The threat of new tariffs on drugmakers has set off a debate within the biotech industry over whether to cut voluntary pricing deals with the Trump administration in exchange for exemptions.

Why it matters: Small and midsize companies don't have the resources of a Pfizer or Merck to make price cuts, domestic manufacturing investments and other concessions the White House is seeking.

• But 100% tariffs on patented pharmaceuticals and active ingredients could be devastating for some of the small and midsize biotech companies that develop more than half of all FDA‑approved medicines.

State of play: The Trump administration acknowledges it's using the same strategy that yielded confidential "most favored nation" agreements with 16 large drug manufacturers.

• "Reshore here and charge MFN prices, right? That's exactly our objectives," a senior administration official said this month, when the White House announced the pharma tariffs. Companies that have struck deals to date have won three years of tariff relief.
• But the trade group representing mostly smaller and midsize companies is cautioning its members about the deals, calling the pricing agreements "shortsighted."
• "You just don't have the portfolio," John Crowley, CEO of BIO, told Axios. "You don't have the financial flexibility to do anything like the deals that the larger companies did."

Between the lines: The pricing deals don't cover every drug a manufacturer makes, meaning some large companies could cut the prices on older or lower-margin treatments without taking a big financial hit.

• Smaller biotechs might only make one or two products and not have that flexibility.
• "For many of those companies, they're still losing money," Crowley added, referring to smaller firms pushing products through clinical trials or the FDA approval process.
• Rather than MFN deals, Crowley is pushing for changes to pharmacy benefit managers' business practices as a way to address affordability concerns.

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The administration wants to set new deadlines for insurer decisions on whether they'll cover drugs ordered by doctors, as well as impose new transparency requirements.

Why it matters: Prescription drugs account for a significant portion of so-called prior authorization requests, which patients and doctors argue can hinder access to needed treatments.

• A proposal released on Friday builds on a Biden administration policy that required insurers in most government health programs to conduct quicker pre-treatment reviews on medical items and services, but excluded drugs.

What's inside: Medicaid and Affordable Care Act plans would have to respond to urgent approval requests within 24 hours and standard requests within 72 hours.

• Plans would have to publicly disclose claims denials, the outcomes of appeals and timeframes for decisions on covering drugs.
• Insurers in Medicare Advantage, Medicaid and Affordable Care Act markets would also have to expand electronic prior authorization requirements to include drugs by October 2027.

Between the lines: Insurers say they've already pared prior authorizations by 11% since taking voluntary steps to address the issue last year.

What we're watching: CMS is also proposing to define "failure to report," which would let the government fine group purchasing organizations or other entities that don't provide timely access to documents that auditors use to track payments made to certain health providers.

Medicare also wants to bring back an experiment to overhaul the way it pays for knee, hip and ankle replacements.

Why it matters: The procedures are some of the most common for seniors. Medicare typically pays physicians, hospitals and other providers separately for the surgeries and post-op care, which can lead to overlap and unnecessary costs.

• The new proposal builds off a system tested by Medicare between 2016 and 2024 that saved money while keeping the quality of care high.

Where it stands: If finalized, most hospitals beginning in October 2027 would have the cost of surgeries and related care assessed against a target price set by Medicare.

• At the end of the year, hospitals could get extra payments if they come in below the target. If they're above it, they'd have to refund the difference to the government.

Hospitals panned the idea. Making it mandatory "destabilizes the system by interfering with clinical decision-making," Charlene MacDonald, CEO of the Federation of American Hospitals, said in a statement.

Zoom out: Hospitals are in line for a $1.9 billion Medicare pay boost in 2027 — the combination of a 2.4% basic rate increase and other add-on payments.

• That's "a step in the right direction, but it does not negate the compounding effects of rising inflation, record levels of uncompensated care and a growing uninsured population," MacDonald said.

Health systems are warming up to mergers and acquisitions after a markedly slow 2025.

The big picture: Macroeconomic pressures driving deals haven't fundamentally changed, but regulatory uncertainty has eased, Brock E.W. Turner wrote first on Pro.

State of play: "We're seeing an uptick in activity in 2026," says Ropes & Gray partner Torrey McClary. She notes some of this year's momentum is due to pent-up deal demand from 2025.

• The number of hospital mergers sank 36% last year, with total transacted revenue plummeting about 53%, per Kaufman Hall data.

Driving the news: In March, California-based Sutter Health announced plans to acquire Minneapolis-based Allina Health to create a combined nonprofit health system.

• Memphis-based Baptist Memorial Health Care and Arkansas Methodist Medical Center finalized plans to merge in February.
• Other deals last quarter include Freeman Health System's purchase of four hospitals from Community Health Systems for $112 million and RWJBarnabas Health's planned purchase of Englewood Health.

Catch up quick: Hospitals and health systems have digested the implications from the GOP budget law and threats from various Trump executive orders that chilled activity considerably in 2025.

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🥛 Health Secretary Robert F. Kennedy Jr. hasn't taken steps to expand raw-milk access, despite prior promises. (WSJ)

🩺 A lawsuit underscores the increasing number of patients who don't see an ICU specialist in person, even in an emergency. (CNN)

😷 Physicians' compensation rose by around 3% on average in 2025, with orthopedics, cardiology and radiology the highest-paying specialties. (Medscape)