Health Law Informer

On February 23, the FDA announced a new approval pathway designed to support the development of drugs for ultra-rare diseases. Often, treatments for ultra-rare diseases have difficulty meeting the agency’s rigorous approval requirements. The FDA has issued a guidance document for the “Plausible Mechanism Framework,” which will allow drugmakers to bypass certain clinical trial requirements when advancing drugs treating ultra-rare conditions. Specifically, the framework will target products where randomized clinical trials are not feasible. Rather, the experience of individuals will inform the drug’s path to approval.  The therapies targeted will be those which are designed to correct or modify the underlying cause of a specific genetic, cellular, or molecular abnormality which causes disease. The framework may further apply to other tailored therapeutics, if they directly address the specific underlying cause of the disease.

The FDA recently shared information regarding its flexible approach to overseeing chemistry, manufacturing, and control (CMC) requirements for cell and gene therapies (CGT).  Due to the unique nature of the characteristics of CGT, regulatory flexibility must be adapted in a way that encourages increased innovation while still maintaining the integrity of safety and efficacy.

Throughout the country, state governments have been introducing bills which grant state authorities the ability to closely scrutinize health care transactions – specifically, with an eye toward those involving private equity. In Pennsylvania, the recent closure of the Crozer-Chester Medical Center and the bankruptcy of its parent organization, Prospect Medical Holdings, spurred a revival of the Pennsylvania legislature’s interest in overseeing proposed transactions relating to health care facilities.

On July 10, 2025, citing a drive to increase transparency, the Food and Drug Administration (“FDA”) published more than 200 complete response letters (CRLs) previously issued to companies that had submitted new drug applications (NDAs) or biologics license applications (BLAs) to the FDA for new drug or biological products. The FDA issues a CRL when it is rejecting a NDA or BLA on the grounds that the product in question that fails to meet statutory or regulatory standards. The CRLs published were mostly issued between 2020 and 2024, however, all products ultimately received approval after the recipient companies corrected the cited deficiencies. Of the 200 letters, many were already publicly available in the FDA’s Drugs@FDA database.

On May 1, the federal government brought a False Claims Act (“FCA”) suit against three health insurers, as well as three insurance brokers. The Justice Department’s suit alleges that the insurers paid millions of dollars in kickbacks to brokers in exchange for obtaining enrollments into their Medicare Advantage (“MA”) plans in the form of “marketing,” “co-op,” or “sponsorship” payments. In the same suit, two of the insurers were also accused of discriminating against disabled MA beneficiaries.

In October 2024, Blue Cross Blue Shield (“BCBS”) agreed to a $2.8 billion settlement to resolve allegations of anti-competitive practices in the health insurance market – it is reported to be the largest settlement in a health care antitrust case to date. This landmark case has drawn significant attention from policymakers, health care advocates, and consumers alike, highlighting the complexities of the health care system and its relationship with fair competition.

California is looking to take the lead on regulating private equity deals in the health care space by introducing bill AB 3129, which requires private equity groups or hedge funds to receive the state attorney general’s approval before purchasing a health care entity. At present, California’s proposal is the most extensive state legislation that seeks to regulate health care industry transactions in the U.S. and may encourage other states to establish similar legislation.

The bill’s stated goal is to protect the public interest, preserving competitive and accessible health care for communities and the state as a whole. To achieve this goal, state attorneys general are required to consider the potential positive and negative outcomes for the public resulting from a private equity firm’s proposed purchase. Price increases, quality decreases, or the resulting decrease in accessibility or availability of health care services are potential negative effects to be considered by the state attorneys general when deciding whether to consent to a transaction. On the other hand, potential benefits from the transaction to be considered may include price decreases directly passed to patients, improvements in access or availability of services to the community, or access to capital that the local community would not receive otherwise. [cite].

Under the No Surprises Act, “open negotiation” is the period of time during which payers must disclose to providers important information regarding the claim at issue. On June 14, 2024, CMS announced a 120-calendar-day exception period, the open negotiation period under the No Surprises Act, for providers, facilities, and providers of air ambulance services whose ability to initiate the open negotiation process was impacted by a recent cybersecurity attack.

Last week, the United States Department of Justice’s Antitrust Division announced the formation of the Task Force on Health Care Monopolies and Collusion (“HCMC”). The task force appears to have been inspired by concern for health care platforms that combine doctors with insurers, data, and other assets. For example, one platform company that combines a number of different health care industry sectors under its roof may be scrutinized by the HCMC. Leading the task force will be Katrina Rouse, an antitrust prosecutor who joined the DOJ’s antitrust division in 2011 and who served as a health care and consumer products section trial attorney.

On April 23, 2024, the Federal Trade Commission (“FTC”) issued its final rule regarding noncompete clauses, and which determined that such clauses are an unfair method of competition and therefore violate section 5 of the Federal Trade Commission Act (“FTC Act”). See 16 CFR Part 910. Since its release, the rule has generated some uncertainty in the health care industry because the ban’s ultimate applicability to nonprofits is unclear. Nonprofit hospitals make up the majority of all hospital systems in the United States, with the American Hospital Association (“AHA”) having indicated that as many as 58% of hospital systems claim tax-exempt status as nonprofits. Notably, nonprofit health care organizations regularly use noncompetes with physicians.