Health Care Watch: May 19, 2025
The following Federal Health Policy (FHP) Strategies Weekly Health Care Watch provides a summary of legislative and regulatory health care activities from May 11 – May 17. 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.
LEGISLATIVE UPDATE
House
On May 11, Energy & Commerce Committee Chairman Brett Guthrie (R-KY) released budget reconciliation text to be marked up by the Committee. The health subtitle includes various policies such as:
Moratorium on implementation of rule relating to eligibility and enrollment in Medicare Savings Programs;
Medicaid provider screening requirements;
Work requirements for able-bodied Medicaid beneficiaries;
Increasing frequency of Medicaid eligibility redeterminations for certain enrollees;
Reducing FMAP for states that providing use their Medicaid program to provide benefits to undocumented immigrants;
Moratorium on implementation of rule relating to staffing standards for long-term care facilities under the Medicare and Medicaid program;
Prohibiting federal Medicaid and CHIP funding for gender transition procedures for minors;
Moratorium on new or increased provider taxes and state directed payments;
Expanding and clarifying the exclusion for orphan drugs under the Medicare drug price negotiation program;
Delaying DSH reductions; and
Banning PBM spread pricing in Medicaid and other reforms.
The Committee held a markup of the text on May 13 and 14, where the Committee voted 30 – 24, along party lines, to advance the health care section of their budget reconciliation text. The health subtitle can be found here and all other subtitles can be found here. A section-by-section summary can be found here.
On May 12, Ways & Means Committee Chairman Jason Smith (R-MO) released budget reconciliation text to be marked up by the Committee. The text makes the 2017 Trump tax cuts permanent, and, under the health subtitle, it expands health savings accounts, codifies the final 2019 regulations permitting Individual Coverage Health Reimbursement Arrangements (ICHRAs) and renames the policy as Custom Health Option and Individual Care Expense (CHOICE) arrangements, and allows individuals with High-Deductible Health Plans (HDHPs) to enroll in Direct Primary Care (DPC) arrangements. The Committee held a markup of the text on May 13 and favorably reported the bill along party lines. A section-by-section summary of the bill can be found here.
On May 14, the Appropriations Subcommittee on Labor, Health & Human Services, Education, and Related Agencies held a hearing to discuss the FY 2026 Department of Health & Human Services (HHS) budget. HHS Secretary Kennedy testified before the committee and received many questions and comments from Democrats stating that he was violating the Constitution by not spendingCongressionally-allocated funds. His opening statement can be found here.
On May 16, the Budget Committee began consideration of the House committees’ reconciliation policies. Chairman Jodey Arrington (R-TX) was forced to delay a vote on the legislation due to GOP defections on the committee who want to see additional Medicaid cuts. Negotiations will continue throughout the weekend to secure the necessary support. It is expected that the Medicaid work requirement implementation will be sped up from 2029 to 2027 and that termination of coverage for undocumented immigrants will happen more quickly as well. A committee vote is currently planned for the evening of May 18. Elsewhere, GOP moderates from blue states have concerns about the State and Local Tax (SALT) deduction threshold. Speaker Mike Johnson (R-LA) has stated that he is still aiming to advance the reconciliation package in the House by Memorial Day. Senate Majority Leader John Thune (R-SD) has targeted July 4 for Senate to have completed consideration of its bill.
Senate
On May 12, Sen. Angela Alsobrooks (D-MD) and Finance Committee Ranking Member Ron Wyden (D-OR), and Banking, Housing, and Urban Affairs Committee Ranking Member Elizabeth Warren (D-MA) filed a resolution of disapproval of HHS Secretary Kennedy.
On May 13, the Judiciary Committee held a hearing entitled PBM Power Play: Examining Competition Issues in the Prescription Drug Supply Chain. The hearing included testimony from industry leaders, academics, and pharmacists.
On May 14, the Senate Health, Education, Labor & Pensions (HELP) Committee held a hearing on the FY 2026 HHS Budget. HHS Secretary Kennedy testified before the committee and stated that he will spend congressionally allocated funding but deflected questions regarding agency cuts that have already happened. Some Republicans raised concerns about HHS cuts and their impact on various programs that affect businesses, farmers, children, and vulnerable populations.
On May 15, the Finance Committee voted 14-13 to advance the nomination of James O'Neill to be Deputy Secretary of the HHS and voted 19-8 to advance the nomination of Gary Andres to be an Assistant Secretary of HHS.
On March 15, Sens. Josh Hawley (R-MO) and Jeanne Shaheen (D-NH) introduced the No Handouts for Drug Advertisements Act. The legislation would amend the Internal Revenue Code to disallow tax deductions for expenses related to direct-to-consumer advertising of both prescription drugs and compounded medications. It also defines “direct-to-consumer advertising” as advertisements primarily targeted to the public through television, radio, direct mail, billboards, internet, social media, and other digital platforms.
REGULATORY UPDATE
On May 12, the Centers for Medicare & Medicaid Services (CMS) issued draft guidance for public comment on Initial Price Applicability Year (IPAY) 2028 and manufacturer effectuation of the negotiated maximum fair price (MFP) in 2026, 2027, and 2028. The draft guidance includes policies that aim to improve the transparency of the negotiation program, prioritize the selection of prescription drugs with high costs to the Medicare program, and minimize any negative impacts of the negotiated MFP on pharmaceutical innovation within the United States. Of note, under the draft guidance, key definitions like “drug” and “manufacturer” remain unchanged from previous rounds of negotiation but CMS is soliciting comment on how to treat fixed combination drugs in which one ingredient is not therapeutically active against the indicated disease for the purpose of determining qualifying single source drug (QSSD) status. A fact sheet can be found here. Comments are due by June 26, 2025.
On May 12, CMS issued a proposed rule entitled Preserving Medicaid Funding for Vulnerable Populations – Closing a Health Care-Related Tax Loophole. Specifically, the proposed rule would prohibit higher tax rates on Medicaid than on non-Medicaid businesses even if they pass the applicable statistical test. The rule would also bar the use of vague language to disguise taxes that target Medicaid. Based on how recently the state’s tax waiver was last approved, the rule would immediately end these loophole taxes. Comments on the proposed rule are due July 14, 2025. A fact sheet detailing the proposed rule can be found here. With the exception of providing authority for an up to 3-year phase-in, the same policy is contained in Section 44134 of the House Energy & Commerce budget reconciliation text.
On May 13, CMS’ Center for Medicare & Medicaid Innovation (CMMI) held a webinar to announce its new Make America Healthy Again Strategy. The strategy will focus on three main pillars: 1) promoting evidence-based prevention; 2) empowering people to achieve their goals; and 3) driving choice and competition. CMS also released a white paper detailing the strategy. CMS Deputy Administrator and Director of CMMI Abe Sutton led the webinar, discussing the strategy and stating that more information on new models and adjustments to existing models would be provided in the coming months
On May 13, CMS, in partnership with the Assistant Secretary for Technology Policy/Office of the National Coordinator for Health Information Technology (ASTP/ONC), announced that it is seeking public input on how best to advance a seamless, secure, and patient-centered digital health infrastructure. The request for information (RFI) invites input from patients, caregivers, providers, payers, technology developers, and other stakeholders on how CMS and ASTP/ONC can: 1) drive the development and adoption of digital health management and care navigation applications; 2) strengthen interoperability and secure access to health data through open, standards-based technologies; 3) identify barriers preventing the seamless exchange of health information across systems; and 4) reduce administrative burden while accelerating progress toward value-based, patient-centered care. The public comment period will be open through June 16, 2025. The RFI is available here
On May 13, the Food & Drug Administration (FDA) announced that it is initiating action to remove concentrated ingestible fluoride prescription drug products for children from the market.
On May 13, HHS and FDA announced next steps in Operation Stork Speed, an initiative that aims to ensure the safety, reliability, and nutritional adequacy of infant formula. FDA issued an RFI to begin the nutrient review process required by law for infant formula. Through the RFI, FDA is seeking public input to help determine whether existing nutrient requirements should be revised based on the latest scientific data. The agency also welcomes data on potential adjustments to existing minimum or maximum levels, recommendations for additional nutrients to consider, and how such changes may improve health outcomes. Comment are due by September 11, 2025. Further information on how to submit a comment can be found here.
On May 13, HHS and FDA announced the launch of a public RFI to identify and eliminate outdated or unnecessary regulations. The initiative is part of a broader federal effort to reduce regulatory burdens and increase transparency, in alignment with President Trump’s EO 14192, Unleashing Prosperity Through Deregulation. Under the directive, HHS Secretary Kennedy has committed the Department to a "10-to-1" deregulatory policy: for every new regulation proposed, at least ten existing regulatory actions will be rescinded. Under the EO, HHS will implement the following measures: 1) the 10-to-1 rule; 2) regulatory cost cap; 3) expanded scope; and 4) radical transparency. Comments are due July 12, 2025.
On May 15, FDA Commissioner Dr. Marty Makary announced that FDA will release a “massive framework” in the coming days that will outline a general approach for COVID-19 vaccine manufacturers and include the agency’s current thinking on approvals.
On May 16, the FDA cleared for marketing the first in vitro diagnostic device that tests blood to aid in diagnosing Alzheimer’s disease. The test, developed by Fujirebio Diagnostics uses a blood sample to detect the presence of plaques in the brain called amyloid that are thought to be linked to Alzheimer’s. The current method of detecting amyloid involves costly PET imaging scans of the brain. The FDA noted that “today’s clearance is an important step for Alzheimer’s disease diagnosis, making it easier and potentially more accessible for U.S. patients earlier in the disease.”
WHITE HOUSE
On May 12, President Trump issued an Executive Order (EO) entitled Delivering Most-Favored-Nation (MFN) Prescription Drug Pricing to America. This EO directs the U.S. Trade Representative and Secretary of Commerce to take action to ensure foreign countries are not engaged in practices that purposefully and unfairly undercut market prices and drive price hikes in the United States. The EO also directs HHS to communicate MFN price targets to manufacturers by June 11, 2025, and establish a mechanism through which patients can buy drugs directly from manufacturers at the MFN price. If manufacturers do not make “significant progress” in voluntarily offering their drugs at the MFN price, the EO directs CMS to take certain aggressive actions - including proposing a “rulemaking plan to impose MFN pricing.” A fact sheet detailing the EO can be found here.
On May 15, the Trump Administration announced that it is launching four projects aimed at revolutionizing pharmaceutical manufacturing in the United States using artificial intelligence, machine learning, and informatics. The program, called Equip-A-Pharma, is a collaboration between HHS, the Administration for Strategic Preparedness and Response (ASPR), the Defense Advanced Research Projects Agency (DARPA), and the private sector. Over the next year, each company and its partners will aim to show how their technologies can potentially make active pharmaceutical ingredients and specific finished drug formulations at the point-of-care.
A list of all administrative and health care-related EOs can be found here. FHP Strategies will update this document, as needed.
HEARINGS
Senate
Appropriations Committee
May 20; 10:00 AM; 124 Dirksen
A Review of the President’s Fiscal Year 2026 Budget Request for HHS
Witness: Robert Kennedy, Jr, Secretary, HHS
May 22; 10:30 AM; 124 Dirksen
A Review of the President’s Fiscal Year 2026 Budget Request for the Food and Drug Administration
Witness: Dr. Martin Makary, Commissioner, FDA
Committee on Homeland Security and Governmental Affairs
May 21; 2:00 PM; Hart 216
The Corruption of Science and Federal Health Agencies: How Health Officials Downplayed and Hid Myocarditis and Other Adverse Events Associated with the COVID-19 Vaccine
House
Oversight & Government Reform Committee
Subcommittee on Economic Growth, Energy Policy, and Regulatory Affairs
May 20; 10:00 AM; HVC-210
Mandates, Meddling, and Mismanagement: The IRA’s Threat to Energy and Medicine
Witnesses: Ben Lieberman, Senior Fellow, Competitive Enterprise Institute; Erin Trish, Co-Director, USC Schaeffer Center, Associate Professor, Department of Pharmaceutical and Health Economics, USC Mann School of Pharmacy; William McBride, Chief Economist and Stephen J. Entin Fellow in Economics, Tax Foundation.
RULES AT THE WHITE HOUSE OFFICE OF MANAGEMENT & BUDGET (OMB)
Pending Review
CMS
CY 2026 Hospital Outpatient PPS Policy Changes and Payment Rates and Ambulatory Surgical Center Payment System Policy Changes and Payment Rates (CMS-1834); Proposed Rule; 4/21/25
CY 2026 Changes to the End-Stage Renal Disease (ESRD) Prospective Payment System and Quality Incentive Program (CMS-1830); Proposed Rule; 4/24/25
CY 2026 Home Health Prospective Payment System Rate and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Competitive Bidding Program Updates (CMS-1828); Proposed Rule; 4/25/25
CY 2026 Revisions to Payment Policies Under the Physician Fee Schedule and Other Revisions to Medicare Part B (CMS-1832); Proposed Rule; 4/25/25
Patient Protection and Affordable Care Act; Marketplace Integrity and Affordability (CMS-9884); Final Rule; 5/2/25
REPORTS
Government Accountability Office (GAO)
On May 14, GAO released a report examining HHS priority open recommendations. GAO stated that in May 2024, it identified 35 priority recommendations for HHS. Since then, HHS has implemented four of those recommendations, including sharing data that helps ensure the reproducibility of Centers for Disease Control and Prevention (CDC) research, and increasing agencies' awareness of limitations related to cybersecurity. In May 2025, GAO identified four additional priority recommendations for HHS, bringing the total number of open priority recommendations to 35. These 35 recommendations involve the following seven areas: 1) leadership of public health emergency preparedness and response; 2) FDA oversight; 3) prevention and reduction of improper payments in Medicaid and Medicare; 4) public health and human services program oversight; 5) Medicaid program oversight; 6) Medicare payment accuracy and appropriateness; and 7) health care infrastructure, information technology, and cybersecurity improvements. GAO stated that implementing these priority recommendations could help improve the efficiency and effectiveness of key federal health care programs and funding.
Office of Inspector General (OIG)
On May 15, OIG released a comparison of average sales prices and average manufacturer prices for the fourth quarter of 2024. OIG found that in the fourth quarter of 2024, eight drug codes met CMS’ price-substitution criteria by exceeding the 5-percent threshold for two consecutive quarters or three of the previous four quarters. OIG is providing the eight drug codes to CMS for its review and stated that CMS should review the information to determine whether to pursue price substitutions that would limit excessive payments for Part B drugs.
ADDITIONAL POLICY NEWS
On May 10, Peter Gillooly, CEO of the Wellness Company, filed a formal complaint against Calley Means, Special Advisor to the HHS Secretary. The complaint accuses Means of abusing his HHS position and conflict-of-interest laws.
On May 12, Invivyd announced that it is launching a discovery program for a measles monoclonal antibody. The company stated that while measles vaccines are the most important tools to prevent measles infection, they have important limitations in post-exposure prophylaxis and are increasingly underutilized by sizeable populations in America due to restricted healthcare access or religious or personal views on the use of vaccines in general.
On May 13, UnitedHealth Group CEO Andrew Witty announced that he will be stepping down as CEO for personal reasons and will be replaced by Stephen Hemsley, UnitedHealth Group’s board chair and former CEO. Witty will serve as a senior adviser to Hemsley.