Throughout 2022, the healthcare industry grappled with public health crises, economic and financial pressures, and a dynamic regulatory environment. We expect 2023 to continue challenging industry stakeholders. Those best positioned to face legal and regulatory headwinds will be, in turn, best positioned to manage risk, reconfigure care delivery models and capitalize on market opportunities. We summarize below some of the most notable developments expected to impact healthcare in the new year.

• The New Arms Race: How Retail Giants Will Reshape Primary Care in the Next Decade. Retail giants are increasingly investing in healthcare. Customers may be more willing to turn to familiar retail chains for healthcare services, to access more information about their care options and to participate in a virtual care model utilizing remote options cultivated during the pandemic.
• Healthcare Consolidation in the Crosshairs. Federal and state regulators are increasingly exercising oversight of healthcare transactions. The FTC is likely to increase scrutiny of vertical integrations. State lawmakers are expanding pre-transaction review and approval authorities parallel to federal agencies, creating a complex regulatory environment for transactions in this space.
• The Future of Healthcare Data: Implications of the American Data Privacy and Protection Act. In response to a rapidly growing digital health market, the House Energy and Commerce Committees approved the American Data Privacy and Protection Act. This comprehensive healthcare data protection bill provides a glimpse into the broad oversight lawmakers may seek to implement in the near future.
• Implementation of the Inflation Reduction Act: What Life Sciences Investors Need to Know. The Inflation Reduction Act implements a series of changes aimed at lowering prescription drug costs. Notably, it requires HHS to negotiate the prices of high-spend Medicare Part B and D drugs, caps out-of-pocket spending for Medicare beneficiaries and imposes rebates for manufacturers that raise prices over the rate of inflation. These changes will impact what types of drugs manufacturers prioritize, as well as their pricing strategies given the increased burdens and cost of compliance.
• Artificial Intelligence for Life Sciences and Healthcare Companies. The use of AI will continue to increase in 2023, challenging the boundaries of the current FDA regulatory framework. While FDA has yet to issue formal guidance on appropriate risk mitigation measures based on anticipated modifications to AI in medical devices, such guidance is forthcoming and could require manufacturers to increase transparency and reporting obligations.
• FTC Antitrust Developments and Impacts on M&A. Under Chair Khan’s leadership, the FTC is looking to expand its current toolkit, including the use of its prior approval and prior notice policy. With the goal of protecting future markets, the FTC is likely to target transactions by private equity firms in the healthcare and life sciences space.
• Healthcare PE Portfolio Companies Face Close Scrutiny over Potential for Interlocking Boards. The DOJ is poised to utilize Section 8 of the Clayton Act, which prohibits a “person” from serving on the board of two competitors, to combat healthcare consolidation. As regulators have recently opined that sponsor-affiliated directors serve on behalf of the sponsor, increased DOJ enforcement could impact healthcare investors if the agency finds that two boards are interlocked as a result of board service by different individuals within a single sponsor.
• Healthcare SPAC Outlook in 2023: A Prognosis. Despite a general downturn in SPAC activity, SPAC IPOs and de-SPAC transactions remain comparatively high in the healthcare sector. As public healthcare companies face operational and economic challenges, private buyers may seek to increase take-private transactions, which could generate litigation stemming from the de-SPAC transaction process.
• Over-the-Counter Drug Innovation Opportunities. Reforms to the OTC drug regulatory regime allow companies to obtain authorizations for new active ingredients or dosage forms without needing to submit costly and time-consuming new drug applications. A proposed FDA rule could allow additional categories of drugs to switch from prescription to OTC status, and authorize new avenues for consumers to self-select OTC drugs without the supervision of a healthcare practitioner.
• Realizing the Promise of the 21st Century Cures Act: Healthcare Information Interoperability, EHR Competition, and Penalties for Information Blocking. The 21st Century Cures Act prohibits “information blocking,” practices that interfere with, prevent or materially discourage the access, exchange or use of electronic health information. While enforcement has stalled pending further rulemaking by ONC and the creation of appropriate disincentives by HHS, information blocking enforcement will be a major focus of HHS, leading to potential enforcement in 2023.
• What an End to the Public Health Emergency May Mean for Modernizations to Care Delivery. Telehealth and the role of pharmacists in direct patient care assumed an integral role during the COVID-19 pandemic due to emergency regulatory flexibilities. While certain telehealth flexibilities were permanently expanded, others remain temporary; the failure to make permanent these flexibilities, however, could see federal regulation of telehealth revert to pre-pandemic restrictions.
• Civil and Criminal Enforcement by the DOJ’s Consumer Protection Branch Targeting Life Sciences Companies. The CPB is increasingly targeting corporate entities, including life sciences companies, for civil and criminal enforcement of violations that have traditionally been handled by regulatory agencies. Increased CPB enforcement significantly ups the stakes for investors, as CPB may bring criminal prosecutions and seek large monetary fines, highlighting the importance of effective compliance programs for investors in pharmaceuticals and medical devices.
• DOJ Focused on Pursuing Individual Criminal Liability of Healthcare and Life Science Executives. DOJ is prioritizing individual liability in its criminal enforcement efforts, and executives at healthcare and life sciences companies are likely to be a central target. DOJ may seek to utilize the Responsible Corporate Officer doctrine to hold executives liable for FDCA violations by their companies if the executive could have prevented the violation, but failed to do so. Accordingly, companies should review their compliance programs and make enhancements as appropriate.
• Chapter 11 Remains Viable Option for Companies Facing Mass Litigation. Chapter 11 bankruptcy can be an effective way for even solvent companies with strong operations to resolve mass litigation. Given the advantages of consolidating lawsuits into a single forum before a judge that understands both the underlying claims and the impacts of such suits on the health of the company, bankruptcy is likely to continue to be a beneficial forum for companies addressing mass litigation.
• Major Supreme Court Cases to Watch in 2023. A number of groundbreaking cases that could have measurable impacts on healthcare and life sciences companies will be decided by or may reach the Supreme Court in the 2022-2023 term. Of note, the Court will review the scope of the “enablement requirement” under patent law, determine whether individuals can sue for violations of their rights under the Federal Nursing Home Reform Act or otherwise seek redress under the Civil Rights law. Further, the Court could potentially analyze whether copay assistance programs violate the Anti-Kickback Statute.