE OFFICE OF MANAGEMENT & BUDGET (OMB)
Pending Review
CMS
Amendments to Rules Governing Organ Procurement Organizations (CMS-3409); Proposed Rule; 8/21/25
HHS Notice of Benefit and Payment Parameters for 2027 (CMS-9883); Proposed Rule, 11/14/25
Preserving Medicaid Funding for Vulnerable Populations – Closing a Health Care-Related Tax Loophole (CMS-2448); Final Rule, 11/17/25
Advance Notice of Methodological Changes for Calendar Year (CY) 2027 for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies; Notice; 12/04/25
Amending the Indirect Hold Harmless Threshold of Health Care-Related Taxes (CMS-2452); Proposed Rule, 12/31/2025
Administrative Simplification: Adoption of Standards for Health Care Attachment Transactions and Electronic Signatures (CMS-0053); Final Rule, 01/09/26
Interoperability Standards and Prior Authorization for Drugs (CMS-0062); Proposed Rule; 01/16/2026
Comprehensive Regulations to Uncover Suspicious Healthcare (CRUSH) (CMS-6098); Notice; 01/16/2026
Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals; the Long-Term Care Hospital Prospective Payment System; and FY 2027 Rates (CMS-1849); Proposed Rule; 01/22/2026
FDA
Evaluating the Safety of Antimicrobial New Animal Drugs with Regard to their Microbiological Effects on Bacteria of Human Health Concern; Guidance for Industry; Notice; 7/10/25
Postapproval Pregnancy Safety Studies; Guidance for Industry; Availability; Notice; 8/21/25
New and Revised Draft Q&As on Biosimilar Development and the Biologics Price Competition and Innovation Act; Draft Guidance for Industry; Availability; Notice; 11/26/25
New Clinical Investigation Exclusivity (3-Year Exclusivity) for Drug Products: Questions and Answers; Draft Guidance for Industry; Availability; Notice; 12/01/25
Substances Generally Recognized as Safe; Proposed Rule; 12/01/25
Medical Devices with Indications Associated with Weight Loss--Premarket Considerations; Guidance for Industry and Food and Drug Administration Staff; Availability; Notice; 12/18/25
General Considerations for the Use of New Approach Methodologies; Draft Guidance for Industry; Availability; Notice; 01/09/25
HEARINGS
Senate
Aging Committee
Truth in Labeling: Americans Deserve to Know Where Their Drugs Come From
January 29, 9:30 AM EST; 608 Dirksen Senate Office Building
Witnesses: John Gray, Dean’s Distinguished Professor of Operations, Fisher College of Business, The Ohio State University; Michael Ganio, Pharm.D., Senior Director, Pharmacy Practice and Quality, ASHP; Stephen Schondelmeyer, Pharm.D., Professor of Pharmaceutical Management & Economics, College of Pharmacy, University of Minnesota; Stephen Colvill, Assistant Research Director, Duke-Margolis Institute for Health Policy
REPORTS
Office of Inspector General (OIG)
On January 20, the HHS OIG issued its annual report identifying the top management and performance challenges facing the Department. The report, titled 2025 Top Management and Performance Challenges Facing HHS, outlines five key areas of concern: financial integrity, Medicare and Medicaid, public health, beneficiary safety, and cybersecurity. The report is intended to help HHS focus attention on these issues and asses progress in addressing them.
On January 21, the HHS OIG released its Fall 2025 Semiannual Report to Congresscovering oversight activity from April 1 through September 30, 2025. The report outlines OIG’s work to address fraud, waste, abuse and mismanagement across HHS programs. OIG's efforts during this period led to a total monetary impact of $2.43 billion.
On January 22, the HHS OIG released an audit finding that Maine made at least $45.6 million in improper fee-for-service Medicaid payments for rehabilitative and community support services provided to children diagnosed with autism. OIG found the payments did not fully comply with federal and state requirements due to deficiencies in required assessments and supporting documentation and determined that the federal share of $28.7 million should be returned.
Government Accountability Office (GAO)
On January 22, the GAO released a report titled Organ Transplantation: HHS Action Needed to Improve Lifesaving Program, which examined Health Resources and Services Administration’s (HRSA) efforts to assess weaknesses in the Organ Procurement and Transplantation Network (OPTN). GAO issued three recommendations to the HHS Secretary, specifically urging the agency to: (1) develop detailed plans for the next phase of the OPTN Modernization Initiative; (2) assess risks regarding OPTN contractor supplementary services and fees; and (3) ensure the action plan of the HRSA-CMS interagency Organ Transplantation Affinity Group (OTAG) includes specific steps and milestones for measuring success.
ADDITIONAL POLICY NEWS
On January 15, a study published in JAMA Network Open analyzed out-of-pocket spending for Medicare Advantage patients who used seven biologic medications that faced biosimilar competition from 2009 to 2022. The study found that mean annual out-of-pocket spending decreased from $233 before biosimilar competition began to $165 four years later, a decrease of $94. The decreases occurred for all seven drugs and were larger among patients who paid coinsurance or deductibles than those who paid only copayments.
On January 16, The Lancet Obstetrics, Gynaecology & Women’s Health published a large systematic review and meta-analysis and found that clinical evidence does not indicate a clinically important increase in the likelihood of autism spectrum disorder, ADHD, or intellectual disability in children of pregnant individuals who use paracetamol (acetaminophen) as directed, supporting existing recommendations on the drug’s safety. The review analyzed 43 studies, and researchers analyzed outcomes for 262,852 children assessed for autism, 335,255 evaluated for ADHD, and 406,681 assessed for intellectual disability.
On January 16, the Supreme Court agreed to hear a case between Amarin Pharma and Hikma Pharmaceuticals concerning the use of “skinny labels” for generic drugs. The dispute centers on Hikma’s generic version of Vascepa, which was approved in 2020 without Amarin’s later cardiovascular indication. The Court’s decision follows a 2024 appellate ruling that revived Amarin’s patent infringement claims related to Hikma’s marketing materials.
On January 19, a coalition of organizations led by the American Academy of Pediatrics expanded an existing lawsuit challenging change to the U.S. childhood vaccine schedule announced by HHS. The plaintiffs allege the revised recommendations, which reduce the number of recommended childhood vaccines from 17 to 11, were made without sufficient justification or consideration of impacts. A federal court in Massachusetts previously denied the administration’s request to dismiss the case.
On January 21, UnitedHealth Group announced it would voluntarily rebate any profits earned in 2026 from its Affordable Care Act (ACA) marketplace plans back to consumers. UnitedHealth Group reported it expects to cover approximately 1 million ACA marketplace enrollees in 2026.