Effects of the One Big Beautiful Bill Act on Health Care and Pharma; and More

At a Glance

• The enacted One Big Beautiful Bill Act includes a number of provisions affecting the health care system and the pharmaceutical industry.
• It is difficult to both plan and ensure compliance with all of the tariffs’ moving targets. Each set of tariffs has its own exemptions, which U.S. Customs and Border Protection is focused on enforcing. The Department of Justice has also announced it will be investigating tariff evasion from a criminal perspective. It is key that compliance teams understand the risks its import teams are taking and advise on the potential penalties from those risks.
• Texas enacted the Texas Genomic Act, effective September 1, 2025, imposing sweeping new restrictions on the use, storage and transfer of Texans’ genomic data.
• On May 12, 2025, the White House issued an executive order to implement a “Most Favored Nation” drug pricing policy.

One Big Beautiful Bill Signed Into Law

Congress has passed the Republican budget reconciliation package, known as the One Big Beautiful Bill Act (OBBBA), into law, achieving President Trump’s ambitious goal of passage by the Fourth of July. The primary goal of the legislation was to make the 2017 Trump tax cuts permanent, but it also included a number of provisions affecting the health care system and the pharmaceutical industry. After clearing the House, the Senate made notable changes — particularly to provisions affecting SNAP (food stamps) and Medicaid — before final approval. 

The new law includes $1 trillion in reduced federal spending on Medicaid, which will be phased in over the coming years. States must implement work requirements for Medicaid eligibility by January 2027 and, later that year, states will see significant reductions in the portion of costs contributed by the federal government. Each state will react differently to these mandated changes depending on their current budget methodologies, political climate, priorities and overall state budgets. A $10 billion rural hospital fund was created to help offset the impacts of these cuts for rural hospitals.

Notably, the final law dropped the provisions intended to increase pharmacy benefit manager (PBM) transparency, including “delinking” reform that would mandate Medicare prescription drug plans, uncouple the compensation paid to PBMs from the list prices of drugs sold in Part D, and a ban on spread pricing in Medicaid. It does not include a provision like the BIOSECURE Act, which advanced late last year and would restrict federal funding for biotech companies linked to foreign adversaries, primarily China. Nor does it extend the rare pediatric disease Priority Review Voucher (PRV) program, which expired at the end of last year and incentivizes drug development for rare childhood diseases. Without reauthorization, drug developers and patient advocacy organizations are concerned about the impact on innovation of new treatments for pediatric rare diseases.

As it relates to health care coverage and access outside of Medicaid, the law makes permanent the ability to offer first-dollar coverage for telehealth services in high-deductible health plans (HDHPs), but does not extend the premium tax credits for Affordable Care Act exchange plans.

Lastly, the OBBBA included the ORPHAN Cures Act, which expands the Medicare drug price negotiation’s orphan drug exemption to include drugs with multiple rare disease indications.

An Update on Tariffs

Right now, U.S. importers are awaiting the lift of the “pause” on reciprocal tariffs on August 7, 2025, as well as any news of additional trade deals or the implementation of the remaining aspects of trade deals beyond the reciprocal tariff rates. There are also many investigations pending whereby certain industries may receive additional tariffs pursuant to Section 232 of the Trade Expansion Act of 1962. 

The reciprocal tariffs were announced by President Trump on April 2 and took effect April 5 at a rate of 10% for every country globally. Beginning April 9, goods from certain countries were subject to tariffs at rates higher than 10%, but President Trump announced the administration would pause those additional rates until July 9, subjecting all goods from every country to tariffs of 10%. Goods of Chinese origin received higher rates, which were reduced on May 14 to 10% until August 12. President Trump announced he would use these “pauses” to enter into deals with the affected countries.

President Trump subsequently pushed that July 9 deadline to August 1, enabling more time to enter into these deals. He has announced deals with the United Kingdom (parts of which have taken effect), Japan, the EU, the Philippines, Indonesia, Vietnam and China. President Trump announced that the pause on reciprocal tariffs would be lifted on August 7, resulting in different rates for most countries, but the underlying rates reached in the announced deals have been reflected. Separately, he increased the tariffs on Brazil and Canada. 

With respect to these 232 investigations, two industries have already been subject to tariffs — aluminum and steel imports and passenger vehicles and their parts. Initially, these goods had rates of 25%, but in June, President Trump raised the aluminum and steel rates to 50% (25% for UK goods). Just recently, he imposed tariffs of 50% on copper articles and their derivatives. Additionally, it is expected that 232 tariffs will be announced for semiconductors and pharmaceutical goods. Therefore, while importers were fairly comfortable with the likelihood that 232 tariffs would probably be 25%, now both the scope and rates of these tariffs are uncertain. 

Given all this uncertainty, it is difficult to both plan and ensure compliance with all of these moving targets. Each set of tariffs has its own exemptions, which U.S. Customs and Border Protection (CBP) is focused on enforcing. The Department of Justice has also announced it will be investigating tariff evasion from a criminal perspective. It is key that compliance teams understand the risks its import teams are taking and advise on the potential penalties from those risks.

Texas Genomic Act: Major New Genetic Privacy Obligations

Texas enacted the Texas Genomic Act (HB 130), effective September 1, 2025, imposing sweeping new restrictions on the use, storage and transfer of Texans’ genomic data. The Act bans the use of genome sequencers and related software produced by or on behalf of “foreign adversaries,” restricts the storage of genomic data in those countries, and prohibits the sale or transfer of such data to foreign adversary entities as part of a bankruptcy proceeding or plan of bankruptcy-related reorganization. The law also requires annual attorney certification of compliance, mandates implementation of cybersecurity measures to protect genome sequencing data, and creates a private right of action with statutory damages up to $5,000 per violation.

A research exemption exists but is narrowly tailored and provides that one section of the Act “does not apply to the storage of genome sequencing data by a medical facility, research facility, company, or nonprofit organization subject to [the Act] that is collected as part of a clinical trial or other biomedical research study subject to, or conducted in accordance with, 28 C.F.R. Part 202,” which is a reference to the DOJ’s Data Security Program. Companies operating in Texas or that conduct research on or testing of genome sequencing or the human genome in Texas should assess their compliance obligations and technology supply chains now to prepare for the September 2025 effective date. Click here to read more.

Most-Favored Nation Executive Order

On May 12, 2025, the White House issued an executive order to implement a “Most Favored Nation” (MFN) drug pricing policy. The order requires that the Department of Health and Human Services (HHS) communicate MFN drug price targets to manufacturers within 30 days and establish direct-to-consumer purchasing programs for those that voluntarily offer products at MFN prices. In a May 20 press release, the agency announced that MFN price targets would apply to single-source brand drugs without generic or biosimilar competition, and be set to the lowest price available in wealthy countries with a per capita GDP of at least 60% of that in the United States. If manufacturers fail to voluntarily meet MFN price targets, the order instructs HHS to initiate rulemaking to impose MFN prices. It also directs the Food and Drug Administration to consider expanded drug importation waivers and to review existing drug approvals for potential modification or revocation. While the legal authority for implementation of MFN pricing across government and commercial health care markets remains uncertain, these potential price controls could impact manufacturers’ decisions to maintain or launch certain products in ex-U.S. markets.

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