Throughout 2023, industry stakeholders contended with growing economic and financial uncertainties, heightened state and federal enforcement efforts and an increasingly complex regulatory environment. These challenges are likely to continue in 2024, and stakeholders that proactively address such challenges will be best positioned to manage risk in an uncertain market. In this article, we summarize some of the most notable developments expected to impact healthcare and life sciences in the coming year.

• Growing Number of States Enact Healthcare Transaction Oversight Laws. State lawmakers are expanding healthcare transaction review and approval authorities, creating an increasingly complex regulatory environment. Healthcare entities and investors in this space must remain aware of the numerous notice requirements that may be implicated.
• Revised Federal Regulatory Guidance Creates Uncertainty for Healthcare Mergers. The Federal Trade Commission (“FTC”) and Department of Justice (“DOJ”) have taken several measures to implement the Biden administration’s aggressive stance on antitrust enforcement in the healthcare industry. Such policy changes create ambiguity for healthcare companies, but legal challenges to the agencies’ enforcement perspectives may bring additional clarity to an uncertain antitrust landscape.
• Increased Enforcement Ahead as the Federal Trade Commission Targets Health Information. Reviving the long-dormant Health Breach Notification Rule (“HBNR”), the FTC issued a proposed rule to modernize the agency’s approach to defining and protecting health data and has since brought two enforcement actions under HBNR. Companies and other stakeholders should evaluate their exposure under HBRN given the agency’s aggressive approach.
• Continued Growth in the Use of Contingent Value Rights in Life Sciences M&A to Bridge the Valuation Gap. The use of contingent value rights (“CVRs”) instruments in public biopharma transactions has significantly increased in recent years as a way to bridge the valuation gap between transacting parties. As CVRs continue to proliferate in biopharma transactions, transacting parties should proactively address associated risks.
• Strong Biopharma Deal Volume Likely to Fuel M&A Activity in 2024. Biopharma M&A activity has remained high despite a drop in overall deal volume across the life sciences sector. As biopharma companies adjust their acquisition strategies, they should remain mindful of potential regulatory hurdles.
• IRA’s Drug Price Negotiation Provisions Face Looming Litigation Uncertainty in 2024. The Centers for Medicare and Medicaid Services announced its selection of the first 10 drugs for Part D price negotiations, with negotiated prices set to take effect in 2026. Pending lawsuits, however, contend the negotiation program is unconstitutional, creating uncertainty as to the permissibility of these provisions.
• Rapidly Evolving Regulatory Oversight of Artificial Intelligence in Healthcare and Life Sciences. The Food and Drug Administration (“FDA”) has taken a number of steps to adapt its regulatory framework to the unique challenges posed by the use of AI in medical devices, drug discovery and manufacturing. Simultaneously, the Biden administration’s executive order on AI seeks to accelerate broad AI regulatory developments in the healthcare and life sciences industries. Companies and investors should carefully monitor these developments and actively engage with regulators.
• Federal Regulators Will Continue Enhanced Scrutiny of Medicare Advantage. The increased prevalence of Medicare Advantage plans has incurred greater scrutiny from the DOJ. The DOJ plans to focus on competition, prior authorization, behavioral health and advertisements and is likely continue to address fraud allegations through the False Claims Act.
• The Food and Drug Administration Changes Course and Asserts Regulatory Authority over Laboratory Developed Tests. The FDA has issued a proposed rule that, if finalized, would regulate laboratory developed tests as medical devices. Despite strong opposition from clinical labs, the FDA is expected to finalize the rule in 2024 and, pending any legal challenges, affected stakeholders will need to ensure that compliance programs are adequately equipped to handle the regulatory transition.
• SCOTUS to Hear Chevron Doctrine Challenge. The Supreme Court is set to hear two cases challenging judicial deference to agency decisions under the Chevron doctrine. The outcomes of these cases could result in less deference to agency decision-making and create substantial uncertainty for healthcare and life sciences companies.