On February 11, 2025, President Trump signed Executive Order (E.O.) 14210,
Implementing The President’s “Department of Government Efficiency” Workforce Optimization Initiative, which instructed the newly formed Department of Government Efficiency (“DOGE”) to make changes to the federal workforce, such as restructuring agencies and eliminating certain positions. On March 27, 2025, the Department of Health and Human Services (HHS) announced a significant restructuring to “save taxpayers $1.8 billion per year” by eliminating agency positions throughout HHS, streamlining and centralizing functions, and implementing HHS' priority for eliminating chronic illness “by focusing on safe, wholesome food, clean water, and the elimination of environmental toxins,” among other priorities.
- HHS intends to eliminate 10,000 full-time employees across agencies (resulting in a total downsizing from 82,000 to 62,000 full-time employees, when combined with anticipated retirements), consolidate its current 28 divisions into 15 divisions (including new divisions) and reduce the number of regional offices from ten to five.
- While the Centers for Medicare & Medicaid Services (CMS) is not expected to experience a significant staff reduction, it is unclear where in the agency the cuts will occur and what effect, if any, such a reduction will have on key CMS activities, such as rulemaking, implementation of Inflation Reduction Act (IRA) provisions, the Medicare Advantage (MA) and Part D programs, and various Trump administration priorities, among others.
- The Food and Drug Administration (FDA) will undergo significant staffing reductions, which will likely have a ripple effect on regulated industries, patients, and consumers. Potential areas of concern include application review and/or action milestones established under the various user fee programs, as well as the FDA’s interactions with stakeholders.
- The Health Resources and Services Administration (HRSA) will be combined with other divisions, such as the Substance Abuse and Mental Health Services Administration (SAMHSA), to launch the new Administration for a Healthy America (AHA). It is unclear how, if at all, the 340B drug-discount program, which HRSA manages, will be affected by this consolidation.
- HHS also intends to reduce staff and centralize functions for the Centers for Disease Control and Prevention (CDC) and the National Institutes of Health (NIH).
Overview of the Present Regulatory Landscape
In its announcement about the Department-wide restructuring, HHS stated that it will ensure that Medicare, Medicaid, and other essential health services remain intact. However, several proposed changes directly affect the staffing capacity and structure of CMS and the FDA. Such changes may have a downstream effect on these agencies’ programmatic and regulatory functions.
Moreover, it is unclear how these proposed structural and personnel updates will affect rulemaking activities, particularly in the wake of several significant changes in administrative authority and processes. On June 28, 2024, the Supreme Court issued its opinion in Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce (“Loper Bright”), which struck down the doctrine of Chevron deference, thereby ending four decades of judicial deference to agency interpretations of ambiguous statutes. In a post-Loper Bright landscape, federal agencies are anticipated to be more cautious in rulemaking (i.e., by hewing closely to statutory language), and courts may be more likely to increase scrutiny on agencies. More recently, HHS on February 28, 2025 issued a policy statement rescinding the Richardson Waiver, thereby eliminating the requirement for HHS, and any agencies within HHS, to engage in notice-and-comment rulemaking for matters exempted under § 553 of the Administrative Procedure Act (APA)—that is, “agency management or personnel or to public property, loans, grants, benefits, or contracts.” 1
HHS: Office Closures and Consolidations Across Agencies
As part of the restructuring, HHS intends to eliminate 10,000 full-time employees across agencies, resulting in a total downsizing from 82,000 to 62,000 full-time employees, when combined with personnel taking early retirement or leaving their positions. HHS also intends to consolidate its current 28 agency divisions into 15 new divisions and reduce the number of regional offices by half, from ten to five.
This Department-wide restructuring follows an earlier announcement from HHS, on March 11, 2025, regarding changes to HHS’ Office of the General Counsel (OGC). The HHS-OGC restructuring includes consolidation of regional offices from ten to four; HHS-OGC offices in San Francisco, CA, Chicago, IL, Boston, MA, New York City, NY, Dallas, TX and Seattle, WA, will be closed, with offices in Denver, CO, Atlanta, GA, Kansas City, MO and Philadelphia, PA, remaining open.2 At present, HHS has not announced which regional offices will be closed, nor clarified if the Department-wide regional office closures will occur in the same geographic locations as the HHS-OGC consolidations.
We note, however, that HHS’ announcement does not seem to affect HHS’ Office of the Inspector General (OIG), therefore it is unclear what implications, if any, this restructuring will have on HHS enforcement activities under, for example, the False Claims Act (FCA), the Anti-Kickback Statute (AKS), and the civil monetary penalties statute.
CMS: Minor Reduction in Staff, Consolidation Across Agency
In its announcement, HHS explained that CMS will decrease its workforce by 300 full-time employees and will focus on “reducing minor duplication.” According to HHS, these reorganization efforts “will not impact Medicare and Medicaid services.” However, it is unknown where in CMS these cuts and structural changes will occur. It is also unclear what effect, if any, these changes will have on key CMS activities and programs, such as the annual rulemaking process, the Medicare Drug Price Negotiation Program (under the IRA), Medicaid waivers, the Center for Medicare and Medicaid Innovation (CMMI), the Medicare Advantage (MA) and Part D programs, and implementation of various Trump administration priorities, among others.
HHS additionally intends to establish a new Assistant Secretary for Enforcement to manage the Departmental Appeals Board (DAB), Office of Medicare Hearings and Appeals (OMHA), and Office for Civil Rights (OCR). Moreover, HHS announced that it will reorganize the current Administration for Community Living (ACL) by integrating its programs into other agencies under HHS, including CMS, noting this change is not anticipated to affect Medicare or Medicaid.
FDA: Larger Reduction in Staff, Streamlined and Centralized Processes
One of the most impactful changes involves FDA, which is set to see a reduction of approximately 3,500 full-time employees. Despite assurances from HHS that the proposed reductions “will not affect drug, medical device, or food reviewers, nor will it impact inspectors,” there are concerns about the broader implications of such a significant workforce reduction. The interconnectivity of the various personnel functions at the FDA (e.g., reviewers, inspectors/investigators, regulatory project managers, regulatory counsels, policy analysts, as well as other support personnel) is integral to the agency being able to meet its mission of promoting and protecting public health. It is highly unlikely that reductions in personnel, other than reviewers and inspectors, will not cause ripple effects that will negatively impact regulated industry, patients, and consumers.
One area of concern is the potential impact on application review and/or action milestones established under the various user fee programs. FDA relies heavily on user fees collected under programs like the Prescription Drug User Fee Act (PDUFA) to fund its review processes. A reduction in integral, non-review staff could strain the agency’s ability to meet the timelines and performance goals associated with these user fees, potentially leading to delays in the approval of new drugs and medical devices for the public. Additionally, FDA’s general responsiveness is likely to suffer, as remaining staff members may be overwhelmed by increased workloads and reduced support. This could lead to longer wait times for responses to inquiries, slower processing of applications, and a general decline in the efficiency and effectiveness of FDA’s operations.
The reduction in workforce is also likely to affect FDA’s general interactivity with stakeholders, including drug, biologic, and medical device manufacturers, as well as other entities that rely on timely and effective communication with the agency. With fewer staff members available to handle inquiries, provide guidance, and engage in collaborative efforts, the overall responsiveness of FDA is likely to diminish substantially. This, along with other efforts to reduce regulatory interference (see, e.g., E.O. 14192, Unleashing Prosperity Through Deregulation), may lead to a regulatory dark zone where regulated industry will be left to figure how to start or continue business operations in the absence of implementing regulations and/or policy guidance.
Lastly and also concerning is the potential for continued brain drain (with significant impact) across various functions and at all levels within FDA, which may prove somewhat challenging to reverse—at least, in the immediate term.
HRSA and SAMHSA: Consolidated into New Administration for a Healthy America (AHA)
HHS intends to create a new agency, the Administration for a Healthy America (AHA), by combining several existing divisions, including HRSA and SAMHSA: Agency for Toxic Substances and Disease Registry (ATSDR); National Institute for Occupational Safety and Health (NIOSH); and the Office of the Assistant Secretary for Health (OASH).
Currently, HRSA is authorized to administer the 340B Drug Pricing Program, which has recently been the subject of litigation. It remains to be seen how consolidating HRSA with other divisions to launch the new AHA will affect the covered entities and pharmaceutical manufacturers that participate in the 340B program, and how, if at all, this consolidation affects the ongoing litigation.
Implications for NIH and CDC: Reductions in Staff and Process Centralizations
HHS anticipates that CDC will decrease its workforce by an estimated 2,400 employees, and that NIH will decrease its workforce by an estimated 1,200 employees. HHS also recently announced that multiple NIH grants would be rescinded because they are inconsistent with President Trump’s Executive Orders. It is not clear whether, in light of the Department’s reorganization, additional NIH grants will be terminated.
Conclusion
Foley Hoag will continue to monitor the impact of this restructuring announcement on HHS and its agencies, such as CMS, FDA, and HRSA. In the coming weeks, Foley Hoag will host a public webinar to share further insights on policy implications for HHS and its agencies, following these personnel and organizational changes. Please do not hesitate to reach out with any questions.
1 As we noted in our analysis on the recission of the Richardson Waiver, CMS has its own special APA-like requirements that apply to the Medicare program, under § 1871(a)(2) of the Social Security Act; therefore, CMS is likely still required to engage in notice-and-comment rulemaking for most aspects of the Medicare program.
2 The HHS OGC restructuring includes establishment of a Chief Counsel for Food, Research, and Drugs.
