McDermott+ Check-Up: June 6, 2025 - McDermott+

McDermott+ Check-Up: June 6, 2025

THIS WEEK’S DOSE


  • Senate Begins Work on Reconciliation. Democrats prepared to file points of order to exclude certain provisions under the Byrd rule, while Republicans discussed key health provisions.
  • White House Sends Congress $9.4 Billion Rescissions Package. The package requests that Congress rescind $900 million in global health funding.
  • Senate HELP Committee Reviews Reauthorization of Over-the-Counter Monograph Drug User Fee Program. Discussion focused on layoffs at the US Food and Drug Administration (FDA) and how the agency can expedite over-the-counter medication development.
  • House Begins FY 2026 Appropriations Markups. The Subcommittee on Agriculture, Rural Development, FDA, and Related Agencies met to mark up its fiscal year (FY) 2026 bill.
  • HHS Releases FY 2026 Budget in Brief. The US Department of Health and Human Services (HHS) budget in brief requests $94 billion in discretionary funding, a $31 billion decrease from FY 2025.
  • CMS Rescinds 2022 EMTALA Abortion Guidance. The agency noted that the Emergency Medical Treatment and Active Labor Act (EMTALA) guidance did not reflect the current administration’s priorities.
  • FDA Declines to Appeal Ruling on LDT Regulation. A federal court previously struck down the laboratory-developed test (LDT) final rule, and the FDA declined to appeal within the given 60-day window.
  • Fired HHS Employees File Class Action Lawsuit. The federal case alleges that firings were based on incorrect personnel records.

CONGRESS


Senate Begins Work on Reconciliation. The Senate returned from its Memorial Day recess to begin consideration of HR 1, the One Big Beautiful Bill Act, the House-passed reconciliation package. Senate Majority Leader Thune (R-SD) aims to have a modified bill on the floor the week of June 23, 2025, with the goal of getting a final bill to President Trump’s desk by July 4, 2025. This week’s work occurred mostly behind the scenes. Senate committees of jurisdiction are not expected to hold markups; instead, committees of jurisdiction will release titles of the bill within their jurisdiction. The process started this week. The Senate Committee on Commerce, Science, and Transportation released its language that modifies the House’s artificial intelligence (AI) provisions, removing the 10-year state ban on AI regulation and amending funding language so that states would only be eligible for AI development grants if they do not enforce state laws regulating AI models.  The Senate Finance Committee, with jurisdiction over Medicaid, taxes, and the Affordable Care Act (ACA), will likely be the last committee to release updated text. Majority Leader Thune noted that the Finance Committee title could be released as soon as next week.

Majority Leader Thune can lose no more than three Republicans to pass the bill. This week, more Republicans came out in opposition to certain Medicaid provisions, including the moratorium on provider taxes. Sens. Collins (R-ME), Murkowski (R-AK), Moran (R-KS), and Hawley (R-MO) are among those with concerns. On the conservative side, Sens. Paul (R-KY), Johnson (R-WI), Lee (R-UT), and Rick Scott (R-FL) continued to voice strong opposition unless the bill does more to cut federal spending and reduce the deficit. There has also been discussion about potentially including Medicare Advantage reforms to increase savings, although no explicit policies have been presented publicly. Senate passage will likely require a delicate balancing act, and afterward the bill must pass the House again. President Trump met this week with Senate Finance Committee Republicans, and Centers for Medicare & Medicaid Services (CMS) Administrator Oz is holding meetings in the Senate to hash out concerns and attempt to reach policies that can unite Republicans. The process to scrub the bill of provisions that don’t meet the Byrd rule is also ongoing. Republicans met with the Senate Parliamentarian this week, and Democrats likely will follow soon. (For a full explainer on the Byrd rule, read our +Insight).

On June 4, 2025, the Congressional Budget Office (CBO) released updated estimates for H.R. 1. CBO estimates that the bill would increase the deficit by $2.4 trillion. This figure is based on a $1.2 trillion reduction in federal spending offset by a $3.6 trillion decrease in revenue. CBO estimates that 10.9 million individuals would be uninsured in 2034. Of those, 7.8 million would lose Medicaid coverage, with others mainly losing coverage from changes to the ACA. CBO estimates that the ACA changes would result in gross benchmark premiums for ACA plans decreasing by an average of 12%. At the request of Senate Democrats, CBO released additional analysis that provides further details on health insurance loss and estimates that failure to extend the enhanced advance premium tax credits as part of H.R. 1 would lead to an additional 5.1 million Americans being uninsured in 2034.

White House Sends Congress $9.4 Billion Rescissions Package. The package asks for more than $9 billion of previously appropriated funding to be rescinded and is largely focused on foreign aid and the Corporation for Public Broadcasting. The package includes recissions of funding from health programs within the US Department of State and the US Agency for International Development (USAID). It requests rescission of $500 million in global health USAID funding that focuses on equity, family planning, and reproductive health within child and maternal health, HIV, and infectious disease activities. It also requests rescission of $400 million of President’s Emergency Plan for AIDS Relief (PEPFAR) funding. Congress has 45 days to act. Approval of the rescission package only requires a simple majority in the House, which will likely consider it next week. In the Senate, Appropriations Chair Collins (R-ME) has already stated concerns about PEPFAR cuts and noted her committee’s intention to examine the package.

Senate HELP Committee Reviews Reauthorization of Over-the-Counter Monograph Drug User Fee Program. During the hearing, Democrats focused on how workforce reductions at the FDA will impact agency operations, while supporting the development of over-the-counter (OTC) drugs. Republicans advocated for a more streamlined and efficient transition from prescription drugs to OTC medications, emphasized the need for regulatory oversight of international facilities, and encouraged use of an online dashboard to track the FDA’s progress. Jacqueline Corrigan-Curay, MD, acting director of the FDA’s Center for Drug Evaluation and Research, expressed her commitment to working with Congress to streamline the transition from prescription drugs to OTC medications.

House Begins FY 2026 Appropriations Markups. The House Appropriations Committee began subcommittee markups this week to discuss spending bills for FY 2026. The Subcommittee on Agriculture, Rural Development, FDA, and Related Agencies held its markup, during which it advanced its bill to the full committee by a party line vote. During the markup, Republicans stated that the bill would help reduce the federal deficit, while Democrats criticized the bill for cutting funding for the FDA and the Supplemental Nutrition Assistance Program. The full schedule of subcommittee and full committee markups can be found here.

ADMINISTRATION


HHS Releases FY 2026 Budget in Brief. Late on May 30, 2025, HHS released its budget request for FY 2026, known as a budget in brief. Some agencies and divisions within HHS also released congressional justifications that provide more information on funding requests. Additional justifications from other agencies and divisions are said to be forthcoming. The budget in brief follows the earlier release of the “skinny” budget and provides more detail on HHS priorities, including the agency’s restructuring. The document only includes discretionary funding requests and does not include legislative proposals that would impact mandatory programs such as Medicare or Medicaid. Administration officials indicate that mandatory funding requests are unlikely to be released before reconciliation is complete.

Highlights for HHS discretionary funding requests include:

  • $95 billion for HHS, a $31 billion decrease from FY 2025.
  • $14 billion for the new Administration for a Healthy America (AHA), which HHS estimates to be a $6 billion cut from current funding levels for all the programs that will be transferred to AHA. The budget in brief includes an overview of the programs from the Health Resources and Services Administration, the Centers for Disease Control and Prevention (CDC), the Substance Abuse and Mental Health Services Administration, and the Office of the Assistant Secretary for Health that would be part of AHA.
  • $3.1 billion for FDA, a $409 million cut compared to FY 2025.
  • $4.1 billion for CDC, a $550 million cut compared to FY 2025.
  • $27.5 billion for NIH, a $17 billion cut compared to FY 2025.
    • The budget notes that NIH would cap indirect cost rates for grants at 15%, a policy that NIH pursued earlier this year, is subject to ongoing litigation, and is likely to face scrutiny from lawmakers on both sides of the aisle.
  • $3.5 billion for CMS, a $673 million cut compared to FY 2025.

Read more in our +Insight.

CMS Rescinds 2022 EMTALA Abortion Guidance. The Biden administration released the HHS guidance in July 2022 in the wake of the US Supreme Court Dobbs decision that left regulation of abortion to the states. The now-rescinded guidance stated that EMTALA protects healthcare providers’ clinical judgement and any action they take to provide stabilizing care for emergency medical conditions, including ectopic pregnancy, complications of pregnancy loss, or preeclampsia. In a press release, CMS noted that it will continue to enforce EMTALA, including in emergency medical situations where the health of a pregnant woman or her unborn child are at risk, and indicated that the agency will rectify any legal confusion on this issue.

COURTS


FDA Declines to Appeal Ruling on LDT Regulation. In late March 2025, the US District Court for the Eastern District of Texas struck down the regulation finalized in May 2024 under the Biden administration that gave the FDA the authority to regulate LDTs. The district court found that the rule violated the Loper Bright standard because the FDA exceeded its statutory authority. The FDA was given a 60-day window to appeal the decision, which it declined to do. Therefore, the final rule remains without force. Although the FDA did not issue a statement on its decision, it follows previous actions by the Trump administration to limit agencies’ regulatory power outside of statutory authority. Read more about the March court decision here.

It remains to be seen if the Trump administration will take a new approach to LDT regulation or if lawmakers will re-introduce the VALID Act, which received bipartisan support in previous session of Congress and would require the FDA to regulate LDTs and other in vitro diagnostics.

Fired HHS Employees File Class Action Lawsuit. In yet another challenge to the HHS reductions in force, seven former HHS employees filed a case in the US District Court for the District of Columbia.  The lawsuit claims that the personnel files used to justify firings had errors and inaccuracies, which HHS Secretary Kennedy has attributed to siloed human resources departments across the agency. The lawsuit notes that most employees fired during the April 2025 reduction in force could be eligible for this class action.

QUICK HITS


  • FDA Begins Agency-Wide AI Tool Use. FDA employees are using the generative AI tool Elsa in various internal projects, including clinical protocol reviews and scientific evaluations. The tool was launched before the original deadline of June 30, 2025, and FDA will expand the tool over time.
  • HHS Announces Heads of ASTP, OCR. Thomas Keane, MD, a radiologist, will serve as the assistant secretary for technology policy (ASTP) and national coordinator for health information technology. Paula Stannard worked for HHS during the first Trump administration and will serve as director of the HHS Office of Civil Rights (OCR).
  • FBI Opens Tipline for Reports of Gender-Affirming Care for Minors. The tipline seeks reports of any hospitals or clinics performing gender-affirming care for minors and follows HHS tips for whistleblowers.
  • CMS Announces Health Technology Initiatives. In line with CMS’s request for information on the healthcare technology ecosystem, the initiatives include building an interoperable national provider directory and modernizing Medicare identification processes.
  • House Passes SUPPORT Act Reauthorization with Bipartisan Support. The legislation would modify HHS substance use and mental health disorder programs and reauthorize various grant programs through FY 2030. It passed by a vote of 366 – 57, with the nays mostly from Freedom Caucus Republicans and Energy and Commerce Democrats.
  • James O’Neill Confirmed as HHS Deputy Secretary. The Senate confirmed O’Neill by a 52 – 43 party line vote. Once sworn in, he will be second in command at HHS.
  • House Oversight Committee Ranking Member Questions AI Use in MAHA Report. Acting Ranking Member Lynch (D-MA) requested information from HHS Secretary Kennedy by June 16, 2025, to assess whether the agency used AI to write the recently released MAHA report.
  • GAO Releases Report on Diagnostic Testing for Pandemic Threats. The US Government Accountability Office (GAO) report summarizes insights from a roundtable of 19 experts. GAO recommends that HHS develop and periodically update a national diagnostic testing strategy for infectious diseases and establish a national diagnostic testing forum.
  • NIH Requests Information on Agency AI Strategy. NIH requests information about specific topics and notes that there is a need for a unified, Office of the Director-level AI structure to build synergy across program silos, improve transparency, and accelerate research and development. Comments are due July 15.
  • CMS Rescinds Biden-era Medicaid SOGI Data Guidance. The now-rescinded guidance aimed to help states with collecting sexual orientation and gender identity (SOGI) information in Medicaid applications. The rescission notes that CMS no longer intends to collect this data from states.

NEXT WEEK’S DIAGNOSIS


Both chambers of Congress will be in session next week, with work on reconciliation expected to continue in the Senate. The Senate Appropriations Committee will discuss the NIH FY 2026 budget, and the House Energy and Commerce Health Subcommittee will examine US-made medicine and domestic supply chains. The House Committee on Appropriations will consider the Agriculture, Rural Development, FDA, and Related Agencies appropriations bill that advanced from the subcommittee this week.