Since the start of 2025, we’ve seen changes in policy, payer strategies, and innovation that will impact our industry in the months ahead. So, Activate Health is here again to help you stay ahead of the curve. Below is a look at the latest.
REGULATORY AND POLICY
Medicare Drug-Price Negotiation Advances
Federal judges in Texas and Connecticut rejected challenges to the Medicare Drug Price Negotiation Program, delivering a blow to the pharmaceutical industry. Both courts ruled that participation in Medicare is voluntary, and drugmakers failed to show the program violated constitutional rights or caused irreparable harm. The Texas case, brought by the trade group PhRMA, was dismissed, while the Second Circuit Court upheld an earlier ruling against Boehringer Ingelheim in Connecticut.
Reconciliation Bill Blocks Funding for Family Planning Services, Reproductive Health, and Related Medical Care
While the original version of the Reconciliation Bill, known as the “One Big Beautiful Bill Act” (OBBBA), included restrictions on abortion care and gender-affirming care, nearly all were removed as a result of the Byrd Rule—”a procedural rule that requires all provisions to be related to the purpose of budget reconciliation.” What remains however is a provision prohibiting Medicaid spending to healthcare providers that deliver family planning and related services (e.g. STI testing, birth control, cancer screenings)-if that provider also provides abortions. This provision will be in effect for one year and will apply starting October 1, 2025, to 501(c)(3) organizations that received more than $800,000 in combined federal and state Medicaid funding during the 2023 fiscal year 2023.
U.S.–EU Deal to Curb Pharma Tariffs
The U.S. and European Union reached a trade deal that will impose a 15% tariff on pharmaceutical imports, though key details remain unclear, including which products will be covered. Analysts estimate the tariffs could cost the industry $13–19 billion but note the impact may be manageable since many drugmakers already manufacture in the U.S. Industry groups in both the U.S. and Europe warned the tariffs could raise costs, disrupt supply chains, and harm patient access to medicines. The move comes as the Trump administration continues a Section 232 investigation into pharmaceutical imports, which could layer additional tariffs of up to 200% in the future.
PAYER
Medicare Advantage Insurers Retrench
Humana and CVS raised profit expectations in the second quarter after cutting Medicare benefits and shedding unprofitable members last year, while rivals like UnitedHealth and Centene lowered forecasts amid rising medical costs. Seniors may have fewer MA plan options in 2026 as a result of slashed benefits and higher premiums, as payers try to account for lower profitability amid higher healthcare costs. The spillover also impacts non-MA eligibles, with many of the same insurers exiting select ACA markets or leaving the Marketplace entirely.
Insurers Commit to Simplifying Prior Authorization
Nearly 50 U.S. health insurers have signed a voluntary pledge to streamline prior authorization requirements, a process often criticized for delaying care. The commitments aim to standardize electronic submissions, speed approvals, and reduce overall use of prior authorization by 2026. By 2027, insurers pledged that 80% of electronic requests will be answered in real time, with added transparency and protections for patients switching plans. While the changes could reduce insurer profits if patients seek more care, officials said the effort marks a major industry step toward improving access and rebuilding trust in the healthcare system.
HEALTH SYSTEM NEWS
Continued Consolidation of Hospitals
In 2025, U.S. hospitals saw a wave of consolidation with 27 mergers and acquisitions completed across the country. Major deals included Sanford Health’s merger with Marshfield Clinic to form a 56-hospital system, HCA’s acquisitions in New Hampshire and Florida, and Northwell Health’s merger with Nuvance Health, creating a $22.6 billion system with 28 hospitals. Other notable transactions involved Duke University Health, AdventHealth, Prime Healthcare, and Ascension expanding through hospital purchases.
Ransomware Attack Disrupts Care
Kettering Health in Ohio has largely restored operations following a cyberattack by the Interlock ransomware group that disrupted hospital and outpatient services, EHR access, and phone systems. While emergency care continued during the outage, elective procedures were canceled, and patients were warned about scam calls linked to the incident. Kettering Health is continuing its investigation to identify any impacted data and will notify affected individuals, offering fraud protection resources as needed.
HEALTH IT AND INNOVATION
Generative AI Gaining Ground in Care Delivery
Universal Health Services and Hippocratic AI are piloting an AI agent to help clinicians improve the efficiency of post-discharge follow-up calls. The tool, tested at two hospitals, received high patient ratings and allows nurses to follow up when needed. UHS plans to expand the program to more than 10 additional hospitals and eventually all 29 of its acute care facilities. The initiative reflects broader healthcare interest in agentic AI to reduce administrative burdens and clinician burnout, though some experts caution that health systems may not pass time savings onto clinical staff directly.
PHARMACEUTICAL
New Weight-Loss Drug Shows Results – and Limits
Eli Lilly’s experimental oral GLP-1 demonstrated an average weight loss of up to 27.3 pounds in its first pivotal phase 3 trial. The trial, Attain-1, included adults with obesity or who were overweight and had at least one weight-related comorbidity (diabetes excluded). The study showed dose-dependent results, with 36 mg daily producing 12.4% weight loss, compared to 0.9% in the placebo group. Company executives hailed the results as highly promising for a once-daily small-molecule GLP-1 therapy. Lilly plans to submit the drug for regulatory approval by the end of 2025 and is exploring its use as a maintenance therapy for patients who have lost weight on injectable treatments.
As we move into the fall, staying current on these shifts—from regulatory battles to payer realignments and pharmaceutical advances—is essential. These developments signal broader changes shaping the future of healthcare. If you’re seeking guidance to navigate these trends, contact us.