Trump Signs Executive Order to Reduce U.S. Drug Prices with “Most-favored Nation” Policy and CMS Establishes Pricing Targets

By Squire Patton Boggs on June 17, 2025 Posted in Executive Actions, Pharmaceutical

On May 12, President Trump signed an executive order entitled “Delivering Most-Favored Nation Prescription Drug Pricing to American Patients” (the “Order”). At the core of the executive order is a commitment to most-favored nation (“MFN”) pricing for drugs sold in the U.S. Under MFN pricing, Americans would pay no more for prescription drugs than the lowest prices for which those drugs are sold in other developed countries. To implement MFN pricing, the Order directs the U.S. Trade Representative and Secretary of Commerce to take steps against foreign nations that the Administration believes to be suppressing drug prices abroad in ways that unfairly shift higher costs onto American consumers. It also instructs the Administration to communicate clear pricing targets to pharmaceutical companies, reinforcing that U.S. consumers should receive the most favorable pricing. Further, it directs the Secretary of Health and Human Services to establish a mechanism through which American consumers can buy drugs directly from manufacturers rather than intermediaries. Lastly, the Order instructs the Secretary of Health and Human Services to impose MFN pricing through regulations on drug manufacturers that do not voluntarily adopt MFN pricing and to take other steps to reduce the costs of drugs for U.S. consumers.

Reconciliation Bill Provisions Targeting Tax-Exempt Organizations Affect Hospitals

By Stacey Grundman on May 29, 2025 Posted in Hospitals, Legislation, Tax

The budget reconciliation bill passed by the House of Representatives on May 22, 2025 (the “Reconciliation Bill”), contains a number of provisions targeting tax-exempt entities. While these provisions do not specifically target or call out hospitals, they may apply to tax-exempt and government hospitals.

Excise Tax on Compensation Expanded

Under current law, tax-exempt organizations and certain government entities are subject to a 21 percent excise tax on employee compensation that exceeds $1 million or that constitutes an excess parachute payment. The excise tax applies to amounts paid to the five highest compensated employees of the organization in the tax year and those who had been in that category since 2017 (“Covered Employees”).

Hospitals exempt from taxation under section 501(a) of the Internal Revenue Code of 1986 (the “Code”) and, in some cases, those owned by state or local governments are subject to this excise tax. However, compensation paid to licensed medical professionals for the performance of medical services does not count towards the $1 million trigger of the excise tax. Only the portion of a medical professional’s compensation for other services, such as research, teaching, or administrative or governance duties, are considered compensation for this purpose. Compensation paid by entities related to the tax-exempt or government entity, such as a for-profit or tax-exempt subsidiary or other affiliate, is included for this purpose.

Top 10 Key Takeaways From the UK Healthcare and Innovation Forum

By Mark Yeo, Jon Lent, David Naylor, Nicola Smith and Victoria Leigh on May 15, 2025 Posted in United Kingdom

On 12 March, we hosted an event in our London office where lawyers Mark Yeo, Jon Lent, David Naylor, Nicola Smith, Victoria Leigh and Nick Green discussed: decarbonisation in healthcare, healthcare with the new government with geopolitical insights, trends in healthcare M&A and HealthTech innovations.

View the top 10 takeaways affecting the industry and likely to have significant impact in the coming year.

District Court Strikes Down New CMS Rule Imposing Minimum Staffing Requirements for Long-Term Care Facilities

By Robert Nauman on May 8, 2025 Posted in Long-Term Care, Nurses, Regulations

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On Monday, April 7, the U.S. District Court for the Northern District of Texas vacated CMS’s recently adopted rule imposing minimum staffing requirements for long-term care facilities participating in Medicaid or Medicare. On April 22, 2024, CMS announced this final rule (the “Final Rule” or “CMS-3442F”), which sought to “significantly reduce the risk of residents receiving unsafe and low-quality care within LTC facilities.”[1] Specifically, the Final Rule would have required nursing homes to provide at least 3.48 hours per resident day of total nurse staffing and required each nursing home to maintain a registered nurse onsite 24 hours a day, 7 days a week – triple Congress’s original directive of 8 hours, 7 days a week.

District Court Strikes Down FDA’s LDT Rule, Opens the Door for Challenges to FDA’s Regulation of Other “Services” as Medical Devices

By Keith Bradley, Delia Deschaine and Samuel Ballingrud on April 11, 2025 Posted in FDA, Regulations

On Monday, March 31, a court in the Eastern District of Texas found unlawful and vacated the Food and Drug Administration’s 2024 Rule regulating as “devices” under the Food, Drug, and Cosmetic Act (“FDCA”), certain laboratory-developed test (“LDTs”) used to diagnose, monitor, or determine treatment for diseases and conditions. The decision, American Clinical Laboratory Assoc. v. FDA, No. 4:24-CV-479-SDJ, 2025 WL 964238 (E.D. Tex. Mar. 31, 2025), marks another application of the Supreme Court’s recent Loper Bright decision rejecting the longstanding Chevron principle of deference to agency statutory interpretation. Loper Bright continues to fundamentally rework the legal framework for challenging agency actions.

LDTs are familiar products which underlie an enormous amount of modern medical care and range from the prosaic to the profound. Anyone who has ever had bloodwork done during an annual checkup has been a part of this well-known process: a doctor orders a specimen to be taken—here, blood—which is drawn from the patient and sent off to a laboratory for analysis to report quantitative measurements such as blood type which are in turn reported to the ordering physician to inform patient care. Other LDTs are much more specialized; Human Leukocyte Antigen (“HLA”) tests are necessary components of emergency, life-saving care which involves a rapid histocompatibility test as part of organ, stem cell, and tissue transplantation.

The Trump Administration Proposes Changes to Regulations Governing Insurance Subject to the Affordable Care Act

By Doug Anderson on March 26, 2025 Posted in ACA, Insurance, Proposed Rule

In its first major attempt to reform the Affordability Care Act (“ACA”), the Trump Administration issued a proposed rule on March 10, 2025 (“Proposed Rule”) amending regulations governing insurance coverages subject to the ACA.[1] Public comments on the Proposed Rule will be accepted for consideration until April 11, 2025.

In conjunction with the Proposed Rule, the Centers for Medicare & Medicaid Services (“CMS”) issued a statement explaining that the proposed regulations include “critical and necessary steps to protect people from being enrolled in Marketplace coverage without their knowledge or consent, promote stable and affordable health insurance markets, and ensure taxpayer dollars fund financial assistance only for the people the ACA set out to support.” To support its position, CMS cited a report from the Paragon Health Institute suggesting “4 to 5 million people were improperly enrolled in subsidized ACA coverage in 2024, costing federal taxpayers up to $20 billion.” The impact analysis that accompanies the Proposed Rule shows that the Proposed Rule will reduce enrollment in the ACA plans, reduce the number of people who access premium tax credits and cost-sharing reductions that make coverage more affordable, and limit benefits available to individuals including, specifically, coverage for services related to a sex-trait modification as an essential health benefit.

Firm Launches US Executive Actions Monitor

By Squire Patton Boggs on March 21, 2025 Posted in Executive Actions

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Squire Patton Boggs has launched its US Executive Actions Monitor, a site dedicated to tracking executive actions issued by President Donald Trump since taking office.

We offer an overview of all executive orders, providing summaries and analysis of their potential impacts, covering issues from economic and foreign policy to government reform and taxation. Our lawyers and policy professionals will continue to analyze Trump’s executive actions, providing ongoing updates as some of the directed actions may present significant constitutional questions that could be litigated and subsequently overturned or blocked.

As one of the world’s strongest integrated law firms, providing insight at the point where law, business and government meet, our analysis is guided by the skills and resources of both our public policy team and lawyers. This combined legal and policy perspective guides our analysis of Trump’s actions and how they will impact the shape of our nation and the world. You can read more on our Capital Thinking Blog, available here.

HHS Publishes Notice of Proposed Rulemaking to Amend HIPAA Security Rule Requirements—Comments Due March 7, 2025

By John Wyand and Julia Jacobson on February 6, 2025 Posted in Cybersecurity, Data Protection, HIPAA, Privacy, Proposed Rule

Summary

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On December 27, 2024, the U.S. Department of Health and Human Services, Office for Civil Rights (“HHS”) published its Notice of Proposed Rulemaking (“NPRM”) titled HIPAA Security Rule to Strengthen the Cybersecurity of Electronic Protected Health Information. HHS seeks comments on proposed modifications to the Security Standards for the Protection of Electronic Protected Health Information comprising 45 C.F.R. Parts 160 and 164, Subpart C, commonly known as the “Security Rule”, to address modern breach and cybersecurity risks to electronic protected health information (“ePHI”)[1] and common deficiencies observed by HHS in Security Rule compliance investigations, and to incorporate current industry best practices[2] and court decisions affecting enforcement of the Security Rule[3].[4] As summarized below, the proposed modifications signal HHS’s commitment to aligning the Security Rule requirements with current cybersecurity standards and addressing areas of non-compliance with more prescriptive measures to enhance ePHI security in the face of evolving cyber threats and technological advancements. HHS invites interested parties to submit comments by March 7, 2025.

Two weeks after the NPRM was published in the Federal Register, President Trump issued an Executive Order requiring a “Regulatory Freeze Pending Review.” The regulatory freeze makes the fate of the proposed Security Rule amendments unclear. If the proposed Security Rule amendments proceed unchanged, regulated entities and health plan sponsors could incur significant combined costs, which HHS estimates at approximately $9.3 billion in the first year of implementation.[5]

Are You Ready? Deadline to Comply with HIPAA Requirements for Reproductive Health Care PHI December 23, 2024

By John Wyand on October 28, 2024 Posted in HIPAA, Privacy, Regulations

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In response to the shifting legal landscape around reproductive health care, the U.S. Department of Health and Human Services, Office for Civil Rights (OCR) finalized amendments to the HIPAA Privacy Rule to strengthen privacy protections for highly sensitive protected health information (PHI) related (or potentially related) to reproductive health care. OCR announced the final rule on the HIPAA Privacy Rule to Support Reproductive Health Care Privacy (Final Rule) on April 22, 2024, which became effective on June 25, 2024. The privacy limitations outlined in this post directly apply to all “Regulated Entities,” meaning that both covered entities and business associates must comply with the HIPAA requirements for PHI pertaining to reproductive health care set forth in the Final Rule.[1] Regulated Entities must comply with most of the Final Rule’s requirements by December 23, 2024. The deadline to comply with requirements pertaining to relevant updates to regulated entities’ Notice of Privacy Practices is February 16, 2026.

Mental Health Parity and Addiction Equity Act Final Rules (“Final Rules”) Are Released: Plans and Issuers Must Prepare for January 1, 2025 Effective Date (US)

By Kristine Woliver, Ima Nsien and Gabrielle Martin on October 21, 2024 Posted in HHS, Insurance, Labor and Employment, Regulations

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The long-awaited Final Rules amending the Mental Health Parity and Addiction Equity Act (“MHPAEA”) were released on September 9, 2024, with the bulk of the requirements going into effect on January 1, 2025. As we previously reported here, in August 2023, the Departments of Labor, Health and Human Services (“HHS”) and Treasury (together, the “Departments”) published proposed rules further regulating insurance coverage for treatment for mental health and substance use disorders. Although the Final Rules appear less burdensome than the proposed rules, they do impose significant changes to the obligations of group health plans and health insurance issuers with a short time to achieve compliance. The key provisions are summarized below.

Key Changes in the Final Rules

The Final Rules’ stated intent is to “strengthen consumer protections consistent with MHPAEA’s fundamental purpose,” which includes reducing burdens on access to benefits for individuals in group health plans or with group or individual health insurance coverage seeking treatment for mental health and substance use disorders (“MH/SUD”) as compared to accessing benefits for the treatment of medical/surgical (“M/S”) conditions.