The latest on Budget Reconciliation: Will the wild ride end on July 4 or continue into the summer?
Congress continues to hand President Trump the narrowest of victories as it attempts to deliver his “Big, Beautiful Bill” by July 4. The budget reconciliation bill contains many of Trump’s top legislative priorities, but it’s evolved from its original House version. The Senate version is now in the spotlight after Vice President J.D. Vance cast the tie-breaking vote this week, sending it back to the House for final consideration. The Senate version, which was shaped heavily by the Senate parliamentarian (who decides what provisions can and cannot be included in a Senate budget reconciliation bill), is expected to be voted on by the House this week. Moderate Republicans remain concerned about major Medicaid reforms and some conservative members remain opposed to its impact on the national debt. The House passed the original budget reconciliation bill by one vote. House Speaker Mike Johnson (R-LA) can only lose three votes. After weeks of his attention be consumed by international affairs, the President is now dialed in and ramping up pressure on all House Republicans to support the Senate version. If the House makes changes to the bill at this point, that will require another Senate vote. As of Wednesday, House leaders say they will not seek changes, even though they don’t agree with some of the Senate changes.
What’s in the bill and what’s out (as of today)?
- Medicaid work/community engagement requirements – IN (80 hours a month for “able-bodied” adults)
- New Medicaid copay requirements – IN (only for certain adults and with many exceptions)
- Extension of 2017 personal tax cuts – IN ($4.5 trillion total)
- Restrictions on Medicaid coverage for immigrants – IN (reduces federal funding to states that provide coverage for immigrants not in the U.S. legally)
- Tax relief for businesses – IN (including 100% write-off for equipment and research)
- Supplemental Nutrition Assistance Program (SNAP) changes – IN (states would have pick up some costs)
- OPRHAN Cures language to protect more rare disease drugs from Medicare drug negotiation – IN
- Pharmacy Benefit Manager (PBM) reforms and restrictions – OUT (it was ruled out of scope by the Senate parliamentarian)
- Federal regulations on the use of Artificial Intelligence – OUT
- Federal ban on Medicaid payment for transgender health care – OUT (ruling by parliamentarian)
- 1 year ban on federal funding of Planned Parenthood – IN (original language had the ban at 10 years)
Budget reconciliation battle prompts two key Republicans to announce retirement
Before the bill even becomes law, two key members of Congress announced they are calling it quits. After his announcement that he planned to vote “no” on the budget reconciliation bill due to Medicaid reforms, Senator Thom Tillis (R-NC) drew the ire of President Trump, who threatened Tillis with a primary challenger. Up for re-election in 2026 and already one of the most vulnerable Republicans, Tillis decided to step aside and terminate his re-election campaign. After doing so, he took to the floor of the Senate to announce that he would not be bullied into supporting a bill that was not in the best interests of his state. “I respect President Trump, I support the majority of his agenda, but I don’t bow to anybody when the people of North Carolina are at risk and this bill puts them at risk,” Tillis said. Tillis was a long-time advocate for the biotech/biopharma community, especially on issues related to intellectual property. He also recently criticized the President’s Most Favored Nation drug pricing program as a threat to U.S. innovation. Another casualty was Rep. Don Bacon (R-NE). Bacon was an early critic of major Medicaid reforms in the reconciliation bill, but he ultimately voted in favor of the bill when it reached the House floor. Bacon was also considered a vulnerable GOP incumbent heading into the mid-term elections.
Skepticism surrounds major health insurer announcement on Prior Authorization reforms
The biggest health insurance companies in the U.S. have pledged to reform their much-maligned prior authorization policies, which require doctors and hospitals to get their go-ahead before providing certain services. The changes were announced on June 23 by the U.S. Department of Health & Human Services, insurer lobby AHIP and the Blue Cross Blue Shield Association and are backed by almost 50 health insurers, including UnitedHealthcare, Aetna, Cigna, Elevance and Humana. The commitments include a promise to reduce the number of claims subject to prior authorization by next year. HHS says the self-imposed reforms will result in faster access to treatments for patients and fewer administrative hoops for providers. Compliance is voluntary, raising questions about accountability for payers that have signed on. HHS Secretary Robert Kennedy, Jr. and CMS Administrator Dr. Mehmet Oz heralded the announcement, while the American Medical Association (AMA)—a long-time critic of the insurers’ PA practices—said they were “cautiously optimistic”. Specifically, the insurers agreed to:
- Standardize electronic prior authorization submissions
- Reduce the volume of medical services subject to prior authorization by Jan. 1, 2026
- Honor existing authorizations during insurance transitions to ensure continuity of care
- Enhance transparency and communication around authorization decisions and appeals
- Expand real-time responses to minimize delays in care with real-time approvals for most requests by 2027
- Ensure medical professionals review all clinical denials
Critics were quick to point out that similar pledges were made by the health insurance industry in 2018 and 2023, with little noticeable changes for providers or patients.
FDA proposes new approval pathway for certain therapies
The Food and Drug Administration announced the launch of a new program to fast-track agency approvals for drug manufacturers working on products that could cure chronic disease, prepare for a pandemic, or address other national public health priorities. FDA Commissioner Dr. Marty Makary announced on June 17 that, beginning this year, the Commissioner’s National Priority Voucher, or CNPV, program would reduce approval times from the current 10 to 12- month wait to only one or two months following a final drug application submission. “In order to modernize the FDA, we have to keep innovating our regulatory processes. This new program is one step closer to doing that,” said Makary in a video address on X after the agency issued its press release outlining the program. The defining criteria of what constitutes a “national priority” is broad, according to the agency’s FAQ page for the new program. But Makary said in his video address that bolstering domestic manufacturing of pharmaceuticals is a national security priority that would fit under the umbrella of the program. He also said that any application to tackle an “unmet public health need” or improve pandemic preparedness would qualify. Critics quickly pounced on the announcement, citing the need for more resources and reviewers to expedite approvals at a time when the FDA has been hit with some of the steepest staffing cuts (estimated to be about 3,500 employees).
Health Policy Snippets
- Inflation Reduction Act (IRA) results in seniors paying more for drugs, according to USC study. Making prescription drugs more affordable was a key goal of the Inflation Reduction Act (IRA). However, most Medicare beneficiaries may end up paying more out of pocket for medicines as Part D plans adjust to the law’s new provisions, according to a new white paper from the University of Southern California Schaeffer Center for Health Policy & Economics. The white paper identifies two major shifts in Part D plan offerings that leave patients more exposed to drugs’ sticker prices: 1) A sharp increase in annual deductibles, or the amount that patients pay out of pocket before coverage begins 2) Fixed co-pays for common brand-name drugs are increasingly being replaced with coinsurance, in which patients pay a percentage of a drug’s list price, often a much higher amount.
- In hopes of encouraging CAR-T access, FDA removes REMS requirements. Citing more evidence on the safety and efficacy of CAR-T immunotherapies, the FDA announced in June that it was no longer requiring the REMS safety program. Under the REMS program, hospitals and clinics had to be specially certified to be able to administer CAR-T therapies. The FDA has determined that the demand is no longer necessary “given the established management guidelines and extensive experience of the medical hematology/oncology community in diagnosing and managing” the safety risks. Post-treatment monitoring of patients no longer has to be carried out at certified healthcare facilities, according to the FDA. In addition, patients are now asked to remain within close proximity of a healthcare facility for two weeks, rather than the previously mandated four weeks.
