Holland & Knight Health Dose: February 3, 2026

Looking Ahead

The federal government has been in a partial shutdown since late last week, with several federal agencies – including the U.S. Department of Health and Human Services (HHS) – experiencing a lapse in appropriations. The U.S. House of Representatives on February 3, 2026, will consider a funding agreement that was passed by the U.S. Senate on a 71-29 vote. The appropriations package would fund nearly all remaining federal agencies through fiscal year (FY) 2026. However, as part of the agreement struck by Senate leaders, the U.S. Department of Homeland Security (DHS) will receive only two weeks of funding as part of the package to ensure negotiations over potential restrictions to U.S. Immigration and Customs Enforcement (ICE) and other DHS subagency activities can continue. The U.S. Congress had previously passed appropriations bills to fund other agencies, including the U.S. Food and Drug Administration (FDA), through December 31, 2026, which is why the shutdown is considered partial. The final vote on the appropriations package is expected to garner some Democratic support.

Upcoming Events

The Senate Committee on Health, Education, Labor, and Pensions (HELP) will hold a hearing on February 3, 2026, "to examine modernizing the National Institutes of Health, focusing on faster discoveries and more cures."

The House Committee on Energy and Commerce Subcommittee on Oversight and Investigations will hold a hearing on February 3, 2026, titled "Common Schemes, Real Harm: Examining Fraud in Medicare and Medicaid."

The House Committee on Veterans' Affairs Subcommittee on Disability Assistance and Memorial Affairs will hold hearings on several bills, including:

• Love Lives on Act of 2025 (H.R.1004)
• Justice for ALS Veterans Act of 2025 (H.R.1685)
• Dayton National Cemetery Expansion Act of 2025 (H.R.2164)
• Board of Veterans Appeals Annual Report Transparency Act of 2025 (H.R. 6698)
• Veterans Burial Allowance and Reimbursement Act of 2026 (H.R. 6943)
• Providing Radiation Exposed Servicemembers Undisputed Medical Eligibility (PRESUME) Act (H.R.4469)
• Fraud Reduction And Uncovering Deception (FRAUD) in VA Disability Exam Act (H.R.5723)
• Susan E. Lukas 9/11 Servicemember Fairness Act (H.R.5339)
• National Cemetery Administration Annual Report Act of 2026

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.

Congressional Updates

House Returns to D.C., Must Consider Appropriations Package to End Partial Government Shutdown

The House returned to session on February 2, 2026, and the House Rules Committee met on the same day to debate a rule that will allow the House to consider and vote on the appropriations package passed by the Senate. The rule was ultimately advanced by the committee and will allow the appropriations package among other legislative items to be considered on the House floor. The appropriations package provides funding for five agencies through the end of 2026, including for the U.S. Departments of Labor (DOL), HHS, Education, Transportation (DOT), Housing and Urban Development (HUD) and others, as well as two weeks of funding for the DHS. The two-week continuing resolution (CR) is intended to allow additional time for negotiations about potential restrictions or changes to DHS policies, following events in Minnesota in January 2026, to continue among Republican and Democratic leaders, as well as the White House. However, a two-week funding deadline places significant pressure on leaders to find a solution regarding a path forward, which is far from certain to be reached, given potential reforms sought by Democrats and continued focus on immigration enforcement and other issues by Republicans and the White House.

House Republican leaders initially intended to pass the updated spending package through the House on "suspension," a process by which legislation can be considered more quickly if there is sufficient support among two-thirds of House members. However, that plan was scrapped following Minority Leader Hakeem Jeffries (D-N.Y.) stating that Democrats would not offer that significant of support for the package. House Republicans must now seek to pass the appropriations package with Republican votes, as passage will require 218 votes – a slim one-vote margin following the election and swearing in of newly elected Rep. Christian Menefee (D-Texas), planned for February 2, 2026. President Donald Trump shared his support last week for passage of the updated spending package, which was accompanied by a Statement of Administration Policy in support of its passage.

HELP Chair Cassidy Seeks Information on 340B Program

Senate HELP Committee Chair Bill Cassidy (R-La.) sent a letter to a federally contracted vendor as part of continuing investigations into the 340B Drug Discount Program. The letter seeks additional information from the vendor regarding the company's revenue and compensation structure, remittance of any revenue from certain entities based on 340B drug utilization, organizational structure and internal access controls, and other questions regarding the company's relationship with other entities in the 340B ecosystem.

Reps. Dunn and Trahan Issue RFI for PAHPA Reauthorization

Reps. Neal Dunn (R-Fla.) and Lori Trahan (D-Mass.) issued a request for information (RFI) on January 27, 2026, regarding the Pandemic and All-Hazards Preparedness Act (PAHPA) reauthorization. The majority of PAHPA reauthorizations expired in 2023, with Congress opting to extend a limited set of programs as part of previous CRs. In addition, during the 118th Congress, the House Energy and Commerce Committee debated various measures to reauthorize PAHPA but ultimately failed to advance in the full House lines following divisions in the wake of the COVID-19 pandemic. The RFI comes as lawmakers potentially seek to debut a new version of PAHPA reauthorization and asks stakeholders to assess a variety of existing programs to identify programs that are working well, potential duplication or where modernization or streamlining could occur. The RFI also explicitly invites ideas beyond current authorized programs, signaling openness to new authorities or structural reforms, and asks respondents to flag redundancies across already existing efforts. Finally, it seeks respondents' top three priorities for PAHPA 2026, which may help inform congressional negotiations, hearing agendas and the overall scope of the reauthorization. Comments are due February 15, 2026.

House to Consider Bipartisan Fetterman-Budd Bill Establishing NSF Programmable Cloud Lab Network

The Senate Committee on Commerce, Science, and Transportation will hold an executive session on February 3, 2026, to address a number of items, including the National Programmable Cloud Laboratories Network Act (S.3468). The legislation is a response to the Trump Administration's Artificial Intelligence (AI) Action Plan, which calls for investments in "automated cloud-enabled labs" by federal partners such as in coordination and collaboration with private sector and other research institutions. Introduced by Sens. John Fetterman (D-Pa.) and Ted Budd (R-N.C.), the legislation would create a national network of up to six AI‑enabled, remotely accessible programmable cloud labs to accelerate scientific research. The legislation aims to cut costs, reduce barriers and expand access to advanced lab capabilities (i.e., robotics, automated manufacturing and AI-driven experimentation) across universities, nonprofits and private research entities. The National Science Foundation would select the labs, while the National Institute of Standards and Technology (NIST) would set standards and evaluate future expansion. The bill also requires annual progress briefings to Congress.

Select China Committee Sends Letter Urging Action on Potential Investment in U.S. Medical Device Company

Select Committee on China Chair John Molenaar (R-Mich.) sent a letter to U.S. Department of the Treasury Secretary Scott Bessent on January 30, 2026, to urge immediate action by the Committee on Foreign Investment in the U.S. (CFIUS) regarding the potential investment of a foreign company in a U.S. medical device company. The letter argues that the U.S. medical device company's product is a "critical technology" because it is subject to export controls and for matters related to national security. The medical device in question is a laser-based technology with applications for use in treating cardiovascular disease, as well as beyond medical applications. The letter raises a variety of allegations regarding why the investment should not proceed, including using previous technologies acquired for non-permitted uses and falsification of data overseas.

The letter represents the latest effort by the committee to ensure U.S. companies remain competitive and remain protected from intervention by foreign adversaries, including the healthcare and life sciences industries.

Senate HELP Committee Launches Task Force on Eliminating Fraud

Senate HELP Committee Chair Cassidy announced on January 26, 2026, the formation of a task force to eliminate fraud in federal funding. The task force will be led by Chair Cassidy, as well as Sens. Ashley Moody (R-Fla.), Roger Marshall (R-Kan.), Tommy Tuberville (R-Ala.), Jon Husted (R-Ohio), Markwayne Mullin (R-Okla.) and Tim Scott (R-S.C.). The members of the task force will co-lead based on their subcommittee leadership roles, with Sens. Moody and Marshall focusing on healthcare, Sens. Tuberville and Husted focusing on education, and Sens. Mullin and Scott focusing on labor and pensions. The formation of the task force follows efforts in the House Energy and Commerce Committee to launch investigations of fraud in various states. The committee has also launched an online portal for reports of fraud.

Regulatory Updates

ASTP/ONC RFI on Diagnostic Imaging Interoperability Standards

The Assistant Secretary for Technology Policy/Office of the National Coordinator for Health Information Technology (ASTP/ONC) issued an RFI on January 29, 2026, on the potential adoption of diagnostic imaging technical standards and certification criteria for health information technology (IT) under the ONC Health IT Certification Program. The intent of the potential adoption of new standards is to better enable access, the exchange and the use of diagnostic images by healthcare providers and to improve care for patients. Responses to the RFI will be used to inform future rulemaking. Specific information is sought by ASTP/ONC and includes barriers to electronic access to diagnostic images for patients, policies that may limit or interfere with access, approaches to transition from physical media to electronic options and specific focuses on what providers may need in digital format for specific conditions, diagnoses or use cases. Comments will be accepted for 45 days.

CMS Announces Drugs Selected for Third Cycle of Medicare Drug Price Negotiation

The Centers for Medicare & Medicaid Services (CMS) announced the selection of 15 drugs on January 27, 2026, for the third cycle of the Medicare Drug Price Negotiation Program, with prices that will be negotiated and take effect in 2028. The list includes the first round of drugs selected from Medicare Part B. Drug manufacturers have until February 28, 2026, to determine whether they will opt to participate in negotiations. CMS has also, for the first time, selected one additional drug, Tradjenta, for renegotiation. According to CMS, "Between November 2024 and October 2025, about 1.8 million people with Medicare Part B and/or Part D coverage used [the selected] drugs to treat a variety of conditions, such as cancer and psoriatic arthritis. These selected drugs accounted for about $27 billion in prescription drug total expenditures under Medicare Part B and Part D, or about 6 percent, during that time period." The 15 drugs selected for negotiation are:

• Anoro Ellipta
• Biktarvy
• Botox; Botox Cosmetic
• Cimzia
• Cosentyx
• Entyvio
• Erleada
• Kisqali
• Lenvima
• Orencia
• Rexulti
• Trulicity
• Verzenio
• Xeljanz; Xeljanz XR
• Xolair

CMS Issues Proposed Rule on Revisions to OPO CfC

CMS issued a proposed rule on January 30, 2026, titled "Medicare and Medicaid Programs; Organ Procurement Organizations Conditions for Coverage: Revisions to the Conditions for Coverage." The proposed rule would revise the Conditions for Coverage (CfC) for Organ Procurement Organizations (OPOs). The proposed rule adds and clarifies certain definitions, adds new Quality Assessment Performance Improvement (QAPI) requirements, and includes discussion on factors and items that may inform future rulemaking or the issuance of new guidance. Notably, the proposed rule comes several months before CMS is slated to begin the recertification cycle for OPOs based on performance measures related to the number of organs donated and the number of organs transplanted.

The proposed rule comes amid increased focus on OPOs as well as improvements to the organ donation and transplantation system, which have been subject of attention from congressional committees. In addition, the proposed rule follows the issuance of a discussion draft in December 2025 by Sen. Ron Wyden (D-Ore.), signaling attention will continue on the organ donation and transplantation system this year.

CMS Issues Final Rule on Healthcare Provider Taxes

CMS issued a final rule on January 29, 2026, titled "Medicaid Program; Preserving Medicaid Funding for Vulnerable Populations – Closing a Health Care-Related Tax Loophole." The final rule prohibits states from levying higher tax rates on Medicaid entities than non-Medicaid entities. The final rule will take effect on April 3, 2026, and implements changes included in the One Big Beautiful Bill Act (OBBB) (H.R.1). The final rule gives states a transition timeline to come into compliance with the new requirements allowing taxes on managed care organizations (MCOs) with waiver approvals within two years of April 3, 2026, through the end of calendar year (CY) 2026 to comply, taxes on MCO services with waiver approvals two years or more before April 3, 2026, through the end of FY 2027, and taxes on other permissible provider classes through the end of a state's FY 2028.

DOL's EBSA Issues Proposed Rule for PBMs

The DOL's Employee Benefits Security Administration (EBSA) issued a proposed rule on January 29, 2026, to require pharmacy benefit managers (PBMs) to disclose information regarding their compensation to fiduciaries of self-insured group health plans under the Employee Retirement Income Security Act (ERISA). The proposed rule follows EO 14273, which directed DOL to propose regulations to improve employer health plan transparency into the direct and indirect compensation of PBMs. New audit requirements would also be established.

HHS OIG Issues Special Advisory Bulletin on the Application of Anti-Kickback Statute to Direct-to-Consumer Prescription Drug Sales

HHS Office of the Inspector General (OIG) issued a special advisory bulletin on January 27, 2026, clarifying how drugmakers can offer lower-cost prescription drugs directly to patients, including Medicare and Medicaid enrollees. Specifically, the bulletin notes that drug companies generally can sell prescription drugs directly to patients at lower cash prices – even if those patients are on Medicare or Medicaid – without violating the federal anti-kickback law, as long as certain safeguards are in place. The key idea is that the government must not be billed for the drug, the discount cannot be used to steer patients toward other drugs or services that Medicare or Medicaid might later pay for, and the pricing cannot be tied to future purchases. Patients must have a valid prescription from an independent doctor, the drug must be offered at the same cash price for at least a full year, and controlled substances are excluded. As long as these conditions are met, the government views the risk of fraud or abuse as low, though it emphasizes that each arrangement still depends on the specific facts and intent involved.

HHS OCR Issues NPRM, Reopening of Public Comment Period Regarding Nondiscrimination

The HHS Office of Civil Rights (OCR) issued a notice of proposed rulemaking (NPRM) on January 30, 2026, and reopened the public comment period for a proposed rule titled "Nondiscrimination on the Basis of Disability in Programs or Activities Receiving Federal Financial Assistance." The NPRM seeks to clarify that the statutory exclusion of "gender identity disorders not resulting from physical impairments" does not fall within the scope of "gender dysphoria not resulting from a physical impairment."

FDA Announces PreCheck Implementation Roadmap

The FDA will begin accepting applications for the PreCheck Pilot Program on February 1, 2026. The program intends to strengthen the domestic pharmaceutical supply chain by streamlining the construction of new manufacturing facilities in the U.S. The FDA will select an initial group of new pharmaceutical manufacturing facilities to receive more frequent FDA communication at stages of site development and streamlined development of the Chemistry, Manufacturing and Controls (CMC) section of the entity's application through preapplication meetings and provision of early feedback.

FDA Solicits Public Comment on Future Rare Disease Workshops

The FDA issued a notice on January 29, 2026, requesting comments for a future public Rare Disease Innovation, Science and Exploration (RISE) Workshop. Comments are not due until December 31, 2026, so there is ample time for the Rare Disease Diversity Coalition (RDDC) to provide comment. This year, the FDA is specifically seeking comments on "challenges that are common to multiple diseases or a class of diseases, and for which evolving science offers innovative solutions." The workshops are intended to focus on cross-cutting or common issues and not a specific product under review by the FDA.

Health Technology Companies Agree to Implement Medicaid Community Engagement Requirements

CMS announced on January 29, 2026, that more than 15 health technology companies have voluntarily agreed to help states successfully prepare for and implement Medicaid community engagement requirements. These voluntary commitments aim to generate substantial savings for states and taxpayers and improve the beneficiary experience by reducing administrative burden, strengthening eligibility and verification systems, and better connecting Medicaid enrollees to work, education, volunteering and job training opportunities.

CMS noted in the announcement that additional companies interested in pledging similar voluntary commitments should reach out to CMS. Further, CMS stated it is committed to working with companies interested in the U.S. General Services Administration (GSA) process.

Legal Updates

340B Program Dynamics

A major trade association representing hospitals nationwide has asked the Health Resources and Services Administration (HRSA) to prevent a drug manufacturer from implementing a change that would require entities in the 340B program to submit claims every time the manufacturer's drugs are dispensed at 340B pricing. The trade association argues to HRSA that this requirement would be burdensome. The policy change was instituted by the drug manufacturer following a federal court's ruling, which found the HRSA Rebate Model Pilot Program to potentially be unlawful given violations of the Administrative Procedures Act (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.