The first days of December have been marked by an unusual burst of activity related to OTC drugs at FDA.

Request for Information for 2026 Meeting

As previewed by former CDER Director Tidmarsh at the Consumer Healthcare Products Association meeting in September, FDA announced last week its intent to schedule a public meeting in 2026 on increasing access to nonprescription (OTC) drugs. In preparation for the meeting, FDA issued a request for information inviting interested parties and the public (specifically including commercial drug developers, health care providers, and consumers) to share their perspectives on scientific, regulatory, and practical considerations related to nonprescription drug use.

The request includes specific questions for which FDA is seeking input that will be used to inform topics for the 2026 public meeting. The questions listed below are described as being “most pertinent to increasing access to nonprescription drugs.”

1. What are challenges faced in the development of drugs for nonprescription use?
2. What are the biggest opportunities to improve access to nonprescription drugs?
3. How could interested parties— including, but not limited to, drug developers, health care providers, patients, consumers, and retailers— work together to increase access to safe and effective nonprescription drugs?
4. Looking ahead to a 2026 public meeting, what specific topics or questions would you like to see on the agenda for public discussion?
5. What scientific barriers most limit progress in increasing access to nonprescription drugs?
6. What additional scientific tools, technologies, or data sources could support access to nonprescription drugs?
7. Are there specific diseases or conditions that have not, traditionally, been treated with nonprescription drugs for which nonprescription drugs could be safely and effectively used without the supervision of a licensed healthcare practitioner? If so, what information would support such use under the applicable statutory and regulatory requirements for nonprescription drugs?

In the past five-plus years, two programs have been introduced that were designed, at least in part, to increase access to OTC drugs. The first was under OTC Monograph Reform enacted in the 2020 CARES Act which includes a process for adding ingredients or new uses to the monographs through the submission of an OMOR (over-the-counter monograph order request) (read our blog here), and the second was the final rule for ACNU to allow for the approval of an OTC drug with “additional conditions of nonprescription use” beyond the information found in the drug facts label (DFL) (read our blog on ACNU here).  Although the final ACNU rule issued in January 2025 only became effective in May of this year, and the OMOR process was expected to take some time to get up and running, the lack of increase in OTC options under these programs and the generally low numbers of OTC switches in recent years may be a factor the Agency’s decision to hold this meeting.  It will be interesting to see whether commenters provide implementable suggestions for increasing access to nonprescription drugs or primarily describe frustrations with the current programs, and what FDA does with the comments and, eventually, the meeting itself.

The comment period closes on February 2, 2026.

New MaPP for ANDAs of a Switched NDA

This week FDA issued a new Manual of Policies and Procedures (MaPP) for when a reference listed drug (RLD) undergoes an OTC switch from prescription to nonprescription status. MaPP 5200.11, entitled “Prescription to Nonprescription Switches and Abbreviated New Drug Applications,” applies only to full Rx-to-OTC switches. The MaPP describes that in this situation, ANDAs referencing the now-switched NDA must update labeling with the relevant changes and that FDA does not consider the full Rx-to-OTC product approved through a supplement to the original Rx NDA to be a different listed drug. Consequently, ANDA holders referencing that NDA can submit a supplement (rather than a new ANDA) to update labeling to reflect the OTC status of the RLD.

The MaPP goes on to set forth timelines for FDA to take certain actions following the switch. Specifically, it provides that FDA will notify the ANDA holders and track whether ANDA holders address the change with the submission of a supplement or withdrawal of the ANDA or other correspondence regarding the intended action and timeline. If no action is taken within six months, a follow-up notification will be sent and if there is no response within 30 days, the Office of Compliance is to be consulted.

Priority Review Vouchers (PRV) are incredibly valuable—several have sold for hundreds of millions of dollars.  Which is why it makes sense that Sun Pharma Advanced Research Co. Ltd. and Sun Pharmaceutical Industries, Inc. went to the mat fighting FDA for a PRV for phenobarbital.  And last week, that fight was rewarded by the District Court for the District of Columbia, which found that FDA’s refusal to award a PRV was unlawful under the Administrative Procedure Act based on the definition of the word “approved.”

For the uninitiated, a PRV is a voucher that can be redeemed for Priority Review on a subsequent application.  Use of the voucher therefore reduces the PDUFA goal for a non-Priority Review eligible application from 10 months to 6 months.  A PRV can be awarded for a statutorily-enumerated tropical disease or, relevant here, a rare pediatric disease approved before September 2026 (there used to a Medical Countermeasure PRV, but that has lapsed).  In order to be eligible for a rare pediatric disease PRV, the application must be for the prevention or treatment of a rare pediatric disease, submitted under section 505(b)(1) of the FDC Act, approved between September 30, 2016 and September 30, 2026, based on clinical data from a study evaluating pediatric populations and dosages without an adult indication, and eligible for priority review.   Integral to the issue at hand here, the application also must seek approval for “a drug . . . that contains no active moiety . . . that has been previously approved in any other application under subsection (b)(1), (b)(2), or (j) of section 355 of this title.”

Back to the action: The fight starts in November 2022, when Sun received approval for SEZABY (phenobarbital) to treat neonatal seizures.  But in approving SEZABY, FDA informed Sun that it denied Sun’s request for a rare disease PRV.  FDA denied the PRV on the basis that SEZABY “is not an application for a drug ‘that contains no active moiety . . . that has been previously approved in any other application under subsection (b)(1), (b)(2), or (j) of section 505’ of the FD&C Act.”   FDA pointed to NDA 000597 for phenobarbital and atropine as the basis of denial, noting that the Agency had “identified at least one NDA for a drug product containing phenobarbital as an active moiety that came into effect before 1962 and was deemed approved by the 1962 Amendments.”

Importantly, the phenobarbital NDA referenced by FDA, NDA 000597, was submitted in 1939, when section 505 of the FDC Act provided that an NDA would automatically become effective unless a contrary order were issued; as the Court explained, the NDA “became effective not by any positive agency action but by its inaction.”  In 1962, Congress amended the FDC Act to require affirmative agency approval based on evidence that showed the drug is effective; applications that previously became effective under the Act were “deemed” approved by FDA, allowing them to continue to be marketed unless FDA ordered its removal after two years for lack of efficacy.  In 1972, FDA determined that there was a lack of substantial evidence to support effectiveness of the phenobarbital drug, proposed to withdraw NDA 000597 in 1977, and formally withdrew approval in 1982.

Based on these facts, Sun argued that NDA 000597 was not an application under section 505(b)(1), (b)(2), or (j) of the FDC Act because those provisions did not exist in 1939.  But even if it were an application, Sun argued, the application was not “approved” as Congress contemplated under the plain language of the statute.   The word “approved” requires affirmative review, which did not apply to phenobarbital, as it was automatically approved by FDA inaction and later only “deemed” approved.

FDA, on the other hand, argued that NDA 000597 was an “application under subsection (b)(1)” precisely because it was deemed approved under the 1962 amendments.  And, because it was “deemed” approved, the application is approved, according to FDA.  Thus, since phenobarbital was one of the active moieties in approved NDA 000597, FDA contended that the active moiety had been previously approved by FDA and not entitled to a PRV.

The Court sided with Sun.  Because FDA did not ““sanction officially” phenobarbital, or “confirm [it] authoritatively,” or “accept [it] as satisfactory,” and because it was only “deemed” approved and later withdrawn for lack of efficacy, the Court said, “[i]n no ordinary sense then was NDA 000597 ever ‘approved.’”  By cross-referencing the 1984 Hatch-Waxman Amendments that introduced the modern-day 505(b) and (j) approval pathway, the Court explained that “Congress clearly signaled that any ‘previous approval’ had to have successfully navigated” the modern-day application process.  Finally, the Court found that FDA’s interpretation conflicted with the purpose of the rare pediatric PRV: Congress could not have intended a drug that “was never able to show efficacy and was ultimately pulled from the market to erect an obstacle to future developments in the treatment of rare pediatric diseases.”

This decision is meaningful—both in the context of rare pediatric diseases and beyond.  It opens up grandfathered drugs to be eligible for a very valuable PRV if they are repurposed for a pediatric or tropical disease.  While that is interesting, it is relevant to a very small number of drugs.  Nevertheless, the decision has serious implications beyond the world of PRVs:  effectively, the decision will force FDA to reexamine the definition of a “new” drug in any context in which the active moiety cannot have been previously “approved.”   Specifically, this is important from an NCE context, as FDA previously has interpreted NCE to apply only to drugs that have never been approved, searching its records all the way back to 1938.   Presumably, this leaves FDA’s interpretation vulnerable to challenge, as drugs “approved” between 1938 and 1962 were not necessarily “approved.”   We’re watching to see whether someone—maybe even Sun—takes this to court to obtain an NCE period for a pre-1962 drug.

At this point in 2024, there were countless unknowns about how the medical device industry would be impacted in 2025.  Did the year unfold as you expected?  Did your company prepare for impacts to the foreign supply chain?  Did you predict the government was going to shut down for 43 days?  What lessons have we learned to take into 2026?

Please join us at 11:00 am today, December 10, 2025, for a webinar tailored to medical device professionals: attorneys, regulatory experts, and compliance staff.  HPM attorneys Anne Walsh and Steven Gonzalez will present the key developments that affected the medical device industry in 2025, highlight notable trends from the data, and read the tea leaves for what to expect in 2026.  Don’t miss this free webinar.

Register here.

On December 5, FDA’s Digital Health Center of Excellence announced the “Technology-Enabled Meaningful Patient Outcomes (TEMPO) for Digital Health Devices Pilot,” in conjunction with the Center for Medicare and Medicaid Innovation (CMMI) Advancing Chronic Care with Effective, Scalable Solutions (ACCESS) model. FDA’s press release states that TEMPO is a “voluntary pilot designed to promote access to certain digital health devices while safeguarding patient safety.”

TEMPO will use a “risk-based enforcement approach that supports digital health devices intended for use to improve patient outcomes in cardio-kidney-metabolic, musculoskeletal, and behavioral health conditions.” The devices in the TEMPO pilot must be for uses “covered by the CMMI ACCESS model while collecting, monitoring, and reporting real-world performance data.” The ACCESS model intends to address a current challenge faced by developers of many digital health products, namely, that these products have not historically been covered by CMS, minimizing, if not entirely precluding, their uptake. ACCESS will allow CMS to offer coverage based on “outcomes over activities, enabling clinicians to offer innovative technology-supported care that improves patients’ health and complements traditional care.”

There are a few points of particular interest in this announcement. First, FDA states:

Under this approach, participating manufacturers may request that the FDA exercise enforcement discretion for certain requirements, such as premarket authorization and investigational device requirements, while manufacturers collect and share real-world data demonstrating the device’s performance. The FDA will work with participants in the TEMPO pilot to identify the circumstances when enforcement discretion may be appropriate for that manufacturer’s device.

It is not clear how a manufacturer would go about requesting enforcement discretion, the circumstances in which FDA would find it appropriate to exercise such discretion, or what happens after the manufacturer is done collecting and sharing “real-world data demonstrating the device’s performance.” Would the manufacturer, at that point, have to go back and obtain a premarket authorization? This would be an extraordinarily odd outcome, if the device is already being reimbursed by CMS, utilized for clinical decision-making, and essentially used commercially as if it were already authorized. This also does not address whether FDA would exercise enforcement discretion for other related requirements, for example, registration and listing and quality system requirements. It also is worth pointing out that it is not clear whether FDA has the statutory authority to permit differential treatment of certain devices, allowing some on the market without premarket authorization while requiring similar devices that are not part of the program to obtain premarket authorization before commercialization.

Relatedly, while not necessarily clear on FDA’s website, CMS’s website more explicitly calls out the types of conditions that devices in the pilot should be intended to treat, namely:

• Early cardio-kidney-metabolic conditions (eCKM): hypertension (high blood pressure), dyslipidemia (high or abnormal lipids, including cholesterol), obesity or overweight with marker of central obesity, and prediabetes
• Cardio-kidney-metabolic conditions (CKM): diabetes, chronic kidney disease (3a or 3b), and atherosclerotic cardiovascular disease, including heart disease
• Musculoskeletal conditions (MSK): chronic musculoskeletal pain
• Behavioral health conditions (BH): depression and anxiety

The first category above is particularly interesting, given FDA’s recent pushback on any blood pressure product that has not been cleared by FDA, stating that without such clearance there is no assurance of safety and effectiveness. See our posts on the WHOOP Warning Letter and FDA’s recent safety alerts regarding risks associated with use of unregulated blood pressure monitors. FDA now seems to be saying that products of this type may not need premarket authorization, at least not if they are part of this pilot program, which seems to call into question FDA’s prior statements about the necessity of such oversight to assure safety and effectiveness.

Given the historical challenges associated with coverage of digital health products, the TEMPO pilot is an overdue initiative and one with the potential to help provide access to critical digital health products for the Medicare population. In order to allow interested parties to proceed appropriately, however, additional clarification is needed. For example, it is not clear whether a party needs to submit both a “statement of interest” to the FDA, as indicated in the announcement, as well as an “ACCESS Model Interest Form” to CMS, or whether submission of one is adequate. It is also not clear whether CMS would need to first determine that the device is eligible for coverage under the ACCESS Model prior to the device being considered for the TEMPO pilot, or whether such a determination will be made collaboratively between CMS and FDA. Furthermore, it may be helpful for FDA to update its page to more specifically identify the conditions to be treated by a device in the pilot and mirror what is on CMS’s website, indicated above.

CMS’s website also states that the ACCESS Model Interest Forms must be submitted before April 1, 2026, and the program is intended to begin in July 2026. While FDA’s announcement indicates that interested parties can submit “statements of interest” beginning in January 2026, it does not include the April 1 deadline, nor does it indicate an intent to begin the program in July. Given that ACCESS and TEMPO are intertwined, it is reasonable to assume that these dates apply for both parties.

We are happy to help you keep up your “tempo” to be able to “access” both initiatives in a timely manner.

A few months ago, we blogged about a Texas U.S. District Court’s Wulferic ruling that FDA’s civil monetary penalty (CMP) provision for tobacco products contained at 21 U.S.C. § 333(f)(9) is unconstitutional under the Seventh Amendment and SEC v. Jarkesy, 603 U.S. 109 (2024). Wulferic, LLC v. FDA, 793 F. Supp. 3d 830 (N.D. Tex. 2025).  (As a recap, the court, applying Jarkesy, ruled that the Seventh Amendment right to a jury trial applies to civil monetary penalties like those applied by the FD&C Act, and that the enforcement of these penalties by administrative law judges is unconstitutional.)  We also considered the potential implications of that ruling, and its place in the broader landscape of Jarkesy challenges to FDA’s tobacco CMPs.  Nearly four months on, the picture is coming into focus: the main action is now shifting to the D.C. Circuit and the Fifth Circuit, and with FDA going full steam ahead on pursuing tobacco CMPs and defending its position, the stakes remain high.

In September, FDA appealed the Wulferic decision and filed a brief in the Fifth Circuit case we were watching, Texas Tobacco Barn, forcefully defending the constitutionality of its tobacco CMP provisions.  The Fifth Circuit then decided to stay the Wulferic appeal pending the outcome of Texas Tobacco Barn, although the Wulferic petitioner (likely wanting to get a word in while it matters most) filed an amicus brief there.  See Wulferic, LLC v. FDA, No. 25-11112, Dkt. No. 18 (5th Cir. Oct. 10, 2025); Texas Tobacco Barn, LLC v. HHS, No. 25-60200, Dkt. Nos. 43, 44 (5th Cir. Aug. 3, 2025).  Texas Tobacco Barn is fully briefed, but no argument has yet been scheduled.

We were also keeping an eye out for a ruling in The Vaping Dragon, which presented a different judge in the Northern District of Texas with the same issues as Wulferic.  That judge has still not issued any ruling — although that case has not been formally stayed, it is possible that the judge too is keeping his pen dry until the outcome of the Fifth Circuit’s decision(s).

Over in the D.C. Circuit, things are moving a bit more speedily in the case we were watching there.  Much the same as in Texas Tobacco Barn, in D and A, FDA filed a brief forcefully defending its tobacco CMP provisions.  The D.C. Circuit has set oral argument for December 8, 2025 (we’ll be tuning in), offering the first chance for the Circuit courts to weigh in on this precise issue.  See D and A Business Invs., LLC v. FDA, No. 25-1074 (D.C. Cir. Sept. 12, 2025, Oct. 16, 2025).  While Texas Tobacco and D and A each present other challenges to the proceedings such that they theoretically could be resolved without reaching the Jarkesy question, in all likelihood, both Circuits will reach its merits.

As before, the stakes are high: a ruling from either court that FDA’s tobacco Civil Money Penalty proceedings are unlawful could significantly dismantle FDA’s arsenal of actions to enforce compliance with the FD&C Act’s tobacco provisions.  And even if such a ruling only purports to offer party-specific relief (as the district court Wulferic decision did), FDA would be much harder-pressed to continue business as usual given the broader precedent set by such a decision.  If the challengers lose either case, they will be highly motivated to seek review in the Supreme Court; and especially if the outcome of the two decisions results in a Circuit split, the Supreme Court will likely weigh in to resolve it (as it recently did in a series of challenges to FDA decisions on flavored e-cigarette tobacco marketing applications, see FDA v. Wages & White Lion Invs., 604 U.S. 542 (2025) (see our post here)).

At least so far, however, FDA’s CMP proceedings show every sign of proceeding apace even after the (limited) Wulferic loss: FDA records show that it has continued to file hundreds of new administrative CMP complaints in recent months, just as it did before. See FDA, Tobacco Compliance Check Outcomes.

We will continue to monitor the developments in these cases and any other major challenges that may arise; but for now, what goes on in the federal appeals courtrooms in the District of Columbia and then New Orleans will matter most.

FDA has announced a public meeting and request for comment on proposed recommendations for the next reauthorization of the Biosimilar User Fee Act (BsUFA) for fiscal years 2028 through 2032. BsUFA allows FDA to collect user fees to support the review of biosimilar biological products. The current authority expires in September 2027, and new legislation will be needed for FDA to continue collecting these fees.

BsUFA was first enacted in 2012 and has been renewed twice since then. The program is designed to give FDA additional resources—such as staffing—to help ensure efficient and predictable biosimilar application reviews. Under each reauthorization, FDA and industry agree to specific performance goals and procedures, including timelines for reviewing applications and commitments related to meetings, communication practices, and regulatory science efforts. The current BsUFA (BsUFA III) includes enhancements such as new supplement categories, review timelines, expanded support for interchangeable biosimilars, improved inspection communication, and investments in IT and data modernization.

As part of the reauthorization process for BsUFA IV, FDA is seeking public input before it begins negotiations with industry. FDA is specifically interested in feedback on the performance of the current BsUFA program, which elements should be kept, changed or discontinued, whether any new components should be added, and whether the current fee structure should be updated to better support biosimilar development and timely patient access.

The public meeting will be held on December 3, 2025, from 9 a.m. to 12 p.m. EST, both in person at FDA’s White Oak Campus and virtually. After the meeting, FDA will continue to accept written comments until January 2, 2026. A transcript of the meeting and all submitted comments will be posted online once available.

Stay tuned for further updates.

Hyman, Phelps & McNamara, P.C. (HPM) is pleased to announce that Steven Gonzalez has been promoted to Counsel.

Steven joined the firm in 2022 and has quickly become a trusted advisor to clients navigating complex FDA regulatory and compliance matters. His practice focuses on advising pharmaceutical and medical device manufacturers on a wide range of issues, including product development strategy, marketing and promotion, lifecycle management, and enforcement risk. Steven’s full biography can be found here.

HPM Director Anne Walsh noted “Steven’s expertise and judgment on medical device topics make him a go-to resource for firm clients and an invaluable team member at HPM.  I am thrilled that he is being promoted in recognition of his substantive contributions and potential.”

Please join us in congratulating Steven on this well-deserved achievement.

On January 31, 2024, FDA issued the final rule revising 21 C.F.R. Part 820, which, upon taking effect, will be referred to as the Quality Management System Regulation (QMSR) (see our prior blog post here).  The QMSR incorporates the international standard ISO 13485: 2016 Medical devices — Quality management systems — Requirements for regulatory purposes by reference and came with a two-year transition period and effective date of February 2, 2026.  The Agency has said little about its transition during the past two years, but on October 27, 2025, just months from implementation of the QMSR, FDA has issued its first draft guidance, Quality Management System Information for Certain Premarket Submission Reviews (Draft Guidance).

The Draft Guidance provides recommendations for QMSR information included in Premarket Approval (PMA) and humanitarian Device Exemption (HDE) application.  While of obvious importance to those working on PMAs and HDEs, the recommendations in the Draft Guidance also shed light on how FDA may be interpreting ISO 13485 and how it may review quality system information in future inspections.

There is a lot of overlap between the requirements of ISO 13485 and the current Quality System Regulation (QSR), which is being replaced by the QMSR.  One of the key differences between the current Quality System Regulation and ISO 13485 is the requirement in ISO 13485 to “apply a risk based approach to the control of the appropriate processes needed for the quality management system” ISO 13485: 2016, Subclause 4.1.2(b).  The Draft Guidance recommends submitters provide “a summary of the risk-based approach(es) used to control the processes that make up the organization’s QMS.” Draft Guidance at 7.  Thus, when updating the quality system for the QMSR, it will be important to not only ensure each procedure covers the specific requirements of ISO 13485, but also to ensure that the overarching risk-based approach used in developing the system is documented.

The Draft Guidance, when finalized, will supersede the current guidance, Quality System Information for Certain Premarket Application Reviews, issued February, 2003 (Current Guidance).  Despite more than 20 years, the overall content expected is not changing drastically.  The Draft Guidance presents the recommended information for a PMA or HDE in the order it is described in ISO 13485 and uses the terminology used in ISO 13485, which is not always the same as was used in the QSR.  A marketing application should include a full description of the documentation described in ISO 13485 for:

• Management responsibility, including responsibilities of top management;
• Resource management, including infrastructure requirements and requirements for the work environment and contamination control;
• Product realization, including development processes, design and development requirements, purchasing requirements, purchasing process requirements, purchasing information requirements, requirements for verification of purchased product, implementation of production and service provisions, and control of monitoring and measuring equipment; and
• Measurement, analysis, and improvement, including the processes for monitoring and measurement, control of nonconforming product, analysis of data, and identifying and implementing necessary changes.

For requirements of the QMSR that are not directly from ISO 13485, the Draft Guidance also provides recommendations for content in the marketing application.  These include requirements for unique device identification (UDI), traceability and medical device tracking, medical device reporting, reports for corrections and removals, control of records, and device labeling and package controls.  One item of note is that the Draft Guidance recommends the marketing submission include a “sampling of UDIs and Global Unique Device Identification Database (GUDID) records” whenever possible. Id. at 20. As a FDA Premarket Submission Number is required for obtaining a GUDID account and submitting data on the device, this will unlikely be available for original submissions.

One final point of interest in the Draft Guidance is the inclusion of a Guidance History table on the last page.  It includes a note that the “table was implemented, beginning October 2025, and previous guidance history may not be captured in totality”.  For the description of the revisions, it says to “See Notice of Availability for more information” and includes a link to the FDA guidance document webpage.  The Notice of Availability provides high level statements regarding the reason for the Draft Guidance, but does not provide information on the specific differences as compared to the Current Guidance.  Given the lack of any useful information, it is not clear why the table is being included.

Those wishing to submit comments on the Draft Guidance, should do so by January 16, 2026.

As the February 2026 effective date for the QMSR approaches, FDA’s release of the Draft Guidance offers long-awaited insight into how the Agency may operationalize its alignment with ISO 13485. While the core expectations for PMA and HDE submissions remain largely consistent with prior guidance, the shift in structure, terminology, and emphasis on a documented risk-based approach signals a meaningful evolution in FDA’s regulatory posture. Given this, all medical device manufacturers, not just those with planned PMAs or HDEs, should consider the Draft Guidance as any quality system updates are being made for compliance with the QMSR.

Hyman, Phelps & McNamara, P.C. (HPM) is hosting a complimentary webinar, titled “Medical Device Update, 2025 Year in Review.” The webinar is scheduled for December 10, 2025 (11:00am to 12:00pm ET).

Don’t miss this essential briefing. Our experts will unpack the year’s top FDA regulatory changes, enforcement trends, and strategic insights to help medical device companies navigate what’s coming next.

The webinar will feature HPM attorneys Anne Walsh and Steven Gonzalez. You can register for the complimentary webinar here.  After registering, you will receive a confirmation email containing information about joining the webinar.

Hyman, Phelps & McNamara, P.C. (HPM) is excited to announce that Fabiola Cervantes-Gomez, Ph.D. has joined the firm as a CMC Regulatory Expert. Dr. Cervantes-Gomez brings over eight years of experience from the U.S. Food and Drug Administration’s Center for Drug Evaluation and Research (CDER), where she specialized in chemistry, manufacturing, and controls (CMC) review of biotechnology products including antibodies, antibody-drug conjugates, and biosimilars. At FDA, Fabiola served as primary CMC assessor for numerous biologics license applications (BLAs) and investigational new drug (IND) submissions across oncology, rare diseases, and other therapeutic areas. She conducted manufacturing facility inspections, contributed to FDA guidance development, and most recently led CDER’s Network of Experts Program, managing scientific engagement between FDA offices and external professional organizations.

Fabiola is recognized as a subject matter expert in biotechnology product quality assessment. She earned her Ph.D. in Biomedical Sciences from the University of Texas Health Science Center at MD Anderson Cancer Center and her B.S. in Chemistry from the University of Texas at El Paso.

HPM Director Mark Schwartz, who previously served over a dozen years at the FDA in various senior capacities, including as CBER’s Deputy Office Director in the Office of Compliance and Biologics Quality, noted, “Fabiola’s addition strengthens HPM’s team of lawyers and regulatory experts who can assist clients in navigating CMC, cGMP and other quality issues they face both pre and post-approval.  We are thrilled that she has joined our team.”

FDA is moving with notable speed.  Less than a month after announcing its inaugural class of Commissioner’s National Priority Voucher (CNPV) winners (see our previous post), the agency has already named its second cohort.

The CNPV program, designed to accelerate the review of products that advance key national priorities, from improving affordability to addressing unmet public health needs, has captured the attention of industry.  While we have yet to see a voucher’s effect on a review timeline, a voucher may materially change a product’s path to market.

Announced on November 6, the six new awardees reflect some of the most closely watched products in development today, spanning gene editing, oncology, metabolic disease, and global public health.  Five of the six products selected are already approved for at least one indication.  While the basis for some of the selections is clear, others are less clear.  For two of the products (Wegovy and orforglipron, both identified as “for obesity and related health conditions”), their selection was concurrent with pricing agreements, including Most-Favored-Nation (MFN) pricing agreements:

• Wegovy (semaglutide) – Since Wegovy’s initial approval in 2021 for chronic weight management, Wegovy’s labeling has expanded to include adolescents (2022), cardiovascular risk reduction (March 2024), and non-cirrhotic MASH (August 2025). Its selection likely reflects alignment with the CNPV program’s affordability and national health priority goals – potentially tied to the forthcoming 25 mg oral formulation and recently announced pricing commitments for GLP-1s.
• Orforglipron – As the only non-approved product on the list, orforglipron is a once-daily, oral, non-peptide GLP-1 receptor agonist, which would be positioned to offer a more accessible alternative to injectable GLP-1 therapies, if approved. Its inclusion signals FDA’s recognition of obesity as a national health priority, and the selection comes in the context of Eli Lilly’s recent drug-pricing announcement, aligning with the CNPV program’s goals of improving affordability and patient access.

The remaining four products selected for vouchers appear to be for potential expansions of existing indications or new indications:

• Casgevy (exagamglogene autotemcel) – Casgevy was approved by the FDA in December 2023 as the first FDA-approved CRISPR-based gene-editing therapy for patients ≥12 years with Sickle Cell Disease. Ongoing clinical development may further expand its use to younger patients (ages 5-11).
• Jemperli (dostarlimab-gxly) – Although Jemperli was already approved for certain endometrial cancer indications beginning in 2021, the product’s December 2024 Breakthrough Therapy Designation for locally advanced mismatch repair deficiency (dMMR)/microsatellite instability-high (MSI-H) rectal cancer was likely a key driver. Data to date showing a 100% clinical complete response rate suggest a potential shift in the treatment paradigm.
• Hernexeos (zongertinib) – Hernexeos was granted accelerated approval in August 2025 as a second-line, first-in-class oral HER2-directed tyrosine kinase inhibitor for HER2-mutated NSCLC. Hernexeos has provided a targeted option for a population with historically limited choices and poorer outcomes.  Ongoing Phase 3 development is evaluating Hernexeos as a first-line therapy in combination with Keytruda, with preliminary data expected late next year.
• Sirturo (bedaquiline) – Sirturo was initially granted accelerated approval in 2012 for the treatment of pulmonary multidrug-resistant tuberculosis (MDR-TB) in adults, followed by traditional approval in July 2024 with expanded use in pediatric patients > 2 years of age. The voucher is identified as being for “drug-resistant tuberculosis in young children.”  It is not clear what expansion to the labeling is anticipated.

This second CNPV cohort reinforces that FDA intends to deploy this program to reward products that are in line with the Commissioner’s priorities.  We will be watching to see how these vouchers play out.

On November 6, 2025, the Centers for Medicare & Medicaid Services (CMS), through its Center for Medicare and Medicaid Innovation, announced the upcoming launch of the voluntary GENEROUS (GENErating cost Reductions fOr U.S. Medicaid) model, through which participating drug manufacturers can offer “most favored nation” (MFN) pricing on their covered outpatient drugs (CODs) to Medicaid through supplemental rebates to state Medicaid programs.  Set to launch on January 1, 2026 and continue for five years until December 31, 2030, the GENEROUS model will allow CMS to enter into negotiated agreements with manufacturers to set standard coverage criteria and effectuate MFN pricing for their CODs, which participating states may then adopt through a supplemental rebate agreement with the participating manufacturer.  This initiative marks the Trump administration’s latest action regarding MFN pricing, which follows several recent MFN agreement announcements (e.g., here, here, and here) and the May 12, 2025 Executive Order on MFN pricing (see our prior coverage on the Executive Order here and here).

Under the Medicaid Drug Rebate Program (MDRP), state Medicaid agencies obtain rebates from manufacturers in return for coverage of the manufacturer’s covered outpatient drugs (CODs).  The required rebate amount is set by statute, but most states also negotiate voluntary supplemental rebates with manufacturers, typically offering placement on the state’s preferred drug list in exchange for the rebates.  Recognizing the potential for substantial savings on some CODs if states’ net costs for single source or innovator multiple source CODs were set at MFN pricing, CMS stated that the GENEROUS model aims to facilitate a process whereby an interested manufacturer may voluntarily offer states MFN pricing by means of supplemental rebates.  In addition, CMS noted that any supplemental rebates provided by manufacturers under the model will not affect Medicaid Best Price and thus will not affect the ceiling prices required under the 340B drug discount program.

In terms of process, eligible manufacturers (i.e., those with an active Medicaid National Drug Rebate Agreement) that apply for and are accepted to participate in the model will enter into negotiations with CMS to set the key terms of supplemental rebate agreements that the manufacturer will offer to states to effectuate MFN pricing for their single source and innovator multiple source drugs.  These key terms include standard coverage criteria and utilization management policies, such as prior authorization criteria and Preferred Drug List placement.  The MFN price will be based on the average price for the drug’s NDC-9 in each of the selected countries (specifically, the United Kingdom, France, Germany, Italy, Canada, Japan, Denmark, and Switzerland) over the 12-month period reported to CMS by participating manufacturers, net of all rebates, discounts, and price concessions, and adjusted by the selected country’s gross domestic product (GDP), based on purchasing power parity.

After this negotiation phase, the manufacturer will enter into a participation agreement (PA) with CMS and formally become a participant in the GENEROUS model.  CMS will then communicate these agreed upon, standardized key terms to all states, who may choose to execute a state PA with CMS, thereby also becoming participants in the model.  Such participating states will adopt the Key Terms through a supplemental rebate agreement (SRA) with a participating manufacturer, although CMS stated that participating states may create their own criteria and policies as part of their SRAs as long as they are no more restrictive than the standardized access policy negotiated by CMS.  CMS also stated that participating states can determine which CODs they would like to obtain a price similar to what other countries pay with respect to that participating manufacturer.

CMS will share in the supplemental rebates with states via a reduction in the federal share of Medicaid payments, and will conduct monitoring activities to ensure states’ and manufacturers’ compliance with all aspects of the model, such as monitoring the accuracy of payments made under these SRAs.  In addition, CMS will engage an independent contractor to evaluate the model’s impact on drug spending, quality of care, access to medications, and healthcare costs.

Eligible manufacturers may submit applications until March 31, 2026.  CMS has released a Request for Applications (RFA) for drug manufacturers interested in participating in the GENEROUS Model, which outlines eligibility criteria and additional details on the model. CMS will negotiate and enter into PAs with manufacturers from December 2025 through June 30, 2026.  CMS is also seeking letters of intent from state Medicaid agencies interested in participating.  Interested states will have the ability to review pricing information and Key Terms before committing to join the GENEROUS model.  Next month CMS anticipates issuing an RFA for interested states, which will be able to apply for participation in the model on a rolling basis through August 31, 2026.

Donald Trump’s May 12, 2025, Executive Order on MFN pricing threatened that, If significant progress toward most-favored-nation pricing for American patients was not achieved through voluntary measures, “the Secretary [of HHS] shall propose a rulemaking plan to impose most-favored-nation pricing.”   We wonder if the GENEROUS program is a substitute for the rulemaking.  If so, it is a much milder outcome than the threatened rule, since it is not a regulation, does not impose any pricing, is temporary, and is limited to Medicaid.  Whether manufacturers choose to participate will likely depend on what coverage advantages and exceptions from utilization controls they can negotiate in exchange for MFN pricing.

We will continue to follow this and other MFN developments as they arise.

Hyman, Phelps & McNamara, P.C. (“HPM”) Director Larry Houck will moderate “New Rules, New Risks: Inside the Changing World of Federal Inspections” at the Food and Drug Law Institute’s Enforcement, Litigation, and Compliance Conference in Washington, D.C., December 4-5, 2025.  The session will explore the ever-evolving landscape of federal inspections, including the Food and Drug Administration’s use of unannounced foreign inspections, changes in domestic inspection priorities, and the effects of reduced staffing.  The session will explore how the Drug Enforcement Administration’s regulatory oversight and inspection activity impacts manufacturers, distributors, pharmacies, practitioners and other registrants amid growing scrutiny of controlled substances.  Panelists will also examine how federal agencies are rebalancing inspection strategies across borders, sectors, and products.  The session will occur Friday, December 5th.

Mr. Houck was a diversion investigator with DEA in the field and at agency headquarters for 15 years prior to joining HPM in 2001.

Some of the topics in other conference sessions will include:

• FDA’s Compliance Challenges and Enforcement Priorities
• Criminal Liability and Enforcement Trends
• AI in Industry and at FDA
• Dietary Supplements and Labeling
• Significant Class Action Trends Impacting Food, Dietary Supplements and Drug Manufacturers
• FDA Tobacco Enforcement
• Drug Shortages
• False Claims
• Medical Device Enforcement
• State-Level Challenges and Initiatives
• Compounding Litigation and Enforcement
• Recent Court Decisions Impacting FDA’s Authority

Further conference information, including registration, can be found here.

As we previously reported, nearly four years ago, the Natural Grocers, Citizens for GMO Labeling, Label GMOs, Rural Vermont, Good Earth Natural Foods, Puget Consumers Co-op, and the Center for Food Safety (Plaintiffs) filed a complaint against AMS challenging the final rule implementing the National Bioengineered Food Disclosure Standard (NBFDS), also known as the BE labeling rule.  Plaintiffs challenged the rule’s use of the term “bioengineered” (rather than “GMO” or “genetically engineered”), the rule’s limitation of the mandatory disclosure being required only if the food contains detectable modified genetic material, and the rule’s options of using a QR code disclosure or a text message for the disclosure statement.  In 2022, the U.S. District Court of the Northern District of California largely upheld the standard but remanded (without vacatur) the text and QR disclosure options.  Plaintiffs appealed.

On October 31, 2025, the Ninth Circuit reversed several aspects of the district court’s ruling, sending AMS back to the drawing board, i.e., it determined that the district court erred in the definition of bioengineered food, and it abused discretion in declining to vacate the two disclosure format provisions.  It did affirm the district court’s determination regarding the use of the term “bioengineered,” however.

First, the Ninth Circuit reversed the district court’s ruling that AMS could exempt highly refined foods from the definition of “bioengineered foods.”  The Ninth Circuit agreed with the plaintiffs that the current rule not requiring a disclosure statement, if the manufacturer concludes the BE ingredients are not detectable, is not the legal “equivalent to saying that the food does not  ‘contain’ such material.”  The court determined that a food contains modified genetic material “if it actually has modified genetic material within it.”  The crucial issue is that undetectable is not the same as non-presence; it may contain genetic material even if that is not detectable.  That said, the court acknowledged that AMS has the authority to adopt a detectability exception as the statute requires that AMS determine “the amount[] of a bioengineered substance that may be present in food, . . .  in order for the food to be a bioengineered food.”  In other words, AMS could, for example, adopt a limit of detection setting the amount of a BE substance that may be present.  If the bioengineered substance is not detectable within the limit, the food would be considered non-BE.  The food “would not count as a ‘bioengineered food’ under the regulatory standard only because it was excluded under a limit-of-detection-based standard” set by AMS.  The Ninth Circuit remanded the case to the district court, with instructions to remand the relevant regulations to the AMS and to determine whether any part of the regulation should be vacated in connection with that remand.

The Ninth Circuit also disagreed with the district court’s decision to not vacate the regulations allowing the disclosure statement via text or QR code, while AMS is going through the administrative process of reconsidering these options.  It reversed the district court’s decision to deny vacatur; the district court erred when it allowed the use of disclosure options that were found to be inadequate and unlawful, and remanded with instructions to grant an appropriate prospective vacatur, after receiving input from the parties on that specific point.

AMS did not lose on all fronts.  The Ninth Circuit affirmed the district court’s decision that AMS had not been arbitrary and capricious in requiring the term “bioengineered” rather than genetically engineered or GMO.

We will be monitoring future actions by AMS related to the threshold setting for detectable modified genetic material and possible actions regarding an electronic option for the disclosure statement.

Last Friday, October 31, the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2026 Medicare Physician Fee Schedule (PFS) Final Rule, which contained important changes in regulations governing the calculation of average sales price (ASP) for drugs covered under Medicare Part B.  The most significant of these are new policies regarding bundled sales arrangements and new documentation and submission requirements related to bona fide service fees (BFSFs).  Although some of these provisions impose new burdens, manufacturers were given a reprieve on some of the most intrusive requirements in the July 2025 proposed rule (see our prior blog post on the proposed rule here).

The rule will become effective on January 1, 2026, despite numerous comments raising concerns about the proposed rule’s compliance timeline.  Below we summarize the key provisions that CMS finalized (and point out those that CMS chose not to finalize).

I.  Average Sales Price

Currently, manufacturers are required to report ASP to CMS quarterly and calculate ASP for each NDC in accordance with the methodology specified by statute and CMS regulations.  Among other requirements, ASP must reflect sales to all U.S. purchasers, except sales exempt from Medicaid best price and sales that are merely nominal in amount.  In addition, price concessions must be deducted from the ASP calculation, while BFSFs are not considered price concessions and are not deducted from the ASP calculation.  In other words, excluding BFSFs increases the ASP and therefore the Part B payment limit, which is generally 106% of the ASP.

Bundled Arrangements

Manufacturers may offer certain price concessions as part of a “bundled arrangement,” in which the price concessions are conditioned upon the purchase of the same drug or biological or other drugs or biologicals or another product.  ASP calculations must account for such bundled price concessions.

In the proposed rule, CMS proposed to add a definition of “bundled arrangement” to the existing ASP regulations at 42 C.F.R. § 414.802, which the final rule adopted with slight modifications:

Bundled arrangement means an arrangement regardless of physical packaging under which the rebate, discount, or other price concession is conditioned upon the purchase of the same drug or biological or other drugs or biologicals or another product or some other performance requirement (for example, the achievement of market share, inclusion of tier placement on a formulary) or where the resulting discounts or other price concessions are greater than those which would have been available had the bundled drugs or biologicals been purchased separately or outside the bundled arrangement.”

This definition tracks the definition that has appeared in the Medicaid Drug Rebate Program (MDRP) regulations since 2007.  See 42 C.F.R. § 447.502.  However, unlike the Medicaid definition of “bundled arrangement,” which states that value-based purchasing arrangements may qualify as a bundled sale, CMS refrained from expressly including value-based purchasing arrangements in the ASP definition in order to “provide[] the agency the opportunity to monitor and assess how such a definition may affect ASP . . . .

In addition, CMS finalized regulations similar to the Medicaid counterpart regarding how to allocate discounts under bundled arrangements.  Specifically, under the final rule, discounts in a bundled sale, including those resulting from a contingent arrangement, are allocated proportionally to the total dollar value of the units of all drugs or products sold under the bundled arrangement.  However, CMS has apparently reversed its guidance regarding agreements that contain both contingent and non-contingent discounts.  Whereas prior CMS guidance under the MDRP appeared to indicate that only contingent discounts need be proportionally allocated, CMS stated in the final rule preamble that “the ‘unbundling’ of both contingent and non-contingent discounts is appropriate because ‘all the discounts’ in the bundled arrangement should be proportionally allocated.”

Bona Fide Service Fees

Bona fide service fees have historically been excluded from ASP because, as noted above, ASP excludes prices excluded from Medicaid best price, and BFSFs, as defined in the MDRP regulations, are excluded from best price.  CMS proposed to add a definition of BFSF to the ASP regulations, which would have tracked the MDRP definition:  fees paid by a manufacturer to an entity, that (1) represent FMV (2) for a bona fide, itemized service actually performed on behalf of the manufacturer (3) that the manufacturer would otherwise perform (or contract for) in the absence of the service arrangement, and (4) that are not passed on in whole or in part to a client or customer of an entity, whether or not the entity takes title to the drug.  CMS also proposed a number of significant changes to the policies regarding BFSFs, which would have imposed substantial new obligations on manufacturers.

Responding to commenters’ objections, CMS finalized only some of these policies.  CMS was persuaded not to finalize its proposed BFSF definition, which would have mandated a specific methodology for evaluating fair market value and would have required manufacturers to retain an independent firm to evaluate fair market value for every new or renewed percentage-based fee agreement.  CMS also decided not to finalize a proposed list of examples of fees that are not considered BFSFs (e.g., credit card fees, certain data fees, certain percentage-based distribution fees, and tissue procurement fees).

However, CMS did finalize several other proposed policies that have significant implications for BFSFs.  CMS finalized its proposed requirement that manufacturers must obtain letters from the recipient of a BFSF certifying that the fee is not passed on in whole or in part to a client or customer of the recipient of the fee, regardless of whether the entity takes title to the drug.  Letters must be obtained for all new agreements entered into prospectively on or after January 1, 2026, and must be submitted to CMS along with the ASP submission for the relevant quarter.  This is an unusual requirement given that CMS did not finalize an ASP definition of BFSF, so there is no prohibition on pass-through of fees in the first place.

Perhaps most notably, CMS finalized its proposal to require manufacturers to submit reasonable assumptions as part of manufacturers’ quarterly ASP data submissions to CMS.  Previously, submission of reasonable assumptions was optional.  These reasonable assumptions must include summary information on FMV assessments, including documentation of the methodology used to determine FMV for current, new, and renewed BFSF contracts, and periodic reviews of FMV.  CMS advised that summaries should be “well-detailed summaries of FMV methodologies that clearly describe the data sources, assumptions, and rationale supporting the determination.”   CMS noted that it will provide a template for manufacturers to use to document their FMV analysis summaries.  CMS expects manufacturers to document and submit the FMV summaries for all current BFSF arrangements by the April 30, 2026 deadline for ASP data submissions for the first quarter of 2026.  After that, FMV summaries must be submitted if there were new or renewed BFSF agreements during the quarter.

Units Sold at Maximum Fair Price

The Inflation Reduction Act of 2022 established the Medicare Drug Price Negotiation Program, which requires the Secretary of Health and Human Services (HHS) to negotiate a maximum fair price (MFP) with drug companies for certain high expenditure, single source drugs covered under Medicare Part D (starting in 2026) and Part B (starting in 2028).   Beginning in initial price applicability year 2028, for selected drugs payable under Part B, the Medicare Part B payment limit during the price applicability period is 106% of MFP.  In the final rule, CMS confirmed that it will publish only the actual MFP-based payment limit for selected drugs, and no ASP information will be displayed.  Although the payment limit for selected drugs will be based on the MFP rather than ASP, manufacturers of such drugs will still be required to calculate and submit ASP.

As described above, manufacturers of drugs payable under Part B are required by statute to include in ASP sales to all U.S. purchasers, with two exempted categories of sales: (1) sales exempt from best price; and (2) sales that are merely nominal in amount.  Units of drugs sold at MFP are included in the determination of best price.  Because the statutory language does not expressly or implicitly exempt units of drugs sold at MFP from the manufacturer’s ASP calculation, CMS clarified that units of selected drugs sold at MFP are included in the ASP calculation.  As a result, manufacturers’ ASP calculations will be required to include units of selected drugs sold at MFP on or after January 1, 2026, as applicable.

II.  Changes to Medicare Inflation Rebate Programs

In addition to the changes in ASP regulations, the CY 2026 PFS final rule revised the regulations implementing the Medicare inflation rebate program established under the Inflation Reduction Act.

Medicare Part B inflation rebates

The changes to the Medicare Part B inflation rebate program are relatively minor fixes, which include the following.

• Under pre-existing regulations, the benchmark quarter is defined as 3Q 2021 for a drug with a first marketed date on or before December 1, 2020, and for a drug with a first marketed date after that date, the benchmark quarter is the third full quarter after the first marketed date. Under the final rule, if data needed to calculate the payment amount in those quarters are not available, the benchmark quarter will become the third full quarter after the drug is assigned a billing and payment code.
• Under pre-existing regulations, if a published payment limit is not available for a benchmark quarter, CMS will use the lower of 106% of the manufacturer reported ASP or WAC (or, if those are not available, 106% of WAC reported in other sources). To avoid the use of a negative ASP reported by a manufacturer, CMS revised the rule to state that, in the absence of a published payment limit for the benchmark quarter, CMS will use positive ASP or WAC reported by manufacturers to CMS (and WAC from other sources if these are not available).

Medicare Part D inflation rebates

CMS’s revisions to the Medicare Part D inflation rebate regulations are more significant, and relate to the statutory exclusion of sales under the 340B drug discount program from Part D inflation rebates beginning with plan year 2026.  See 42 U.S.C. § 1395-114b(b)(1)(B).  The problem in implementing this exclusion is that a Part D drug’s status as having been purchased under the 340B program is generally not known at the time of dispensing, so that covered entities can only identify the drug’s Part D status retrospectively.  Accordingly, CMS has finalized a “claims-based methodology” to remove 340B units from its Part D inflation rebate calculations.  Under this methodology, CMS will start with the prescriber NPI number from the Prescription Drug Event (PDE) record (i.e., the Part D dispensing record); then find the provider’s Medicare Provider Number (MPN) by crosswalking the NPI number with Medicare Part A and B claims; then filter the NPI and MPN numbers using the 340B Office of Pharmacy Affairs Information System (OPAIS) database, which identifies the MPN numbers for 340B covered entities.  Another process will be used to link NPIs of 340B contract pharmacies in the PDE record to contract pharmacies listed in the OPAIS database.  These processes will result in a file of 340B-affiliated NPIs, which will be used to exclude unit dispensed by entities with these NPIs from the inflation rebates.

CMS estimates that approximately 10-35% of total units will be removed from the rebate calculation.  Under the statute, the exclusion of 340B units is not subject to administrative or judicial review, and CMS has decided not to permit disputes regarding excluded 340B units under the Suggestion of Error process, explaining that this process is limited to mathematical errors.

In the hope of improving the accuracy of 340B unit exclusions, CMS is establishing a voluntary 340B claims repository as of January 1, 2026, initially for usability testing.  The repository will receive voluntary submissions each quarter from 340B covered entities of several simple data elements (e.g., NPI, date of service, fill number) from all of their claims submitted to Medicare Part D plans.  CMS would match these data to PDE records for each drug during a period to identify which units to exclude from inflation rebate calculations.  The preamble explained that CMS is considering mandatory reporting in the near future, but declined to give a timeline for such requirement.  During the initial usability test period, the repository will not be used to actually exclude any units, and it will not be used for that purpose until a policy to do so is proposed and finalized.

III.  Autologous Cell-Based Immunotherapy and Gene Therapy

The rule finalized the continuation of the existing bundled payment policy for CAR T-cell therapies (which was initially finalized in the CY 2025 PFS final rule) and extended the policy to autologous cell-based immunotherapies and gene therapies.  As a result, under the final rule, preparatory procedures for patient-specific cell or tissue procurement and processing required for manufacturing are bundled into the product payment and are not paid separately.

Prior to the final rule, payment for procedures required for manufacturing other autologous cell-based immunotherapies and gene therapies (other than CAR T-cell therapies) had not been explicitly addressed by CMS.  In the final rule, CMS acknowledged that the tissue procurement step for all autologous cell-based therapies is “a pivotal part” of the manufacturing process and the overall cost of the product (i.e., COGS), and therefore should not be paid separately.

Consistent with this policy to include preparatory procedures for manufacturing an autologous cell-based immunotherapy or gene therapy in the payment of the product itself, CMS had initially proposed that such payments not be considered a BFSF for purposes of calculating the manufacturer’s ASP, and proposed to require their inclusion in ASP starting January 1, 2026.  However, CMS decided not to finalize either of these proposals based on public comments.  Instead, under the final rule, manufacturer-paid preparatory services may be treated as BFSFs—and thus be excluded from ASP—when they are itemized, represent fair market value, are performed on behalf of the manufacturer, and are not passed through to a purchaser.

IV. Conclusions

Although the final rule may be seen as a partial win for the pharmaceutical industry and other concerned stakeholders who objected to a number of proposals that CMS decided not to finalize, the final rule still contains major policy changes with substantial impacts on manufacturers and their government pricing activities and obligations, with a fast-approaching deadline of January 1, 2026 for manufacturers to come into compliance with the new data submission requirements.

Looking to the future, CMS will soon be issuing a template for use in submitting “detailed summaries” of fair market value methodologies to be submitted with the ASP submission for 1Q 2026 and subsequent quarters.  Beyond the immediate future, CMS has expressly stated that it will continue to consider a number of its non-finalized proposals in a future rulemaking, including proposals related to FMV determinations and extending the no pass-through requirement to “affiliates” of the service provider.  We expect CMS eventually to finalize a definition of bona fide service fees for ASP purposes.  Moreover, regulations under the MDRP will almost certainly be revised so that the two definitions are consistent.

We will continue to monitor developments on this rule, including any legal challenges, as they arise.