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Looking Ahead
Passage of a multi-bill appropriations package now looks to potentially be in jeopardy, following events over the weekend in Minneapolis. U.S. Senate Minority Leader Chuck Schumer (D-N.Y.) issued a statement following a law enforcement-involved shooting, saying that Senate Democrats would not offer support for the funding package unless the U.S. Department of Homeland Security (DHS) funding is removed from the rest of the package to allow for additional conversations and direction to U.S. Immigration and Customs Enforcement (ICE). Several other Democratic senators, including those who previously voted for continuing resolutions (CR) to fund the government and avert a government shutdown, have stated they intend to vote "no" unless the DHS funding is removed and combined with stronger provisions to limit certain DHS and ICE activities.
In response, Senate Majority Leader John Thune (R-S.D.) has stated he intends to move forward with the package as passed by the U.S. House of Representatives and without the removal of DHS provisions, which would require various procedural motions that would need support of all senators. In addition, the House is slated to be out of session this week, having passed the appropriations package last week, and is not slated to return until February 2, 2026, after the government funding deadline. The situation is further complicated by the winter storm affecting much of the country, keeping the chamber out of session until at least January 27, 2026.
The appropriations package – previously on track to passage – now remains in question.
Upcoming Events
The Senate Committee on Veterans' Affairs will hold a hearing on January 28, 2026, titled "Building a 21st Century VA Health Care System: Assessing Efforts to Restructure the Veterans Health Administration."
The Senate Committee on Aging will hold a hearing on January 29, 2026, titled "Truth in Labeling: Americans Deserve to Know Where Their Drugs Come From."
The Medicaid and Children's Health Insurance Program (CHIP) Payment and Access Commission (MACPAC) will hold its monthly meeting on January 29 and 30, 2026. Topics for discussion include:
- commission votes on recommendations related to Medicaid payment policies to support the home- and community-based services (HCBS) workforce
- policy options to address managed care accountability
- policy options for appropriate access to residential services for children and youth with behavioral health needs
- policy option for implementing community engagement requirements
- policy options for children and youth with special healthcare needs transitioning to adult coverage
- behavioral health in Medicaid and CHIP
- Medicaid for justice-involved youth and transitions to the community
- automation in Medicaid prior authorization
- oversight and monitoring in the Program of All-Inclusive Care for the Elderly (PACE)
- self-direction in HCBS
The Assistant Secretary for Technology Policy/Office of the National Coordinator for Health Information Technology (ASTP/ONC) will hold its annual meeting on February 11 and 12, 2026. The keynote sessions will highlight how health technology can advance transparency and affordability, explore the future of tech‑enabled care, examine data liquidity and discuss ways to accelerate the integration of artificial intelligence (AI) into clinical practice.
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.
Personnel Updates
- The U.S. Department of Health and Human Services (HHS) announced on January 22, 2026, that former U.S. attorney for the Western District of Pennsylvania Scott Brady will lead HHS-wide efforts to combat fraud.
Artificial Intelligence and the Great Divergence – CEA Research Report
In "Artificial Intelligence and the Great Divergence," the Council of Economic Advisers (CEA) frames AI as a general‑purpose economic technology with early, measurable effects on growth and productivity. The report documents that AI investment, computing infrastructure and model performance are highly concentrated, particularly in the U.S., with almost 75 percent compute capacity for AI. It emphasizes that private investment in AI and supporting energy and data infrastructure has accelerated rapidly in the U.S., with key metrics such as compute capacity and model capability increasing at a pace far faster than previous technological shifts. The CEA argues that these dynamics could drive a new period of economic divergence between early adopters and laggards, similar to patterns observed during the Industrial Revolution.
While the report does not examine health or life sciences specifically, its findings have clear implications for research‑intensive, data‑dependent sectors. The CEA underscores that productivity gains from AI will accrue primarily to institutions that can deploy large‑scale compute, integrate AI into existing operations and make complementary investments in human capital and organizational change. For the life sciences ecosystem, this suggests that divergence may emerge between organizations with the resources to adopt advanced AI tools and those without, reinforcing differences in institutional capacity rather than uniformly raising performance across the economy. The report stresses that outcomes are uncertain, noting that historical precedent suggests efficiency gains can often increase (rather than decrease) total utilization of that resource (Jevons' Paradox).
Congressional Updates
HELP Committee Sends Letter to HHS on No Surprises Act Implementation
Senate Committee on Health, Education, Labor, and Pensions (HELP) Chair Bill Cassidy (R-La.) and Sen. Maggie Hassan (D-N.H.) sent a letter to HHS Secretary Robert F. Kennedy Jr. on January 16, 2026, in support of the HHS' efforts to improve implementation of the No Surprises Act and encourage additional actions to resolve payment disputes through the Independent Dispute Resolution (IDR) process. The letter shares the members' strong support for the HHS' work and issuance of final rules to implement IDR processes, highlighting funding through previous legislation to provide additional funding for improvements.
House Judiciary Committee Releases Report Targeting Major Retailer and PBMs
The House Committee on the Judiciary released an interim staff report. The report, authored by Chair Jim Jordan (R-Ohio) and Subcommittee on the Administrative State, Regulatory Reform, and Antitrust Chair Scott Fitzgerald (R-Wis.), follows the committee's investigation into pharmacy benefit managers (PBMs), which was initiated in September 2024. The investigation seeks to examine whether PBMs suppress competition and assess whether legislation is necessary to address "certain conduct" by PBMs.
Specifically, the report focuses on the use of "hub pharmacy technology," which the report notes are "companies which provide various digital pharmacy services to support consumer choice and price transparency." Notably, the report highlights the technology raises new questions about whether existing laws are sufficient and whether reforms should be considered to address the practice in the pharmaceutical industry.
Democratic Leaders on Energy and Commerce Send Letter on Terminated Grants to HHS
The House Committee on Energy and Commerce Ranking Member Frank Pallone (D-N.J.), Subcommittee on Health Ranking Member Diana DeGette (D-Colo.) and Subcommittee on Oversight and Investigations Ranking Member Yvette Clarke (D-N.Y.) sent a letter to HHS Secretary Kennedy to request additional information about the HHS' termination of various grant funding for a nationwide group representing pediatricians and advocating for improvements to children's health. The letter requests answers to nine questions regarding HHS' decisions and requests answers by February 6, 2026.
Regulatory Updates
CMS Releases CY 2027 Advance Notice for MA and Part D
The Centers for Medicare & Medicaid Services (CMS) on January 26, 2026, released the calendar year (CY) 2027 Advance Notice outlining proposed changes for Medicare Advantage (MA) and Part D. CMS proposes updates to the MA risk adjustment model to better reflect current costs associated with diseases, conditions and demographics. Specifically, CMS proposes implementing an updated "2027 CMS-Hierarchical Condition Categories (HCC)" risk adjustment model for MA payments that largely preserves the existing framework and updating the model to better reflect current costs and coding practices. CMS would recalibrate the model using 2023 diagnoses to predict previous expenditures, update the denominator year to 2024 and exclude diagnoses from audio-only services that align with face-to-face requirements. In addition, CMS proposes to exclude diagnoses submitted on unlinked chart review records from risk score calculation, limiting risk adjustment to diagnoses tied to encounter data or fee-for-service (FFS) claims, and aiming to reduce differential coding and improve payment accuracy across MA plans.
For Part D, CMS proposes risk adjustment updates to account for Inflation Reduction Act (IRA) benefit changes, reflect more current cost data, align diagnosis sources with MA risk adjustment policies, and separately account for MA Prescription Drug (MA-PD) plan and standalone Prescription Drug Plan (PDP) costs. CMS is also proposing several updates to the Star Ratings program. Key updates include new 2028 Star Ratings review deadlines for Complaints Tracking Module (CTM) and Part D Patient Safety data, the addition, removal and specification of several measures beginning with the 2027 Star Ratings, expanded use of Part C reporting data to validate appeals timeliness with scaled penalties for data issues, and refinements to the Categorical Adjustment Index following contract consolidations.
Comments on the CY 2027 Advance Notice are due by February 25, 2026, with the final rate announcement expected on or before April 6, 2026.
CMS Issues ANPRM to Strengthen American-Made PPE and Essential Medicines Supply Chains
CMS issued an advance notice of proposed rulemaking (ANPRM) on January 26, 2026, to seek public feedback on potential approaches to strengthen the domestic supply chain for personal protective equipment (PPE) and essential medicines. The ANPRM requests comments on the potential:
- creation of a designation hospitals can earn for their commitment to procuring domestic PPE and domestic essential medicines, as well as a request for comment on a separate future payment to hospitals that earn the designation to recognize additional costs associated with buying domestically manufactured items
- creation of a new measure for hospitals to attest to if they meet a domestic procurement minimum for PPE and essential medicines as part of the hospital Inpatient Quality Reporting (IQR) program
- "additional ideas on other policy paths within CMS' statutory authority to help foster a more resilient supply chain" focused on domestically manufactured PPE and essential medicines
The public has 60 days to submit comments.
HHS Rescinds Guidance on Nondiscrimination Protections Under the Church Amendments
The HHS issued notice on January 23, 2026, that it would rescind guidance titled "Nondiscrimination Protections under the Church Amendments." The Church Amendments prohibits entities receiving federal funding under the Public Health Service Act (PHSA) from discriminating in employment or staff privileges against an employee who may object to assisting or performing certain procedures such as abortion that are contrary to their personal religious beliefs. The HHS based its rescission of the guidance on EO 14182 related to enforcement of the Hyde Amendment – which prohibits the use of federal funding for the provision of abortions except in limited circumstances – as well as a 2021 guidance issued by the HHS Office of Civil Rights (OCR), citing cases referenced in the Supreme Court's 2022 decision in Dobbs v. Jackson Women's Health Organization. The agency also referenced 2021 OCR guidance related to Emergency Medical Treatment and Active Labor Act (EMTALA), which HHS states promoted a "misreading" of the law as it relates to abortion and relied on since-rescinded guidance.
The HHS OCR also rescinded seven additional, previously issued documents from the previous administration, including those to individual recipients, religious freedom, administration of vaccines and certain guidance for retail pharmacies.
HITAC is Back
After a yearlong pause, the Health Information Technology (IT) Advisory Committee (HITAC) is set to resume meetings on February 19, 2026. The federal advisory panel, which guides ONC on health data sharing policy and health IT rules, was sidelined early last year amid major HHS leadership and structural changes. The reason for the halt was never publicly explained, and HHS has not offered clarity since. HITAC's return comes at a moment of transition, however, as both co-chairs, Sarah DeSilvey and Medell Briggs, resigned last week via email.
FDA Issues Guidance on Records Access Authority for Cosmetics
The U.S. Food and Drug Administration (FDA) issued guidance titled "FDA Records Access Authority for Cosmetics: Guidance for Industry." The guidance provides answers to frequently asked questions about authorities for the FDA to access records related to cosmetic products. The Modernization of Cosmetics Regulation Act of 2022 (MoCRA), which was signed into law in 2022 and greatly expanded the FDA's authorities to oversee cosmetics products, included new authorities to allow the FDA to access and copy records related to cosmetic products for inspection if the FDA has a reasonable belief that a product or ingredient is likely to be adulterated and that use or exposure presents a serious health consequence or threat.
In the draft guidance, the FDA outlines where its records access authority applies and under what circumstances, the types of records for access and how records should be maintained, when a product may be deemed adulterated and the types of enforcement activity the FDA may undertake. For more information on the FDA's activities related to cosmetics, see Holland & Knight's previous alert, "FDA Issues Report on PFAS in Cosmetics Products," January 26, 2026.
FDA Issues Priority Deliverables for Human Foods Program in 2026
The FDA issued its list of priorities on January 23, 2026, for the Human Foods Program in 2026. The priorities list outlines key guidance or rulemaking documents the FDA intends to issue in 2026. The list includes provisions across FDA-regulated industries, many of which will build upon efforts that started in 2025. The deliverables will focus on food chemical safety, reducing chronic disease through nutrition and microbiological food safety. Specific priorities include issuance of a proposed rule to reform the generally recognized as safe (GRAS) notification program, final guidance on the regulation of new dietary ingredients, final regulations on front-of-package nutrition labeling, as well as modernization of the FDA's recall processes.
FDA RFI on Gluten in Packaged Foods
The FDA issued a request for information (RFI) on January 21, 2026, following the submission of a citizen petition. The citizen petition was submitted in September 2023 and requests the FDA "act to protect consumers with celiac disease by requiring that all ingredients with gluten be listed by name in the ingredient list and by requiring cross-contact controls with gluten-containing grains." Specifically, the petition requests the FDA issue a rule requiring all ingredients with gluten to be listed by name in ingredient lists of foods and add gluten to the list of allergies in Section 555.520 of the FDA's Compliance Policy Guide to address labeling and cross-contact issues related to food manufacturing practices. The RFI cites the Make America Healthy Again (MAHA) Commission's work on transparency, noting the RFI is "the first step in making recommendations about providing more transparency in disclosures of ingredients that impact certain health conditions, such as gluten for those with CD, and other established food allergens."
As part of the RFI, the FDA seeks additional data and information about the prevalence, severity and/or potency as it relates to non-wheat gluten-containing grains (GCG), gluten in oats, undisclosed ingredients of interest as well as ingredients of interest.
FDA Issues Draft Guidance on Cuffless Non-invasive Blood Pressure Pressuring Devices
The FDA announced the issuance of draft guidance on January 22, 2026, titled "Cuffless Non-invasive Blood Pressure Measuring Devices – Clinical Performance Testing and Evaluation." The draft guidance provides recommendations for clinical performance testing and evaluation for pre-market submissions of cuffless non-invasive blood pressure measuring devices. In addition, the guidance recommends certain attributes for clinical trials, such as age of participants and consideration of special patient populations.
NIH Announces Reestablishment of Sickle Cell Advisory Committee
National Institutes of Health (NIH) Director Dr. Jayanta Bhattacharya announced the reestablishment of the Sickle Cell Disease Advisory Committee. The Advisory Committee makes recommendations on research priorities supported by the National Heart, Lung and Blood Institute (NHLBI), as well as long-range planning for research programs related to sickle cell.
NIH Reinstates Policy from First Trump Administration on Use of Human Fetal Tissue, Issues RFI
The NIH announced on January 22, 2026, that effective immediately, NIH funds will no longer be used to support research involving human fetal tissue. The policy applies across the NIH Intramural Research Program and all NIH-supported extramural research to include grants, cooperative agreements and other awards, as well as research and development contracts. The policy was issued during President Donald Trump's first administration and is now being put back into place.
In tandem with the policy prohibiting the use of human fetal tissue for research, the NIH issued a corresponding RFI on reducing reliance on human embryonic stem cell use in NIH-supported research. The RFI requests comment on areas where newer, validated models could serve as a replacement for stem cell use including:
- research areas in which currently approved human embryonic stem cell lines sufficiently meet the needs of the research community as well as research areas for which new human embryonic stem cell lines are needed
- research areas for which human embryonic stem cell lines are the gold standard and could not be pursued if human embryonic stem cells (hESCs) were unavailable
- research areas in which the robustness of emerging biotechnologies such as induced pluripotent stem cells, adult stem cells, etc., can replace the use of hESCs
- research areas in which additional investments should be made to bolster validated models to replace use of hESCs
Responses to the RFI will be accepted through April 24, 2026.
PTAC Meetings for 2026
The HHS released 2026 meetings of the Physician-Focused Payment Model Technical Advisory Committee (PTAC) on January 23, 2026. PTAC meetings for 2026 will be held both virtually and in person. The meetings will occur on:
- February 23-24, 2026, from 9 a.m. to 5 p.m. ET
- June 15-16, 2026, from 9 a.m. to 5 p.m. ET
- September 14-15, 2026, from 9 a.m. to 5 p.m. ET
- December 8-9, 2026, from 9 a.m. to 5 p.m. ET
Legal Updates
HHS Employees Win Approval to Seek Class Action Lawsuit
A group of HHS employees who were dismissed during the Trump Administration's reduction in force (RIF) efforts won a judge's approval to pursue a class action lawsuit regarding the terminations. The employees had claimed the RIFs were riddled with errors, citing inaccurate information about their status as veterans, performance rating and other specific information. U.S. District Judge Beryl Howell said that the HHS employees had sufficient evidence to keep their case moving forward, giving the employees the opportunity to represent the 10,000 HHS employees who were terminated. The Trump Administration had countered, arguing the employees should seek to take the case through the Merit Systems Protection Board, which is designed to handle personnel matters. The judge tasked the Trump Administration and plaintiffs to create a schedule for certifying or denying HHS employees as part of a class action.
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