Inflation Reduction Act, Healthcare Reform, and General Developments

Trump Executive Order Addresses Drug Pricing

On April 15, 2025, President Trump signed an executive order titled “Lowering Drug Prices by Once Again Putting Americans First.” The order includes various provisions that are relevant to the pharmaceutical industry, including the following:

• The Secretary of the Department of Health and Human Services (HHS) is instructed to, within 60 days, “propose and seek comment on guidance” for the Inflation Reduction Act (IRA) Medicare drug price negotiation program “for initial price applicability year 2028 and manufacturer effectuation of maximum fair price under such program in 2026, 2027, and 2028.”
• Also in connection with the IRA, the order directs the Secretary to “work with the Congress to modify the Medicare Drug Price Negotiation Program to align the treatment of small molecule prescription drugs with that of biological products, ending the distortion that undermines relative investment in small molecule prescription drugs, coupled with other reforms to prevent any increase in overall costs to Medicare and its beneficiaries.” Currently, the IRA provides that small molecule drugs can become negotiation eligible at the earliest seven years after approval, while biologics can become eligible 11 years after approval.
• Within one year, the Secretary is to “develop and implement a rulemaking plan and select for testing…a payment model to improve the ability of the Medicare program to obtain better value for high-cost prescription drugs and biological products covered by Medicare, including those not subject to the Medicare Drug Price Negotiation Program.”
• The Secretary is to “take action” within 90 days “to ensure future grants available under…the Public Health Service Act…are conditioned upon health centers establishing practices to make insulin and injectable epinephrine available at or below” the 340B ceiling price “plus a minimal administration fee” to individuals “with low incomes” who have a “high cost-sharing requirement” for these drugs, have a “high unmet deductible,” or have “no healthcare insurance.” The president’s proposed budget for HHS reportedly includes the same requirement (see the HHS budget discussion below).

Other provisions of the order address drug importation, stabilization of Part D premiums, accelerating the “approval of generics, biosimilars, combination products, and second-in-class brand name medications,” and improving “the process through which prescription drugs can be reclassified as over-the-counter medications.”

Sources: SmartBrief, StatNews (first article, second article), InsideHealth (first article, second article, third article, fourth article, fifth article), BioWorld, Bloomberg Law (first article, second article), 340B Report (first article, second article).

President Trump’s Budget Reportedly Includes Significant Cuts to HHS Funding

While the president’s budget has not yet been formally released, various reports indicate that it will propose significant cuts to the HHS budget, possibly amounting to a roughly 40% reduction in funding.

Sources: InsideHealth (first article, second article, third article), Bloomberg Law, Politico Pro, Stat, BioWorld.

For more updates on the shifting regulatory and legal landscape, visit our blog The Trump Administration: First 100 Days.

Administration Moves Forward With Tariffs on Pharmaceuticals

The Trump administration is reportedly moving ahead with a Section 232 investigation of pharmaceuticals, which may be the precursor for additional tariffs on pharmaceutical products.

Sources: BioWorld, Stat, InsideHealth, 340B Report.

Dr. Oz Outlines Policy Agenda for CMS

In a press release, Dr. Oz, the newly-appointed head of the Centers for Medicare & Medicaid Services (CMS), shared “his agenda and vision for the agency.” Among other things, the press release highlights providing “personalized solutions” so beneficiaries “can better manage their health and navigate the complex health care system” by giving them “the information they need about costs;” providing “health care providers with better information about the patients they serve and holding them accountable for health outcomes,” which includes streamlining “access to life saving treatments;” combatting “fraud, waste, and abuse to stop unscrupulous people who are stealing from vulnerable patients and taxpayers;” and “shifting the paradigm for health care from a system that focuses on sick care to one that fosters prevention, wellness, and chronic disease management.”

Source: InsideHealth.

Oral Arguments Held in Three Lawsuits Challenging the IRA

Oral arguments were held in three cases brought by manufacturers to challenge the IRA.

In Novartis Pharms. Corp. v. U.S. Dep’t of Health & Hum. Servs., No. 24-2968 (3d Cir. argued Apr. 8, 2025), Samir Deger-Sen of Latham & Watkins appeared for Novartis on April 8, 2025.

A second case, Novo Nordisk, Inc. v. U.S. Dep’t of Health & Hum. Servs., No. 24-2510 (3d Cir. argued Apr. 8, 2025), was heard in the same court on the same day.

Finally, Boehringer Ingelheim Pharms., Inc. v. U.S. Dep’t of Health & Hum. Servs., No. 24-2092 (2d Cir. argued Apr. 3, 2025) was argued before the Second Circuit on April 3, 2025.

Sources: InsideHealth, Bloomberg, Law360 (first article, second article, third article).

Check out the Latham roadmap to the IRA, which outlines the statutory provisions in a thoughtful order, while providing citations to the IRA for easy reference to the legislative text.

Stakeholder Discussions of the IRA Continue

Jonathan Blum, a former director of CMS’s Center for Medicare and Medicaid Innovation (CMMI) during the Biden administration, predicts that the IRA’s price negotiation program is likely to change in the future as policies are reconsidered. Blum noted that price negotiation is “…a program that’s going to calibrate to factors around access and price and drug pipeline” and believes that the negotiation framework CMS created will be “durable” under the new administration. He also defended the CMS policy of defining a “drug” for purposes of the negotiation program by reference to active moiety, stating that this policy “was a … judgment call and I think a different team could come to a different policy judgment,” and noting that “we felt it was the cleanest read of the law, that it was a way to preserve the integrity of the system [and] create kind of a level playing field from our vantage point for how we think about negotiation.”

Source: Pink Sheet.

Meanwhile, in testimony before the House Energy & Commerce health subcommittee, Craig Burton, executive director of the Biosimilars Council at the Association for Accessible Medicines, discussed how the IRA’s coverage requirement for biologics subject to a maximum fair price could impact biosimilars.

Source: InsideHealth.

Administration Pursues Deregulation Efforts

Pursuant to an executive order signed Feb. 19, 2025, federal agencies are required to share their deregulation plans with the White House Office of Management and Budget (OMB) by April 19, 2025.

Meanwhile, CMS has issued a request for information, citing yet another executive order, “seeking specific information from healthcare providers, researchers, stakeholders, health and drug plans, and other members of the public” to guide its deregulation efforts. Comments are reportedly due by June 10, 2025.

Source: InsideHealth (first article, second article, third article, fourth article).

Medicaid Drug Rebate Program (MDRP)

No developments to report.

340B Program

More States Adopt Contract Pharmacy Laws

Additional states have adopted or proposed legislation that would bar drug manufacturers from restricting contract pharmacy access, with some bills requiring covered entities to make disclosures regarding 340B discounts. We note that legislative action related to the 340B program may have occurred in other states but has not yet been reported in the trade press.

Source: 340B Report (first article, second article, third article, fourth article, fifth article).

Manufacturer Challenges to State 340B Laws Continue

Lawsuits challenging the 340B laws enacted by various states continue.

Sources: Law360 (first article, second article), Bloomberg, 340B Report (first article, second article, third article, fourth article, fifth article).

Impact of HHS Layoffs on 340B Program Remains Unclear

While it remains unclear how the layoffs and reorganization at HHS will impact the 340B program, stakeholders are speculating that oversight of the program could shift to CMS. The HHS reorganization was discussed in issue No. 43 of this digest. The president’s proposed budget for HHS reportedly also calls for 340B program administration to shift to CMS (see the HHS budget discussion above).

Source: 340B Report.

The HHS layoffs were also the subject of a hearing before the House Energy and Commerce Committee.

Sources: Politico, 340B Report.

Manufacturers Respond to HHS Filings in Rebate Model Litigation

The three manufacturers litigating to defend their 340B rebate models responded to HHS filings. The rebate model litigation was discussed in issue No. 43 of this digest.

Source: 340B Report (first article, second article).

Nevada Covered Entity Challenge of STD Clinic Terminations Continues

A Nevada healthcare system’s litigation against the Health Resources and Services Administration (HRSA), challenging the agency’s termination of some of its STD clinics from the 340B program, continues. HRSA reportedly acknowledged that some of the sites were in fact eligible for participation, while the status of other sites remains disputed. This litigation was discussed in issue No. 43 of this digest.

Sources: Bloomberg, 340B Report (first article, second article).

Medicare Part B

No developments to report.

Medicare Part D

No developments to report.

State Law Developments

Court Rejects Challenge to Colorado’s Prescription Drug Affordability Board

The US District Court for the District of Colorado granted summary judgment against a manufacturer challenging Colorado’s Prescription Drug Affordability Board (PDAB) and dismissed the case without prejudice, citing lack of standing. The court stated that an “upper payment limit” imposed by the PDAB “does not directly apply to a wholesaler's purchase from a manufacturer at the top of the supply chain,” and instead “applies directly only to downstream transactions for the actual sales and reimbursements of the prescription drug dispensed to Colorado consumers.” The court held that, for that reason, the manufacturer “is not subject to direct regulation” under the Colorado statute at issue and thus lacks standing.

Sources: Stat, Law360, Denver Post.