Looking Ahead: House to Vote on Compromise Budget Resolution
On the heels of the U.S. Senate's passage of a compromise budget resolution, the U.S. House of Representatives is expected to consider the budget resolution on the floor this week. Speaker Mike Johnson (R-La.) will work to unify the Republican Caucus in the interim, as some members of the House Freedom Caucus and Republican budget hawks have expressed reservations about the Senate-passed resolution.
Hearings This Week: Rescheduled Energy and Commerce Markup to Include Key Healthcare Bills
Last week's full committee markup in the House Committee on Energy and Commerce was rescheduled due to changes in the House floor schedule. The markup will now be on April 8, 2025, at 10:15 a.m. The 26 bills noticed in last week's markup are expected to be included, including six healthcare-related bills that were advanced on a bipartisan basis by the committee last Congress:
- H.R. 1442, Youth Poisoning Protection Act
- H.R. 973, Setting Consumer Standards for Lithium-Ion Batteries Act
- H.R. 633, Tools to Address Known Exploitation by Immobilizing Technological Deepfakes On Websites and Networks (TAKE IT DOWN) Act
- H.R. 1664, Deploying American Blockchains Act of 2025
- H.R. 2444, Promoting Resilient Supply Chains Act of 2025
- H.R. 2480, Securing Semiconductor Supply Chains Act
- H.R. 1402, Transparency In Charges for Key Events Ticketing (TICKET) Act
- H.R. 1479, Hotel Fees Transparency Act of 2025
- H.R. 859, Informing Consumers About Smart Devices Act
- H.R. 2481, Romance Scam Prevention Act
- H.R. 617, American Music Tourism Act of 2025
- H.R. 2269, Wastewater Infrastructure Pollution Prevention and Environmental Safety (WIPPES) Act
- H.R. 906, Foreign Adversary Communications Transparency (FACT) Act
- H.R. 2449, Future Uses of Technology Upholding Reliable and Enhanced (FUTURE) Networks Act
- H.R. 2458, Secure Space Act
- H.R. 866, Removing Our Unsecure Technologies to Ensure Reliability and Security (ROUTERS) Act
- H.R. 2482, National Telecommunications and Information Administration (NTIA) Reauthorization Act of 2025
- H.R. 2399, Rural Broadband Protection Act of 2025
- H.R. 2037, OpenRAN Outreach Act
- H.R. 1717, Communications Security Act H.R. 2483, SUPPORT for Patients and Communities Reauthorization Act of 2025
- H.R. 2483, SUPPORT for Patients and Communities Reauthorization Act of 2025
- H.R. 1520, Charlotte Woodward Organ Transplant Discrimination Prevention Act
- H.R. 2319, Women and Lung Cancer Research and Preventive Services Act of 2025
- H.R. 1669, To Amend the Public Health Service Act to Reauthorize the Stop, Observe, Ask, and Respond (SOAR) to Health and Wellness Training Program
- H.R. 1082, Shandra Eisenga Human Cell and Tissue Product Safety Act
- H.R. 2484, Seniors' Access to Critical Medications Act
The Senate Committee on Health, Education, Labor and Pensions (HELP) will also hold a markup on April 9, 2025, on the Give Kids a Chance Act (S. 932) to increase access to lifesaving treatments for children with cancer.
Week in Review: CMS Administrator Confirmed Amid Upcoming Medicare Payment Rule Releases
Dr. Mehmet Oz was confirmed to be administrator of the Centers for Medicare & Medicaid Services (CMS) in a 53-45 vote. He will have several pressing issues to attend to now that he is confirmed, as CMS is expected to publish in short order payment rules related to in-patient services. The Senate voted to advance a compromise budget resolution following a series of overnight votes. The compromise budget resolution must now be passed by the House.
Administrative Updates
Executive Order Updates
The Trump Administration has continued to release wide-ranging Executive Orders (EOs). For real time updates, see our "Trump's 2025 Executive Orders: Updates and Summaries" tracking chart.
Pharmaceuticals Exempt from Global Tariffs, But Future Tariffs Remain Possible
President Donald Trump unveiled a plan to implement higher tariffs, including a 10 percent universal tariff on all goods imported into the U.S., starting April 5, 2025. Additionally, higher reciprocal tariffs will be applied to specific regions, including China, Japan and the European Union (EU), beginning April 9, 2025. While the plan includes some exemptions on pharmaceutical products, these could be subject to change, as the administration is considering a so-called Section 232 investigation into pharmaceuticals, which could lead to import duties.
OMB Memos on AI
On April 3, 2025, the Office of Management and Budget (OMB) released two artificial intelligence (AI)-focused memorandums, M-25-21, and M-25-22, with implications for the U.S. Department of Health and Human Services (HHS), including the U.S. Food and Drug Administration (FDA), CMS, National Institutes of Health (NIH) and other subagencies. Additionally, these memos are important for those in the AI-enabled software or AI/machine learning (ML) tool with healthcare applications, as the memos provide substantial insight on the Trump Administration's positioning on AI applications broadly. The memorandums repeal and replace memorandums were introduced under the Biden Administration, and some key continuities remain such as risk management for high-impact AI, emphasis on fairness/ethics and governance during the procurement of AI tools/products. However, M-25-21 and M-25-22 place greater emphasis on transparency, encouraging innovation and America First policies.
The first, M-25-21 – titled Accelerating Federal Use of AI through Innovation, Governance and Public Trust – repeals and replaces OMB Memorandum M-24-10, Advancing Governance, Innovation and Risk Management for Agency Use of AI. This memo aims to increase federal utilization of AI through increased innovation. M-25-21 directs agencies to implement minimum risk management practices for AI that could have significant impacts when deployed (high-impact AI) (as outlined in the Appendix) and to prioritize the use of AI that is safe, secure and resilient. When the high-impact AI is not performing at an appropriate level, M-25-21 asserts that agencies must have a plan to discontinue its use until actions are taken to achieve compliance with this memorandum. Further, if proper risk mitigation is not possible, M-25-21 concludes that agencies must cease the use of the AI. M-25-21 "reminds" agencies that "risk management practices for AI should be proportionate to the anticipated risk from its intended use."
The second, M-25-22 – Driving Efficient Acquisition of AI in Government – rescinds and replaces OMB Memorandum M-24-18, Advancing the Responsible Acquisition of AI in Government. This memo aims to promote market competition through the promotion of American-made AI while managing risk. The memo provides strategies for the assessment of AI performance, managing risk and increasing public trust through responsible acquisition. The memo directs agencies to:
- update agency policies to revisit and update where necessary existing internal procedures on acquisition to comply with the requirements of this memorandum and ensure the agency's use of the acquired AI that will conform to OMB Memorandum M-25-21
- maximize the use of American-made AI
- protect privacy
- protect intellectual property (IP) rights and use of government data
- spotlight AI acquisition authorities, approaches and vehicles
- contribute to a shared repository of best practices
- determine necessary disclosures of AI use in the fulfillment of a government contract
Notably, the memo does not govern the following:
- agencies' regulatory actions designed to prescribe law or policy regarding nonagency uses of AI
- agencies' assessments of particular AI applications because the AI provider is the target or potential target of a regulatory enforcement, law enforcement or national security action; or the agency is evaluating the AI application because it was used by a criminal suspect
- agencies' development of metrics, methods and standards to test and measure AI where such metrics, methods and standards are for use by the general public or the government as a whole, rather than to test AI for a particular agency application
- agencies' acquisition of AI to carry out basic, applied or experimental research except where the purpose of such research is to develop particular AI applications within the agency
- AI used incidentally by a contractor during performance of a contract (e.g., AI used at the option of a contractor when not directed or required to fulfill requirements)
- AI acquired for use as a component of a National Security System (NSS)
Legislative Updates
Compromise Budget Resolution: A Step Closer Toward Passage of Reconciliation Bill
On April 5, 2025, the Senate passed a compromise budget resolution intended to bridge the differences between House and Senate visions for reconciliation.
Both chambers previously passed different versions of a budget resolution earlier this year. The Senate's budget resolution previously directed some committees to increase spending on defense and border security by $350 billion while directing other committees to identify spending that could be reduced as a way to offset the spending increases. The Senate intended to pass two bills: one related to defense and border security, then a second to extend tax cuts from the 2017 Tax Cuts and Jobs Act (TCJA), which is set to expire this year. The House has a different vision, and its budget resolution provided for "one big, beautiful bill." The resolution directed the House Committee on Ways and Means to identify $4.5 trillion in spending increases to accommodate an extension of tax cuts from the TCJA to be offset by spending reductions identified by several committees, including the House Energy and Commerce Committee.
The compromise budget resolution passed by the Senate on April 5, 2025, encapsulates aspects of both chambers' visions. The resolution includes directions to House and Senate committees to provide their recommendations on what to include in a reconciliation bill by May 9, 2025 – a deadline that is largely symbolic.
House committees directed to identify savings include the following:
- Agriculture: $230 billion savings target
- Education & Workforce: $300 billion savings target
- Energy and Commerce: $880 billion savings target
- Financial Services: $1 billion savings target
- Natural Resources: $ 1 billion savings target
- Oversight and Government Reform: $50 billion savings target
- Transportation and Infrastructure: $10 billion savings target
House committees directed to identify new spending:
- Armed Services: $100 billion in spending increases
- Homeland Security: $90 billion in spending increases
- Judiciary: $110 billion in spending increases
- Ways and Means: $4.5 trillion in spending increases
Senate committees directed to identify savings:
- Agriculture: $1 billion savings target
- Banking: $1 billion savings target
- Energy and Natural Resources: $1 billion savings target
- Environment and Public Works: $1 billion savings target
- Finance: $1.5 trillion savings target
- HELP: $1 billion savings target
Senate committees directed to identify new spending:
- Armed Services: $150 billion in spending increases
- Commerce: $20 billion in spending increases
- Homeland Security & Governmental Affairs: $175 billion in spending increases
- Judiciary: $175 billion in spending increases
The compromise budget resolution includes different levels by which to increase the debt ceiling, with the House directed to include a $4 trillion debt limit increase and the Senate directed to include a $5 trillion debt limit increase in their respective bills. Senate and House leaders will have to address the different numbers in the final reconciliation package, which may also need to be considered separately pending updated projections on the "X-date," the date by which the Congressional Budget Office (CBO) believes the U.S. Department of the Treasury will no longer be able to meet existing financial obligations. Finally, the bill also includes language to allow committee leaders to revise the savings and spending targets, should committees not be able to achieve the targets set by the resolution.
Regulatory Updates
CMS Releases CY 2026 MA and Part D Final Rule
On April 4, 2025, CMS issued a final rule outlining changes to the Medicare Advantage (MA) and Medicare Prescription Drug (Part D) programs for plan year 2026. The calendar year (CY) 2026 MA and Part D Final Rate Notice were released on April 7, 2025.
The proposed rule, released in November 2024 under the previous administration, included a broad range of provisions. However, CMS is finalizing only a select number of policies. The rule finalizes proposed clarifications requiring MA and Part D plans to honor medical necessity decisions rendered as part of a prior authorization process, closes loopholes in MA appeals processes by explicitly defining organizational determinations eligible for appeal and codifies requirements designed to improve enrollee experience interacting with dual eligible special needs plans. Additionally, the rule finalizes proposals regarding vaccine and insulin cost sharing for Part D plans and requires all Part D plans to require network pharmacies to be enrolled in the Medicare Drug Price Negotiation Program's Medicare Transaction Facilitator Data Module (MTF DM). Also, most changes to the Star Ratings program have been delayed. However, one update was finalized: a revision to the breast cancer screening measure (percent of female plan members aged 40-74 who had a mammogram during the past two years) that will apply to the 2029 Star Ratings.
Notably, the agency is not finalizing the following proposals from the proposed rule:
- Enhancing Health Equity Analyses: Annual Health Equity Analysis of Utilization Management Policies and Procedures
- Part D Coverage of Anti-Obesity Medications (AOMs) and Application to the Medicaid Program
- Ensuring Equitable Access to Medicare Advantage Services – Guardrails for AI
While these provisions are not moving forward at this time, CMS acknowledged the widespread interest in AI regulation and indicated it may pursue future rulemaking in this area. CMS also noted that it will continue to evaluate several proposed regulations and policies to ensure alignment with the current administration's EO on deregulation. These include:
- the Health Equity Index Reward for the Part C and D Star Ratings
- annual health equity analyses of utilization management policies and procedures
- requirements for MA plans to provide culturally and linguistically appropriate services
- quality improvement initiatives and health risk assessments (HRAs) focused on equity and social determinants of health (SDOH)
MACPAC and MedPAC April Meetings
On April 10-11, 2025, the Medicaid and CHIP Payment and Access Commission (MACPAC) will hold its monthly meeting. MACPAC will discuss several timely healthcare issues, including key statistics and trends in Medicaid; payment and financing of Medicaid; access to special healthcare needs, including for children and youth, individuals with disabilities or those in need of home and community-based services (HCBS); AI and prior authorization; and other issues. Holland & Knight will provide key points covered during the sessions in the next edition of Health Dose. Register for the public meeting online.
The Medicare Payment Advisory Commission (MedPAC) will hold its monthly meeting on April 10-11, 2025. MedPAC will discuss reforming physician fee schedule updates and improving the accuracy of relative payment rates; structural differences between the prescription drug plan (PDP) and MA prescription drug (Ma-PD) markets; assessing the utilization and delivery of MA supplemental benefits; exploring the effect of MA on rural hospitals; paying for software technologies in Medicare; access to hospice and certain services under the hospice benefit for beneficiaries with end-stage renal disease and beneficiaries with cancer; and regulations, star ratings and Fee-for-Service (FFS) Medicare policies aimed at improving nursing home quality. Register for the public meeting online.
Administration Releases Drug Policy Priorities
On April 4, 2025, the Office of National Drug Control Policy (ONDCP) released its statement of policy priorities to address substance use in the U.S. The statement of priorities is not legally binding and lays out several key issues: reducing overdoses due to fentanyl, stemming the flow of illicit drugs into the country, addressing youth substance use and increasing access to treatment services. The Trump Administration is likely to fold these priorities into the "skinny budget" that will be released in the coming weeks, with additional funding to support these priorities likely to be included.
Judicial Updates
Courts Hold that Cell and Gene Therapy Companies Cannot Cover Fertility Preservation
A federal judge on March 31, 2025, blocked a company that offers cell and gene therapies from reimbursing patients for fertility preservation services. Due to the use of chemotherapy during the administration of some cell and gene therapies, many patients risk potential infertility issues as a result of their treatment due to exposure to cancer drugs. As a result, companies previously requested an advisory opinion from CMS to provide fertility preservation services as an exception to anti-kickback rules but sued after an unfavorable opinion was given. The court's ruling increases the potential that Congress may consider additional legislation to clarify whether anti-kickback statutes apply and whether to make exceptions for cell and gene therapies as they become more widely used to treat additional indications and conditions. This issue may also be addressed by recommendations from the Domestic Policy Council in response to President Trump's Feb. 18, 2025, EO on Expanding Access to In Vitro Fertilization.
Supreme Court Upholds FDA Authority on Banning Flavored E-Cigarettes
The U.S. Supreme Court ruled unanimously on April 2, 2025, that the FDA's decision to ban certain flavored e-cigarette products was lawful. E-cigarette manufacturers had previously challenged the FDA's decision to refuse authorization for their products, arguing the FDA's decision was arbitrary and capricious. The U.S. Supreme Court concluded in its opinion that the FDA had been consistent across guidance documents and was within its legal authority to deny marketing authorization due to the high risk to public health. Layoffs across the FDA, especially within the Center for Tobacco Products, has the potential to delay future reviews of marking applications for tobacco products.
Federal Judge Freezes $11 Billion in Grant Clawbacks
A federal judge in Rhode Island halted the Trump Administration from clawing back almost $11 billion in funding to state and local public health programs following a legal challenge from a coalition of states. The funding was pulled back due to claims from the Trump Administration that it was tied to the COVID-19 pandemic. Much of the funding was provided through COVID-19 relief packages, and despite a significant amount of funding being previously rescinded, the $11 billion was insulated from those recissions.
Lawsuit Challenges Indirect Cost Rate Changes by NIH
On April 4, 2025, the federal government requested that the court convert its March 5, 2025, preliminary injunction barring the NIH's indirect cost cuts from moving forward into a permanent injunction. In their motion for conversion, the Trump Administration noted that it hoped to expedite its ability to appeal to the U.S. Court of Appeals for the First Circuit on the case's merits once a final judgment was entered. The court agreed and issued a permanent injunction the same day. The ruling vacates the NIH's February 2025 guidance, which sought to cap indirect cost rates at 15 percent and permanently bars the agency from implementing the cap nationwide unless the federal government is able to successfully appeal.
FTC's PBM Lawsuit Paused
The Federal Trade Commission (FTC) paused for 105 days litigation against three major pharmaceutical benefit managers (PBMs) on April 2, 2025. The case, which alleges that the PBMs used illegal rebate programs to prevent less expensive insulin products from being included on drug formularies, had its status questioned after the Trump Administration dismissed two Democratic commissioners overseeing the case last month. FTC Chair Andrew Ferguson, who had initially recused himself, reversed his decision last week to ensure that the lawsuit can proceed.
Both Democratic commissioners have filed a lawsuit to reverse their terminations, arguing that commissioners cannot be removed without cause. The two remaining FTC commissioners – who are both Republicans – recused themselves from the case when it was launched for unspecified reasons, leaving no remaining commissioners to oversee the lawsuit. Although the FTC typically has five commissioners in total, three spots will remain vacant until President Trump nominates additional candidates to fill the seats.
President Trump previously said he wanted to limit the influence of the "middlemen" in the pharmaceutical industry, making the chances of additional administrative action to address the role of PBMs likely. In addition, Congress will continue its bipartisan focus on PBMs as it continues to identify a potential path forward for PBM sections of the December 2024 health package.
