Partial government shutdown ends. Government funding for the six appropriations bills that had not yet been signed into law lapsed on January 30, 2026, causing a partial shutdown until February 3, 2026, when a comprehensive appropriations package was signed into law. The shutdown stemmed from debate on how to fund the US Department of Homeland Security given Democrats’ concerns about immigration enforcement events in Minnesota. The partial shutdown affected the US Department of Health and Human Services (HHS) and the healthcare extenders, although given the shutdown’s short length, impacts were minimal.
The final package signed into law provides $116.8 billion for HHS, including an increase in funding for the NIH compared to fiscal year (FY) 2025. The package largely rejects the Trump administration’s requests related to the NIH. It does not include a restructuring of NIH institutes and centers, nor does it restructure HHS or create the proposed Administration for a Healthy America. The appropriations report also prohibits the NIH from implementing indirect cost caps and directs the NIH to limit the use of multi-year funding.
The package extends recently expired healthcare programs, including Medicare telehealth flexibilities, Medicaid disproportionate share hospital payment protections, and the low-volume hospital payment adjustment. It includes additional health provisions that are similar to those of the bipartisan, bicameral December 2024 health agreement that was ultimately pulled from that year’s spending bill. Key policies in the 2026 package include pharmacy benefit manager reforms, Medicare Advantage provider directory updates, pediatric research provisions, and reauthorization of mental health support programs for healthcare workers. Read more on the final package here.
The package notably does not include an extension of the enhanced advanced premium tax credits (APTCS) that expired at the end of 2025. Sen. Moreno (R-OH), the lead Republican in bipartisan talks on how to address the APTCs, provided a final offer to Democrats this week. Democrats were concerned about language in the offer regarding abortion restrictions and phasing out the APTCs in exchange for funding for health savings accounts. It appears that any attempts to extend APTCs this year are likely over.
NIH Director Bhattacharya testifies at Senate HELP Committee. During the hearing, Chair Cassidy (R-LA), Sen. Collins (R-ME), and Democratic senators raised concerns that NIH funding cuts have delayed or canceled hundreds of clinical trials, affecting tens of thousands of patients. Republicans urged the NIH to improve how clinical trials are conducted, ensure that research produces measurable results, and guarantee research is impartial to politics, while Democrats expressed concern about limited transparency from the NIH. NIH Director Bhattacharya stated that the NIH is prioritizing research with practical clinical impact, including ongoing efforts in drug repurposing and a focus on treatments that can be delivered more quickly to patients.
The hearing follows ongoing concerns from Chair Cassidy on how HHS Secretary Kennedy is approaching vaccines. Cassidy expressed concern about the United States following Denmark’s vaccine schedule because of demographic differences between Denmark and the United States. Democrats had similar concerns and raised questions regarding vaccine hesitancy and the measles outbreak due to concerns linking vaccines to autism. Bhattacharya stated that he is not aware of any credible study showing vaccines cause autism, and he emphasized HHS efforts to research autism.
House and Senate committees discuss Medicare and Medicaid fraud. During both the House Energy and Commerce Oversight Subcommittee hearing and the Senate Judiciary Committee hearing, Democrats emphasized that the Trump administration is using potential fraud as a justification to deploy US Immigration and Customs Enforcement (ICE) agents in cities such as Minneapolis. During the Energy and Commerce hearing, Democrats specifically urged HHS to reinstate fired inspectors general. Witnesses emphasized the importance of collaboration between local, state, and federal programs to help reduce fraud, and recommended solutions that help create closed feedback loops. Republicans outlined fraud schemes in Medicare and Medicaid in multiple states, including Minnesota, Arizona, and California, and spoke in support of increased prosecution, especially for foreign actors. Republicans stated that Minnesota’s leadership failed to prosecute individuals engaging in fraud. The focus of the Senate Judiciary hearing was largely on Medicaid fraud in Minnesota, but witnesses also discussed fraud in Texas, Washington, and Ohio.
White House launches TrumpRx website. The website will display discounted drug pricing offers and help consumers purchase them without insurance. TrumpRx will not sell medications, instead it will provide patients with instructions on how to obtain a specific drug at a discounted price. The drugs listed on the website are those that have entered into most-favored nation agreements with the administration. Drugs can only be obtained at lower prices if they’re purchased without insurance.
Drug manufacturers have two options to make available discounted prices. First, some drugs will have TrumpRx coupon cards. These coupon cards can be used at various pharmacies nationwide, except for certain specialty medicines. Second, for drugs without a coupon card, patients must use the manufacturer’s own direct-to-consumer website or a limited set of mail order pharmacies to obtain the drug at a discounted price. Doctors cannot submit prescriptions to TrumpRx and instead should submit them to participating pharmacies.
HRSA agrees to withdraw 340B rebate model amidst litigation. In a joint court filing, the US Health Resources and Services Administration (HRSA) and the plaintiffs asked the district court judge to vacate the ongoing litigation against HRSA’s 340B rebate model pilot program. The voluntary pilot program was announced in August 2025 and was set to begin in January 2026, but implementation was blocked by the courts. The pilot would have tested a rebate model (rather than the direct discount, which is how the 340B program has always operated) on a select group of drugs. Under the rebate model, a covered entity would have paid for the drug at a higher price up front, then later received a post-purchase rebate reflecting the difference between the higher initial price and the 340B price.
In this week’s filing, both parties agreed that further litigation would not be fruitful. The filing states that if HRSA begins a new 340B rebate program, HRSA will issue a new notice, solicit new applications, and seek comments on the notice. Further, the effective date for any new 340B rebate program would be no earlier than 90 days following the announcement of approved drug manufacturer applications.
Both chambers of Congress will be in session next week, and focus will likely remain on US Department of Homeland Security funding, which expires at the end of next week. In the healthcare space, given Congress funded HHS through FY 2026 and extended expiring healthcare programs, the focus will be at the committee level on topics including affordability, oversight, and fraud. The Senate Judiciary and Homeland Security Committees will hold hearings next week on fraud in federal programs. The House Energy and Commerce Committee will also hold the second hearing in its series on improving healthcare affordability, focused on the prescription drug supply chain. On the regulatory front, the HHS Assistant Secretary of Technology and Policy will hold its annual meeting, likely announcing additional efforts on interoperability, information blocking, and data sharing.
To subscribe to the McDermott+ Check-Up, please click here.
