Holland & Knight Health Dose: January 6, 2026

Looking Ahead

This week, the U.S. Senate and U.S. House of Representatives will convene and begin the second session of the 119th U.S. Congress. With the beginning of the new year underway, all attention will quickly turn to the January 30, 2026, funding deadline. Passage of another continuing resolution (CR) or passage of full-year appropriations for agencies that only received short-term funding in the previous CR will be necessary to fund large portions of the government beyond the end of this month. The potential for passage of a CR being passed is significant, with conference negotiations ongoing between Senate and House appropriations leaders regarding fiscal year (FY) 2026 appropriations subcommittee bills. Although Senate Republicans and Democrats were unable to reach a unanimous consent agreement in December 2025 to advance a five-bill spending package covering Defense, Labor-Health and Human Services-Education, Commerce-Justice-Science, Transportation-Housing and Urban Development, and Interior-Environment, Senate and House appropriations recently announced agreement on a consolidated Energy and Water, Interior, and Commerce-Justice-Science appropriations bills.

Upon its return, the Senate is expected to hold two Congressional Review Act (CRA) votes, as well as vote on several nominees for whom cloture was filed prior to the recess. Meanwhile, the House will vote on legislation advanced by the House Committee on Energy and Commerce related to housing and certain home fixtures, as well as the "minibus" package containing the Energy and Water, Interior, and Commerce-Justice-Science appropriations bills. The House is also expected to hold a vote in the days and weeks ahead on a three-year extension of the enhanced advanced premium tax credits (APTCs) following a discharge petition that gained the support of several key Republicans, forcing a vote on the measure.

Upcoming Events

The House Committee on Energy and Commerce's Subcommittee on Health will hold a hearing titled "Legislative Proposals to Support Patient Access to Medicare Services." The hearing will focus on the following bills:

• Choices for Increased Mobility Act of 2025 (H.R.1703), introduced by Rep. John Joyce (R-Pa.) 
• DMEPOS Relief Act of 2025 (H.R.2005), introduced by Rep. Mariannette Miller-Meeks (R-Iowa) 
• Preserving Patient Access to Home Infusion Act (H.R.2172), introduced by Rep. Vern Buchanan (R-Fla.) 
• Portable Ultrasound Reimbursement Equity Act of 2025 (H.R.2477), introduced by Rep. Beth Van Duyne (R-Texas) 
• Supplemental Oxygen Access Reform (SOAR) Act of 2025 (H.R.2902), introduced by Rep. David Valadao (R-Calif.) 
• To amend title XVIII of the Social Security Act to increase data transparency for supplemental benefits under Medicare Advantage (H.R.5243), introduced by Rep. Jennifer McClellan (R-Va.) 
• Reforming and Enhancing Sustainable Updates to Laboratory Testing Services (RESULTS) Act of 2025 (H.R.5269), introduced by Rep. Richard Hudson (R-N.C.)  
• Health Care Efficiency Through Flexibility Act (H.R.5347), introduced by Rep. Buchanan (R-Fla.) 
• Senior Savings Protection Act (H.R.6210), introduced by Rep. Doris Matsui (D-Calif.) 
• Ban AI Denials in Medicare Act (H.R.6361), introduced by Rep. Greg Landsman (D-Ohio) 

Administrative Updates

Executive Order Updates

The Trump Administration has continued to release wide-ranging executive orders (EOs). For the latest updates, see our "Trump's 2025 Executive Orders: Updates and Summaries" tracking chart.

• December 18, 2025: President Donald Trump announced an EO titled "Increasing Medical Marijuana and Cannabidiol Research." The EO directs the U.S. attorney general to take all necessary steps to complete the rulemaking process related to rescheduling marijuana from Schedule I of the Controlled Substances Act (CSA) to Schedule III of the CSA. The EO also directs the Assistant to the President and Deputy Chief of Staff for Legislative, Political and Public Affairs to work with Congress to update the statutory definition of final hemp-derived cannabinoid products to increase access as appropriate to cannabidiol (CBD) products.

Trump Administration Awards $50 Billion under Rural Health Transformation Program 

The Centers for Medicare & Medicaid Services (CMS) announced $50 billion in awards under the Rural Health Transformation Program, which was established by the One Big Beautiful Bill Act (OBBB), the Republican reconciliation law enacted in 2025. All 50 states will receive awards ranging from $147 million to $281 million beginning in 2026, with the full $50 billion distributed over a 10-year period. The program was included in the legislation to address concerns raised by Sen. Susan Collins (R-Maine) and other Republicans about the potential impact of the OBBB on rural hospitals and individuals living in rural communities.

CMS also announced the creation of the Office of Rural Health Transformation. The office will oversee management of the Rural Health Transformation Program and includes a Division of State Rural Engagement that will provide policy and operational guidance to states and other stakeholders.

GAO Report on Distribution of New GME Positions

The U.S. Government Accountability Office (GAO) released a report examining the initial distribution of new Medicare-funded physician residency positions. The Consolidated Appropriations Act of 2021 required CMS to allocate 1,000 new Medicare-funded graduate medical education (GME) residency positions to qualifying hospitals through permanent increases to resident caps. To date, CMS has distributed 600 of the 1,000 positions across three annual application cycles. The majority of awarded positions were allocated to hospitals in urban areas, and approximately half supported primary care training. Of the 393 hospitals that applied, about half received new residency positions.

MFN Drug Pricing Initiative Expansion Announced

President Trump announced an expansion of the Most-Favored-Nation (MFN) Drug Pricing Initiative on December 19, 2025, heralding new drug price agreements with nine new drug manufacturers. Three drug manufacturers that received letters from the Trump Administration regarding the prices of their prescription drugs have yet to publicly announce drug pricing agreements with the administration.

As part of the agreement, the nine manufacturers entered into a "voluntary" package that mirrors earlier MFN deals while expanding the scope of commitments. Under the agreement, selected products will be offered to consumers at reduced prices through the TrumpRx.gov platform, which is expected to launch in January 2026. In addition, state Medicaid programs will receive access to MFN pricing for a defined subset of products, with company-specific press releases indicating that this component would be implemented through the GENErating cost Reductions fOr U.S. Medicaid (GENEROUS) Model for Medicaid.

The agreement also includes commitments related to pricing, supply chain security and domestic investment. New medicines will be launched in the U.S. at MFN-aligned prices, and in a new development, several manufacturers agreed to donate active pharmaceutical ingredients (APIs) to the Strategic Active Pharmaceutical Ingredients Reserve (SAPIR) to bolster national security and supply chain resilience. Collectively, the nine companies are committed to investing at least $150 billion in U.S. pharmaceutical manufacturing in the near term. In exchange for reaching an agreement, participating manufacturers will receive three-year exemptions from potential Section 232 tariffs on pharmaceutical products and ingredients.

Personnel Updates

• Thomas Bell has been confirmed as Inspector General for the U.S. Department of Health and Human Services (HHS).
• Raja Krishnamoorthi (D-Ill.) has stepped down as Ranking Member of the House Select Committee on Strategic Competition Between the U.S. and China. Rep. Krishnamoorthi previously entered the race to fill Sen. Dick Durbin's (D-Ill.) seat in the Senate, as Sen. Durbin announced he will retire at the end of his term. Rep. Ro Khanna (D-Calif.) will replace him as the top Democrat on the committee.

Congressional Updates

January 30, 2026, Funding Deadline Approaches

Senate and House leaders will have to quickly confront the looming January 30, 2026, funding deadline. Following the expiration of the enhanced APTCs on December 31, 2025, some support continued efforts to renew and extend the APTCs to include the potential for another government shutdown. However, Senate Minority Leader Chuck Schumer (D-N.Y.) threw cold water on that potential path forward, describing "two separate tracks" for proceeding on government funding, with one path being funding the government for a full year and working in a "bipartisan, bicameral" way to do so. Sen. Schumer also signaled willingness to work on lowering the cost of healthcare but continued to oppose proposals offered by Republicans that do not include an extension of the APTCs.

A bill to fund the government beyond January 30, 2026, will require a majority vote in the House – which continues to be in Republican hands – as well as require 60 votes in the Senate, necessitating support of a handful of Senate Democrats. The eight Senate Democrats who voted in favor of the CR that ended the previous government shutdown will likely confront much pressure to vote for – or against – another CR, given the expiration of the enhanced APTCs.

NDAA Signed into Law

President Trump has signed the FY 2026 National Defense Authorization Act (NDAA) into law following months of negotiation between the two chambers of Congress on a compromise version of the must-pass annual defense policy bill. The law includes a provision that will bar Chinese "biotechnology companies of concern" from receiving federal funding. A previous version of the legislation known as the BIOSECURE Act was omitted from 2025's NDAA due to concerns about naming specific biotech companies to be scrutinized. The final NDAA would require the Office of Management and Budget to create a list of biotech companies – like those on the U.S. Department of Defense's list of Chinese military companies – that would be blocked from federal contracts, grants or loans, and to provide the companies the opportunity to appeal.

Regulatory Updates

CDC Acting Director Accepts Recommendations to Change Childhood Immunization Practices

Acting Director of the Centers for Disease Control and Prevention (CDC) Jim O'Neill signed a decision memorandum on January 5, 2026, accepting recommendations on changes to U.S. childhood immunization practices. The memorandum, authored by National Institutes of Health (NIH) Director Dr. Jay Bhattacharya, CMS Administrator Dr. Mehmet Oz, and U.S. Food and Drug Administration (FDA) Commissioner Dr. Martin Makary, details findings from a scientific assessment in support of changes to the number and types of vaccines children are recommended to receive. The memorandum recommends a schedule of "consensus vaccines" for measles, mumps, rubella, diphtheria, tetanus, pertussis, polio, Haemophilus influenza type B, pneumoccal disease, human papillomavirus and varicella. The memorandum makes additional recommendations, noting that certain vaccines including hepatitis A, hepatitis B, rotavirus, meningoccal disease, influenza and COVID-19, be based on "shared clinical decision making."

CMS Announces GLOBE and GUARD Models to Reduce Prescription Drug Prices

The CMS Innovation Center (CMMI) announced proposed rules on December 20, 2025, for two mandatory models. The models would implement MFN-based pricing in Medicare Part B and Part D. Comments on both proposals are due by February 23, 2026.

The GUARD Model

The Guarding U.S. Medicare Against Rising Drug Costs (GUARD) Model is intended to assess whether an alternative approach to calculating inflation rebates for certain Part D drugs and biological products can lower Medicare program spending while maintaining or improving enrollee access and quality of care. The model would require manufacturers to pay a GUARD Model Rebate when a drug's Medicare net price exceeds an applicable international benchmark. Rebates would apply when U.S. prices are higher than prices paid in comparable countries.

CMS proposes two approaches to establish international benchmarks using pricing data from 19 economically comparable Organisation for Economic Co-operation and Development (OECD) countries. Method I (Default) would use the lowest country-level average price identified through available international data sources while Method II (Optional) allows manufacturers to submit confidential international net pricing data, with CMS using the across-country average net price if it exceeds the default benchmark.

The GUARD Model would be tested over a five-year performance period, launching January 1, 2027, and running through December 31, 2031, with rebate invoicing and reconciliation continuing into 2033. The model would test modifications to the Part D inflation rebate calculation for certain drugs included in the Medicare Part D Drug Inflation Rebate Program, focusing on sole-source drugs and sole-source biologics in specified therapeutic categories which would encompass among others: analgesics, anticonvulsants, antidepressants, antimigraine agents, antineoplastics, antipsychotics, antivirals, bipolar agents, blood glucose regulators, cardiovascular agents, central nervous system (CNS) agents, gastrointestinal agents, immunological agents, metabolic bone disease agents, ophthalmic agents, respiratory/pulmonary agents and treatments for genetic, enzyme or protein disorders.

The GUARD model would exclude 1) generics and biosimilars, 2) sole-source drugs or biologics below the minimum spend threshold, and 3) drugs subject to a negotiated maximum fair price during the applicable price period. Drug units, subject to a 340B pricing agreement, would also be excluded from the model.

The model would apply in randomly selected geographic areas covering approximately 25 percent of Medicare Part D beneficiaries. CMS estimates the GUARD Model would reduce Medicare spending by $14.1 billion over the 2028-2033 period.

The GLOBE Model

The Global Benchmark for Efficient Drug Pricing (GLOBE) Model is designed to test whether an alternative method for calculating Part B inflation rebates for certain separately payable drugs and biological products can reduce costs for Medicare fee-for-service beneficiaries and the Medicare program while preserving or enhancing quality of care. As part of the model, manufacturer rebates would be triggered when a drug's price exceeds an applicable international benchmark derived from prices paid in comparable countries. The model would operate for five years, beginning October 1, 2026, and running through 2031, with rebate invoicing and reconciliation extending into 2033.

The model would focus on high-expenditure Part B rebatable drugs, limited to single-source drugs and sole-source biological products. Included drugs must fall within one of seven U.S. Pharmacopeial Convention (USP) Drug Classification categories: antigout agents, antineoplastics, blood products and modifiers, CNS agents, immunological agents, metabolic bone disease agents and ophthalmic agents. Only drugs with annual Medicare Part B fee-for-service (FFS) allowed charges exceeding $100 million would be included. CMS would establish benchmarks using prices from the same 19 OECD countries and proposes two methods for calculation: 1) Method I (Default) would use the lowest GDP-adjusted country-level price, increased by a 102 percent adjustment factor, and 2) Method II (Optional) would use a manufacturer-submitted, volume-weighted average net price, increased by a 105 percent adjustment factor.

CMS proposes excluding drugs with Healthcare Common Procedure Coding System (HCPCS) Level II codes when payment is based on a negotiated maximum fair price under the Medicare Drug Price Negotiation Program. As part of the proposed rule and through the open public comment period, CMS requests feedback on a number of areas, including whether certain product types (e.g., cell and gene therapies or plasma-derived products) should be excluded.

The model would be implemented in randomly selected geographic areas representing approximately 25 percent of Medicare Part B FFS beneficiaries. CMS projects $11.9 billion in total federal savings over the model period, including approximately $8.4 billion in Part B benefit savings and $1.4 billion in reduced beneficiary cost sharing.

DEA Issues Fourth Temporary Extension for Telemedicine

The U.S. Drug Enforcement Administration (DEA) published a notice in the Federal Register on December 30, 2025, announcing an extension through December 31, 2026, of COVID-19 telemedicine flexibilities for the prescribing of Schedule II-V controlled substances. The extension will allow DEA registered practitioners to continue prescribing Schedule II-V controlled substances without requiring an in-person medical evaluation if certain conditions are met, such as prescriptions are issued for a legitimate medical purpose and a prescription is issued by a provider authorized to prescribe the class of controlled substance. This is the fourth temporary extension of these COVID-19 telemedicine flexibilities. The DEA notes that the extension is an effort to prevent disruptions of care, prevent a backlog of patients who need in-person appointments and allow adequate time for potential, future implementation of in-person medical evaluation requirements.

FDA Issues New Guidance on Real World Evidence for Certain Submissions

The FDA issued draft guidance on December 15, 2025, of how the agency will accept Real World Evidence (RWE) for certain types of medical device submissions without requiring the submission of identifiable, patient-level data as part of a marketing submission. FDA indicated in the same guidance that it intends to update guidance for drugs and biologics to mirror the consideration of RWE. The draft guidance notes FDA will now accept real-world evidence in drug and device submissions that do not include identifiable, individual patient data collected from real-world data sources. This change increases the possibility that the use of de-identified databases with patient records may be used as a resource for sponsors during the submission process.

FDA Sends Letters to Dietary Supplement Companies, Loosens Certain Warning Requirements

In a December 11, 2025, letter to dietary supplement manufacturers, distributors and retailers, FDA announced it is considering requests to amend labeling guidelines for dietary supplement disclaimers. Under the Dietary Supplement Health and Education Act of 1994 (DSHEA), certain statements for dietary supplements may be made if they indicate prominently and in bold that the product "has not been evaluated by the FDA" and is "not intended to diagnose, treat, cure or prevent any disease." FDA shares it has completed an initial review of the regulation and expects that removing the requirement for the DSHEA disclaimer "would be consistent" with the Federal Food, Drug, and Cosmetic (FD&C) Act as well as reduce "label clutter and unnecessary costs." The issuance of a proposed rule to amend the DSHEA disclaimer is contingent upon a continued review of available data and information. In the interim, FDA will exercise enforcement discretion regarding the DSHEA disclaimer and will not enforce requirements related to the requirement.

FDA Medical Gases CGMP Guidance

FDA issued draft guidance titled "Medical Gases – Current Good Manufacturing Practice" intended to support the manufacturers of medical gases in complying with current good manufacturing practices (CGMPs). The guidance revises and replaces previous guidance to include clarifications regarding supplier capabilities, protecting against leakage, cleaning and maintenance, as well as testing for expiration and handling returned or salvaged gases.

FDA Issues Draft Guidance for Cosmetics Industry on Recalls

FDA issued draft guidance on December 18, 2025, for the cosmetics industry regarding recalls as it relates to Section 611 of the FD&C Act, as well as FDA's thinking about its implementation. The draft guidance lays out a variety of questions and details FDA's answers, including the cosmetics subject to mandatory recalls, who FDA considers a "responsible person" under Section 611 of the FD&C Act, as well as the criteria FDA will consider when determining to invoke its mandatory recall authority. Comments on the draft guidance must be submitted by February 17, 2026.

The issuance of the draft guidance preceded a new report published by FDA on December 29, 2025, titled "Report on the Use of PFAS in Cosmetic Products and Associated Risks." The report summarizes FDA's assessment of certain chemicals in cosmetic products called per- and polyfluoroalkyl substances (PFAS), which was mandated by Section 3506 of the Modernization of Cosmetics Regulation Act of 2022 (MoCRA). The report identified 51 different PFAS currently in use as cosmetic product ingredients and includes safety evaluations for the 25 most used PFAS ingredients. FDA found in its assessment that safety conclusions couldn't be reached for the vast majority of PFAS due to incomplete or unavailable toxicological data. 

HHS Releases New RFI, Solicits Comments on Adoption and Acceleration of AI in Clinical Care

HHS issued a new request for information (RFI) in the Federal Register on December 19, 2025, titled "Accelerating the Adoption and Use of Artificial Intelligence as part of Clinical Care," with a 60-day window to comment. The RFI solicits comments on the regulation of artificial intelligence (AI) for clinical care, reimbursement, research and development, and asks the following specific questions:

• What are the biggest barriers to private sector innovation in AI for healthcare and its adoption and use in clinical care?
• What regulatory, payment policy or programmatic design changes should HHS prioritize to incentivize the effective use of AI in clinical care and why? What HHS regulations, policies or programs could be revisited to augment your ability to develop or use AI in clinical care? Please provide specific changes and applicable Code of Federal Regulations citations.
• For non-medical devices, it's understood that use of AI in clinical care may raise novel legal and implementation issues that challenge existing governance and accountability structures (e.g., relating to liability, indemnification, privacy and security). What novel legal and implementation issues exist and what role, if any, should HHS play to help address them?
• For non-medical devices, what are the most promising AI evaluation methods (pre- and post-deployment), metrics, robustness testing and other workflow and human-centered evaluation methods for clinical care? Should HHS further support these processes? If so, which mechanisms would be most impactful (e.g., contracts, grants, cooperative agreements and/or prize competitions)?
• How can HHS best support private sector activities (e.g., accreditation, certification, industry driven testing and credentialing) to promote innovative and effective AI use in clinical care?
• Where have AI tools deployed in clinical care met or exceeded performance and cost expectations and where have they fallen short? What kinds of novel AI tools would have the greatest potential to improve healthcare outcomes, give new insights on quality and help reduce costs?
• Which role(s), decision maker(s) or governing bodies within healthcare organizations have the most influence on the adoption of AI for clinical care? What are the primary administrative hurdles to the adoption of AI in clinical care?
• Where would enhanced interoperability widen market opportunities, fuel research and accelerate the development of AI for clinical care? Please consider specific data types, data standards and benchmarking tools.
• What challenges within healthcare do patients and caregivers wish to see addressed by the adoption and use of AI in clinical care? Equally, what concerns do patients and caregivers have related to the adoption and use of AI in clinical care?
• Are there specific areas of AI research that HHS should prioritize to accelerate the adoption of AI as part of clinical care?Are there published findings about the impact of adopted AI tools and their use clinical care? How does the literature approach the costs, benefits and transfers of using AI as part of clinical care?

CMS Announces ACO REACH Model to Transition to ACO LEAD

CMS announced that the Accountable Care Organization Realizing Equity, Access, and Community Health (ACO REACH) model will transition to a new model, ACO Long-term Enhanced ACO Design (LEAD), a 10-year initiative with an emphasis on high-needs beneficiaries. ACO LEAD is designed to launch on January 1, 2027, following the conclusion of ACO REACH, with applications expected to open in March 2026. CMS has outlined several key design elements for ACO LEAD, including improved integration of high-needs patients through more accurate risk adjustment and benchmarking across all ACOs, as well as two risk-sharing options: global risk (100 percent upside and downside risk) and professional risk (50 percent upside and downside risk).

The model also introduces new healthy living flexibilities intended to encourage beneficiaries to seek care from high-value providers. These flexibilities include Part B cost-sharing support, Medical Nutrition Therapy benefits and – beginning in 2029 – a Part D premium buy-down. In addition, ACO LEAD will test Medicaid integration for dually eligible beneficiaries through ACO-Medicaid partnership arrangements with two states. Notably, the model establishes CMS-Administered Risk Arrangements (CARA), which will allow for episode-based risk arrangements between ACOs and selected care providers. While additional details are forthcoming, ACO LEAD introduces several programmatic design elements – particularly CARA – that signal a meaningful evolution in CMS' value-based care strategy.

Legal Updates

Judge Issues Preliminary Injunction to Block 340B Rebate Model Pilot Program

U.S. District Court for the District of Maine Chief Judge Lance Walker issued a preliminary injunction on December 29, 2025, blocking the 340B rebate pilot scheduled to begin January 1, 2026. The court found the pilot was likely to violate the Administrative Procedure Act's (APA) arbitrary and capricious standard, citing a "hastily assembled" rollout and an inadequate administrative record. The 340B Rebate Model Pilot Program is intended to change how hospitals receive rebates for certain drugs, shifting the current rebate from being provided upfront to a rebate post-purchase.

As a result, the Health Resources and Services Administration (HRSA) is temporarily barred from allowing the nine participating drug manufacturers to replace long-standing upfront 340B discounts with after-the-fact rebates. In his order, Judge Walker emphasized that HRSA likely failed to adequately consider or explain the impact of a rebate-based model on 340B hospitals, which rely on upfront discounts to stretch limited resources in service of rural and low-income communities. He concluded that the APA "likely requires more" from the agency.

The federal government had argued that any injunction should be limited to the plaintiff hospital organizations and their members. The court rejected that position, holding that under the APA, it has authority to preliminarily set aside the pilot program more broadly. The case was initially brought on December 1, 2025, by a trade association representing major hospitals, a state hospital association and several safety-net hospitals. The lawsuit alleged the program was arbitrary and capricious and in violation of the APA.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.