FDA officials this week vowed to be transparent and predictable in setting guardrails for artificial intelligence in drug development as they confront a slew of applications with AI components, Peter reports.

Why it matters: Congress is not showing signs of updating the regulatory framework for health care and AI, leaving it to the agency to fill a significant void.

• At a daylong workshop yesterday, FDA officials warned that innovation could languish if companies are uncertain how the agency will treat the use of AI. But the officials didn't offer a concrete timetable for any rules.

The big picture: AI can be trained to use a vast array of data to help researchers discover new ways to target diseases. But the health industry has been slow to embrace big tech solutions, as we saw with electronic health records.

• Though lawmakers have set up a range of working groups to begin sussing out the issue, the FDA will have leeway determining such questions as whether algorithms are medical devices, or even whether they have the authority to regulate them.

What they're saying: "In order to foster innovation, we also have to create some clarity and make sure that regulated entities operate in an environment of regulatory predictability and not having surprises," said Patrizia Cavazzoni, director of the FDA's Center for Drug Evaluation and Research.

• She said FDA is developing guidance on the issue that "is really aimed at guiding regulated entities on how to integrate AI and machine learning into the work that is regulated by FDA."

Between the lines: There is a broad range of potential uses for AI in drug development, some of which were detailed by outside experts at the workshop.

• One is using AI to predict the incidence of COVID-19 at potential sites for testing new vaccines and treatments, to allow for greater efficiencies in clinical trials.
• Charles Fisher, CEO of Unlearn.AI, said the technology can also be used to create "digital twins" — an AI model of a person or a part of a person — to help predict health outcomes and improve clinical trials.
• "For each one of those people as they show up, we can just say well, let's take information about that person and predict what would happen if they got a placebo," he said.

Cavazzoni said the agency has been getting interest from industry in using AI for monitoring drug safety.

• "We're very interested in sponsors coming to us with pilots and potential use cases" in that area, she said.

By the numbers: AI is already driving drug development to some degree: As of 2021, Cavazzoni said, CDER had received more than 300 submissions with "AI elements," adding that the number is surely much higher now.

The bottom line: FDA officials emphasized the need for predictability in a largely untested field.

• "We know you need consistency," said Jacqueline Corrigan-Curay, deputy director of CDER. "If you don't know the ground rules, you're not going to come to us with AI."

CBO is throwing cold water on a frequent criticism of plans to overhaul hospitals' Medicare payments: that the facilities would simply raise prices for commercial insurers to offset their losses, Peter reports.

Why it matters: The CBO comments give a bit of a boost to site-neutral payment proponents and reflect continued interest in the idea from a key House chairman.

What they're saying: House Budget Committee Chair Jodey Arrington asked the CBO about the issue in recently published questions for the record.

• His committee and others have explored the case for having Medicare pay the same for outpatient services regardless of where they're delivered.
• "Does CBO believe that site-neutral payment reform in Medicare would lead to increased commercial market prices?" he asked.
• CBO's reply about a possible cost shift was essentially no.
• "From the perspective of economic theory, it is unclear why hospitals would negotiate higher prices with private payers only after they experienced payment reductions from public payers," the agency wrote.
• "Therefore, in CBO's view, expanding Medicare's use of site-neutral payments … would not increase the prices paid by commercial insurers," it added.

The bottom line: CBO's skepticism doesn't mitigate other lawmaker concerns about site-neutral, like the possible effects on rural hospitals.

1. Psychedelic decision: Advocacy around MDMA-assisted therapy is peaking ahead of an FDA deadline for deciding whether to approve a treatment for post-traumatic stress disorder, Axios' Maya Goldman reports.

2. CVS earnings: CVS Health slashed its full-year profit outlook and announced a $2 billion cost-cutting plan today as higher medical costs continue to squeeze its balance sheet, CNBC reports.

3. Emergency abortions: The 9th U.S. Circuit Court of Appeals scheduled arguments for the week of Dec. 9 in the ongoing case over whether Idaho's near-total abortion ban conflicts with the federal EMTALA law. h/t Law Dork.

4. Uninsured Americans: The share of people without health insurance rose to 8.2% in Q1 of this year, per CDC estimates. It was 7.7% in the same quarter of 2023.