Welcome to Part 5 of our 2026 Life Sciences Industry Outlook series. Today, we are wrapping up the week with a review of the regulatory environment for life sciences companies in 2025 and our expectations for what 2026 could bring.
In 2025, life sciences companies faced a fast-moving regulatory environment shaped by the Trump administration’s priorities, including deregulation, the use of policy levers to encourage domestic manufacturing and development, and efforts to reduce healthcare costs for American consumers. We expect this unpredictable atmosphere to continue into 2026. In particular, we anticipate regulatory and enforcement developments in FDA regulation, drug pricing and reimbursement, government contracts, tariffs, and antitrust oversight, although specific outcomes and impacts remain difficult to predict.
We anticipate that FDA will continue to develop and implement initiatives aimed at accelerating medical product development and review and inducing industry to domesticate manufacturing. For example, FDA has taken steps to provide “radical transparency” to biopharmaceutical companies by: publishing complete response letters it has issued to applicants; a roadmap to reduce animal testing requirements for investigational new drug applications in favor of machine learning and artificial intelligence-based computational models and other new approach methodologies; acceptance of real world evidence in marketing applications without requiring identifiable patient data from real-world data sources; and, issuance of “Commissioner’s National Priority Vouchers” for programs aligned with “national priorities,” including affordability. We also expect continued scrutiny of foreign manufacturing and testing facilities, particularly in China and India, which may impact companies that rely on ex-U.S. establishments for U.S.-bound products. In addition, FDA enforcement may align with the Make America Healthy Again movement, including targeting purportedly violative direct-to-consumer advertising and shifts in vaccine policy.
We expect pharmaceutical manufacturers to experience continued pressure on pricing and reimbursement, even absent direct congressional action. On July 31 2025, President Trump sent a letter to leaders of 17 global pharmaceutical manufacturers seeking specific actions to reduce U.S. prices (e.g., lowering prices for all Medicaid patients to most-favored nation prices, launching all new drugs at MFN prices, and selling products directly to patients at decreased prices). By the end of 2025, 14 of those manufacturers had reportedly reached agreements to implement key aspects of the Administration’s approach. We also anticipate continued use of enforcement tools entrusted to DOJ, FTC and HHS to influence reimbursement-related conduct, including through aggressive interpretations and applications of the False Claims Act and Anti-Kickback Statute to market access and related business arrangements.
Life sciences companies holding U.S. government contracts should also expect heightened scrutiny, tighter compliance obligations, and increased supply-chain diligence, including as agencies implement and potentially enforce the Biosecure Act (passed as part of the FY2026 National Defense Authorization Act) and related national security initiatives. Agencies may move from policy signaling to operational enforcement through expanded certifications, flow-down requirements, and enhanced audit rights focused on foreign ownership, control, influence, and data-handling practices—particularly with respect to China-linked entities. Greater coordination among contracting agencies, DHS, DOJ, and inspectors general could increase the likelihood that compliance gaps surface in bid protests, False Claims Act investigations, and responsibility determinations. Contractors should plan for more rigorous pre-award diligence, ongoing monitoring of counterparties, and integration of national-security risk assessments into procurement, M&A and R&D strategies.
Tariff policies are also likely to remain fluid and tied to negotiated outcomes. Although the future of the Administration’s country-based tariffs under the International Emergency Economic Powers Act remains uncertain pending a Supreme Court decision expected in the first half of 2026, a ruling against those tariffs would not eliminate exposure for life sciences companies because tariffs specific to biomedical products and inputs are expected to proceed, if at all, under Section 232 of the Tariff Expansion Act of 1962. Since late September, Section 232 tariff threats on branded pharmaceuticals have reportedly been used to secure commitments on U.S. investment, domestic capacity, and price/access concessions, with at least nine companies reporting tariff-relief arrangements by the end of 2025. A new Section 232 investigation into PPE, medical consumables, and medical equipment/devices could lead to targeted tariffs that raise costs and disrupt supply for import-reliant medtech and diagnostics companies. While APIs and generics have not been a primary focus to date, Commerce has characterized APIs, generic drugs, and other upstream materials as “critical inputs,” creating a pathway for spillover; companies should also assume any IEEPA tariff relief could be short-lived if replaced through other mechanisms.
In 2026, life sciences companies should expect continued antitrust enforcement, albeit with greater predictability and more conventional legal theories than during the prior administration. The FTC is expected to continue close scrutiny of pharmaceutical and medical-device deals involving overlapping portfolios or pipelines, but with greater openness to targeted divestitures. Non-merger enforcement—particularly around contracting and rebating practices—will likely remain a priority for federal and state antitrust enforcers.