Donald Trump will be the 47th President of the U.S. Not since
1892 has a President been elected to two non-consecutive terms, and
his victory has helped Republicans pick up several critical seats
in Congress. Senate Republicans have picked up three seats as of
November 7, 2024 and may pick up two more, which would give Senate
Republicans a significant majority to advance President-elect
Trump's agenda. The House is still too close to call, and the
outcome there will determine the speed and breadth with which Trump
can implement his agenda in 2025.
What it means for the healthcare and life sciences industries will
initially play out when Congress returns for the lame duck session
next week. This space will be a major focus of the Trump
administration and Congress, carrying implications for 2025 and
beyond for which you should begin preparing to address.
The Lame Duck Session
The lame duck session refers to the period between the election and
the next Congress when lawmakers return to Capitol Hill to, in
theory, resolve unfinished business. This period is commonly known
as the lame duck session because lawmakers who lost their
reelection or are retiring are still voting members of Congress
until January. It is also the period furthest away from the next
election, so members may be more willing to cut deals to wrap up a
legislative session or address issues they would prefer not to
address (or might not be able to address given changes in party
control) in the next session.
This year, Congress has until December 20, 2024 to fund the
government for fiscal year (FY) 2025 and extend or reauthorize
several expiring programs. The 118th Congress has been historically
unproductive, and there are several programs that must be extended
or reauthorized by the end of the year. Congress has, however,
devoted considerable time to certain health care issues, such as
reforming pharmacy benefit manager (PBM) practices, and lawmakers
are hopeful to advance several bills on this topic by the end of
2024. How this plays out will depend on whether Republicans believe
that waiting until next year will place them in a better position
to negotiate these items, or that clearing the decks now will be
more advantageous for 2025. The outcome in the House will help
determine this calculus, as a Democratic-controlled House will be
able to contain Trump's and Senate Republicans' policy
ambitions to reform the Inflation Reduction Act and the Affordable
Care Act. That said, if Republicans hold the House, they will be
better positioned to advance policy goals, likely through a
reconciliation package, which will have implications for several
public health programs.
Arguably the most pressing healthcare deadlines for Congress in the
lame duck are extending telehealth flexibilities and mitigating
cuts to Medicare physician payments. The Centers for Medicare &
Medicaid Services (CMS) just finalized a 2.8% cut to Medicare
physician payments starting January 1, 2025. There is growing
pressure from stakeholder groups to eliminate this proposed cut, as
the cost of practicing medicine continues to rise and more health
care systems are facing financial difficulties. Congress agreed to
reduce the proposed 3.37% cut that took effect in January 2024 by
about half in the FY24 spending deal.
There is widespread support for maintaining pandemic-era increases
in access to telehealth services in Medicare. Most of those
flexibilities expire at the end of 2024, so stakeholders are
pushing for an extension to uphold Medicare access to telehealth
services, including audio-only telehealth, through 2026. Addressing
these two items will become easier if Congress passes a bipartisan
PBM reform package, which could unlock billions in savings.
Another issue we are monitoring is the BIOSECURE Act, which Speaker
Mike Johnson signaled he would try to advance through an
end-of-year package. Stakeholders in the life sciences industry are
closely watching to see if this bill will pick up momentum in the
lame duck, and whether it is the House version or the Senate
version that is ultimately enacted. While it is hardly a certainty
that the bill becomes law, most observers believe that some version
will be enacted this year.
The productivity of the lame duck session will factor into how the
119th Congress gets underway in 2025, as Republicans are expected
to quickly introduce a major tax package, and begin discussing how
to address the debt limit, while also needing to confirm
Trump's Cabinet nominees. For these reasons, observers believe
a productive lame duck session will set the stage for a more
impactful first 100 days of the second Trump administration.
Key Issues to Watch in the 119th Congress
The Inflation Reduction Act's (IRA) Drug Price
Negotiation Program: It is difficult to predict how
President Trump will approach the IRA's drug price negotiation
program. Trump has been critical of high drug costs and proposed
several policies during his first administration to lower these
costs, including the most-favored nations proposal. Although that
proposal was invalidated by the courts, it was invalidated only on
procedural, not substantive, grounds. CMS has indicated that it
will work with the president-elect's team on the next set of
drugs subject to price negotiation, with the next 15 drugs set to
be announced by February 1, 2025. It will be tremendously difficult
for the president-elect to slow down the IRA's drug price
negotiation program for 2025, but it could be an area where Trump
works with the GOP-controlled Congress to modify the program for
future years.
Medicare: Trump has vowed not to cut Medicare
benefits, but other than that, his plans for Medicare are
uncertain. Trump and officials close to him have voiced support for
expanding Medicare Advantage (MA), which could include easing
barriers to such plans. Medicare Advantage plans are popular among
Americans, even if MA plans have come under Congressional scrutiny
for prior authorization practices in recent years. That oversight
could wane under a Trump administration and GOP-controlled Congress
and create opportunities for new innovations within MA plans. In
his first term, President Trump's administration eased the
ability of MA plans to offer supplemental benefits; it is possible
that such flexibility will continue in a new administration.
Medicaid: State Medicaid programs will likely face
intense pressure under a Trump administration intent on reining in
spending. As we saw in his first term, Trump may allow Medicaid
programs to impose work requirements, experiment with waivers, and
enact other changes that make it difficult to maintain coverage,
forcing some beneficiaries to transition to the Affordable Care Act
insurance exchanges, where premiums may be more expensive. If
Republicans hold the House, it is possible they will propose
sweeping changes like Medicaid per-capita caps or block grants,
which would cut Medicaid spending and give greater control to
states.
Affordable Care Act (ACA): Without question, the
ACA was a thorn during much of President Trump's first term. He
attempted to repeal the ACA when Republicans controlled both
chambers of Congress in 2017, which ultimately cost Republicans
their House majority. Trump may use administrative action to weaken
the ACA, including by shortening the open enrollment period,
slashing funding for advertising and enrollment assistance,
softening the individual mandate penalty, and expanding access to
short-term limited duration insurance plans, and association health
plans, which do not have to comply with most ACA-regulations. In
addition, outside commentators have suggested that there are
significant overpayments in the ACA tax credit subsidies and it is
likely that the incoming administration will attempt to address
those concerns.
However, President Trump and Congress will have to deal with
expiring enhanced subsidies that ACA enrollees will have enjoyed
for nearly five years. The subsidies were initially passed as part
of the American Rescue Plan Act (ARPA) in 2021, and extended
through 2025 by the Inflation Reduction Act (IRA). The ACA's
enhanced subsidies increase financial help for those eligible for
subsidies under the ACA, as well as expand access to subsidies for
middle-income people previously not eligible for such assistance. A
Republican supermajority makes it unlikely these are extended,
although a Democratic-controlled House could seek to extend them in
a compromise deal.
A growing number of stakeholders are already urging President-elect
Trump to take steps to stabilize the health insurance market, even
if the administration pursues reforms. Outright repeal efforts,
which we saw in 2017, would be politically risky and complicate
other less divisive legislative initiatives. Top Republicans like
Speaker Mike Johnson have signaled a willingness to introduce
reforms to the ACA, but Sen. Bill Cassidy, soon-to-be Chair of the
Senate Committee on Health, Education, Labor, and Pensions, has
said comprehensive reforms would be difficult if they are not
bipartisan efforts. That said, a larger GOP majority in the Senate
will make it easier to advance such reforms.
Supply Chain: Trump has expressed support for
ramping up domestic production of medical products and has been
critical of U.S. reliance on drugs from China. Trump was supportive
of companies that manufactured drugs domestically during his first
administration and could look to partner with such entities to
address drug shortages, or to incentivize domestic manufacturing of
medical supplies. For years, the healthcare industry has said it
needs incentives to boost domestic production, especially for lower
cost products. Supply chain issues were debated throughout much of
this Congress, and it is unclear if there will be consensus to
address any such issues during the lame duck. However, tax
incentives to boost domestic production of medical supplies could
be a topic during consideration of a tax bill next year.
Food and Drug Administration: Under a new Trump
administration, it is possible there is less emphasis on rulemaking
and policy development, with a shift toward streamlining
regulations and scaling back some initiatives. There may be
significant turnover in leadership positions, particularly in the
Office of the Commissioner and Office of Chief Counsel, which could
lead to shifts in the agency's priorities.
There will likely be more of a push to bring more therapeutics to
market, especially in the rare disease space. Republicans in
Congress have long supported expanded access policies, and Trump
embraced Right to Try policies during his first administration.
There will likely be an increase in expanded access and eased
restrictions on drug importations, and there could be proactive
policy shifts in tobacco regulatory oversight, with the Trump
administration being more lenient.
Controversial rules and executive orders, such as the Laboratory
Developed Test (LDT) rule or the Artificial Intelligence (AI)
executive order, will likely be overhauled or rescinded. There will
be enormous pressure on the Agency from both sides of the aisle,
which could lead to delays in Agency responsiveness and decision
making, inconsistencies, and unavoidable setbacks. The life
sciences industry will need to be prepared to advocate for issues
through this uncertain terrain.
Potential Players to Watch on Healthcare in the
Administration
- Robert F. Kennedy Jr.: Kennedy has a controversial healthcare background. He is an outspoken vaccine skeptic and recently said he would like to remove fluoride from drinking water, a notable public health achievement. Yet, President Trump has expressed openness to Kennedy serving in his administration, potentially at the Cabinet level or senior administrator level. Because HHS Secretary, and now even CDC Director, are Senate confirmable positions, it is unlikely that Kennedy would be confirmed for such a post, even if Senate Republicans have a sizeable majority. However, Kennedy could influence decision-making for these posts by advising Trump in a senior advisor role.
- Eric Hargan: Hargan is a healthcare veteran of two Republican administrations, including the first Trump administration, having served as deputy secretary of HHS. He has a wide variety of experience and policy expertise and is seen as capable of ensuring a smooth transition from the Biden administration. During the Trump administration, Hargan served on the Board of Operation Warp Speed, which helped facilitate the development of COVID-19 vaccines and other therapeutics. He also worked on launching the Provider Relief Fund, expanding telehealth in response to the pandemic, and other regulatory initiatives. His nomination was supported by eight Democrats in 2017, but top Democrats expressed concern with his nomination.
- Joe Grogan: Grogan is the former director of the Domestic Policy Council and also served as Associate Director for Health Programs at the Office of Management and Budget (OMB). In these roles, Grogan was responsible for overseeing domestic healthcare programs, and assisted on the review of nearly all regulatory and administrative activity relating to Medicare, Medicaid, and other healthcare programs. Grogan has been outspoken regarding concerns that the Medicare drug price negotiation program will stifle innovation.
- Bobby Jindal: Former Louisiana Governor Bobby Jindal is perhaps the most well-known name here, and has experience at HHS during the Bush administration and currently leads the health policy division of the America First Policy Institute. While he may have less experience in the weeds of health policy, the America First Policy Institute has published policies that would rein in PBMs, supported work requirements, and criticized the Affordable Care Act. He also briefly served in the House, which could be helpful when working with GOP lawmakers.
- Ned Sharpless: Dr. Sharpless was acting commissioner of the Food and Drug Administration in 2019, and was widely supported by former commissioners, including current FDA Commissioner Robert Califf, to be nominated as the permanent commissioner. Sharpless is the former Director of the National Cancer Institute and previously the Director of the UNC Lineberger Comprehensive Cancer Center. Given his background, a Sharpless nomination to be FDA Commissioner may help ensure a smooth transition in the next Trump administration.
Key Players to Watch on Capitol Hill
We will expand on these key players in the coming weeks as
committee assignments are confirmed for the 119th Congress.
- Sen. Mike Crapo (R-ID): As Chair of the Senate Finance Committee, Sen. Crapo will hold enormous sway over the scope of a tax package next year, and potential reforms to Medicare, Medicaid, the Inflation Reduction Act, and the Affordable Care Act.
- Sen. Bill Cassidy (R-LA): As Chair of the Senate HELP Committee, Cassidy will be positioned to pursue reforms at the FDA and NIH, which he already proposed reforms to this year, and could be tasked with leading efforts to reform the Affordable Care Act. Cassidy is one of the leading healthcare policy experts in Congress and will be closely watched in the upcoming FDA user fee negotiations and other health policy initiatives.
- Sen. Ron Wyden (D-OR): Sen. Wyden will remain atop the Senate Finance Committee and will be tasked with negotiating with Republicans to overhaul the tax code, policies impacting trade, and changes to Medicare or Medicare Advantage. Wyden has demonstrated a working relationship with Crapo and House Ways & Means Chair Jason Smith, so he will be an important player next year.
- Sen. Bernie Sanders (I-VT): As Ranking Member of the Senate HELP Committee, Sen. Sanders will be limited in what he can do to lower drug costs and enact major policy reforms, but will still have an opportunity to work with Sen. Cassidy on initiatives where there is bipartisan overlap. If Republicans pursue major changes to the ACA or the IRA drug price negotiation program, Sanders will be tasked with countering such efforts.
- Rep. Brett Guthrie (R-KY): While the House majority is still not clear, Guthrie is poised to assume the top position on the Energy & Commerce Committee for Republicans. Guthrie is currently the health subcommittee chair of the Energy & Commerce Committee and will likely continue to play a key role on health care issues next Congress.
- Rep. Jason Smith (R-MO): Smith will remain atop the House Ways & Means Committee and likely lead efforts to extend the expiring tax cuts next year. He worked with Democrats on such a package this year, and if Republicans control the House, a reconciliation package will be the preferred legislative path to passage.
- Rep. Frank Pallone (D-NJ): Rep. Pallone is expected to remain the top Democrat on the Energy & Commerce Committee, and will be a key player for Democrats in advocating for strengthening the IRA and ACA.
- Rep. Richard Neal (R-MA): Rep. Neal will play a major role in the upcoming tax code overhaul as the top Democrat on Ways & Means, where he is expected to remain next Congress. Neal is also a top surrogate for Democrats in support of the ACA, IRA, and strengthening Medicare.
- Rep. Diana DeGette (D-CO): Rep. DeGette is expected to lead the Energy & Commerce Health Subcommittee and has signaled she will push to reauthorize the 21st Century Cures legislation and will play a key role in advancing FDA reforms and defending against major reforms to NIH funding and research. Her role and priorities will largely depend on the outcome of the House majority.
Closing Thoughts
Trump's victory has put Senate Republicans in control for 2025
and could help House Republicans keep the House. This result has
major implications for healthcare policy over the next several
years. Republican control of the Executive and Legislative branches
could result in major changes in the healthcare space, creating
opportunities and challenges for the life sciences industry. If
Democrats flip the House, such changes would be significantly
harder to enact, likely grinding legislating to a halt until there
are must-pass deadlines that spur bipartisan dealmaking, such as
the looming debt limit crisis or expiring ACA subsidies late next
year. We will follow up in the coming weeks as the results clear up
what this will mean for the 119th Congress.
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