Oregon Opens New Front in Battle Over Corporate Practice of Medicine
The Oregon Senate opened a new front in the battle over corporate control of medical decisions with the passage of Senate Bill 951, representing yet another jurisdiction to restrict corporate control of medical decision-making. This bill is attempts to restrict the use of common structures that have allegedly created corporate entities to control physician practices by vesting day-to-day decisions in privately-owned management services organizations (“MSOs”), which effectively run day-to-day, non-clinical operations of the practices. The stated goal is to make sure that doctors and other licensed medical professionals, not business managers or outside companies, are the ones making decisions about patient care.
Key Changes Under the New Law
1. Who Can Own and Control Medical Practices?
Only licensed doctors, nurse practitioners, and physician associates can own and control most medical practices in Oregon. The bill further restricts common means to assure alignment between MSOs and their managed physician practices by restricting MSOs and their shareholders, directors, members, managers, offices, and employees from being employed by, contracting with, or receiving compensation from an MSO to manage a professional medical entity. Moreover, the legislation prohibits MSOs from entering into agreements to control or restrict the transfer of medical practice’s ownership or assets. MSOs are further barred from exercising de facto control over clinical, business, or administrative operations that affect clinical decision-making or the quality of care. This includes, among other restrictions:
• Hiring, firing, setting work schedules, or compensation for medical licensees;
• Setting clinical staffing levels or patient visit durations;
• Making diagnostic coding decisions;
• Establishing clinical standards or policies;
• Determining billing, collection, or pricing policies; and
• Negotiating or terminating contracts with payors or vendors
2. Doctors Must Be in Charge
Under this legislation, Oregon-licensed doctors must hold most of the voting shares in any practice and make up most of the board of directors, and only doctors (except for the secretary and treasurer) can serve as officers of these corporations. Doctors can only be removed from leadership roles by a vote of other doctor-owners, unless there is a serious issue like fraud or loss of a medical license.
3. Limits on Noncompete and Confidentiality Agreements
Most noncompete agreements that would prevent doctors or nurses from working elsewhere after leaving a job would be void and unenforceable, with only a few exceptions. In addition, non-disclosure and non-disparagement agreements between medical licensees and MSOs, hospitals, or hospital-affiliated clinics would be void and unenforceable, except in specific circumstances such as negotiated settlements or post-termination, provided they do not restrict good faith reporting of legal violations. Lastly, the law would prohibit employers from retaliating against doctors or nurses for reporting concerns in good faith.
4. What MSOs and Business Partners Can Still Do
MSOs can help with business operations, such as accounting, compliance, and negotiating contracts, as long as they do not interfere with clinical decisions or the quality of care. They may also assist with business operations, value-based contracts, and compliance, provided they do not cross into clinical or professional decision-making.
5. Who Is Exempt?
Some organizations, like hospitals, rural health clinics, mental health crisis lines, and telemedicine companies without a physical clinic in Oregon, are exempt from some of these rules.
6. What Happens If the Law Is Violated?
Any contract that goes against these rules is automatically void. Doctors and practices harmed by violations can sue for damages, get court orders to stop illegal practices, and may be awarded attorney fees.
7. When Does This Take Effect?
For new medical practices and contracts, these rules would apply starting January 1, 2026, while for existing practices, the rules would apply starting January 1, 2029.
What This Means for You
This proposed law is reflective of continuing national concern around interference in the physician-patient relationship, reflected in legislation and case law related to the corporate practice of medicine as well as the proliferation of health care transaction notice laws across the country. However, a skeptic might note that by excepting out certain entities, including hospitals and telehealth companies, the legislation could have the effect of protecting existing profit-driven enterprises and restricting innovations that could improve access to care in medically underserved areas.
Arizona’s New Heat Safety Executive Order: What to Know as Temperatures Rise
On May 22, 2025, Arizona Governor Katie Hobbs signed Executive Order (EO) 2025-09 as part of the state’s broader initiative to enhance worker safety amid rising summer temperatures. The Industrial Commission of Arizona’s (ICA) Division of Occupational Safety and Health (ADOSH) will establish a Workplace Heat Safety Task Force to draft and recommend heat safety guidelines for employers by the end of 2025. This task force will include members from the private sector, public sector, worker representatives, and occupational safety and health experts to create clear and effective guidance for managing heat risks.
Quick Hits
Arizona Governor Katie Hobbs recently signed Executive Order 2025-09 to enhance worker safety amid rising summer temperatures.
The Industrial Commission of Arizona’s Division of Occupational Safety and Health will establish a Workplace Heat Safety Task Force to draft guidelines by the end of 2025.
The new guidelines, set to be completed by December 31, 2025, will provide detailed, industry-specific recommendations for managing heat risks in the workplace.
Executive Order 2025-09 builds on Governor Hobbs’s Extreme Heat Preparedness Plan, launched in 2023, which aims to address the increasing temperatures in Arizona. ADOSH also implemented its heat State Emphasis Program (SEP), allowing inspectors to focus on heat-related injury and illness prevention, such as ensuring access to water, rest, and shade. Together, the preparedness plan, SEP, and EO position Arizona as an aggressive advocate against heat illness. In contrast, federal Occupational Safety and Health (OSHA) standards have only gone as far as to recognize heat as a safety hazard, but no specific guidelines have been implemented.
The task force’s guidelines, set to be completed by December 31, 2025, will clarify what constitutes a heat safety hazard under the Occupational Safety and Health (OSH) Act’s General Duty Clause. These guidelines will inform how ADOSH’s compliance safety and health officers (CSHO) enforce heat safety standards. While the specifics of the guidelines are still being developed, the task force will use heat data compiled for the SEP to go beyond basic recommendations like water, rest, acclimatization, and shade. The guidelines will offer detailed, industry-specific recommendations to help employers develop practical and effective heat safety plans.
Once completed, the guidelines will be recommended for approval by the ICA, with the intent to implement them by summer 2026. Therefore, the EO does not have an immediate impact on employers or their responsibilities under the OSH Act’s General Duty Clause. In the meantime, ADOSH CSHOs will continue to evaluate worksites for potential heat hazards during inspections, in line with the SEP. Employers may want to prepare to address heat-related hazards by developing safety programs, consistent with the recommendations set forth by the SEP, in advance of the implementation of the new guidelines. Employers can also sign up for email notifications to receive updates directly from ADOSH as the task force progresses.
This Week in 340B: May 27 – June 2, 2025
Find this week’s updates on 340B litigation to help you stay in the know on how 340B cases are developing across the country. Each week we comb through the dockets of more than 50 340B cases to provide you with a quick summary of relevant updates from the prior week in this industry-shaping body of litigation.
Issues at Stake: Other; Contract Pharmacy; HRSA Audit Process; GPO Prohibition
In a case against the Health Resources and Services Administration’s (HRSA) challenging its certification of a group of entities as 340B-eligible, the government filed a reply in support of its partial motion to dismiss.
In a case by a covered entity challenging the government’s decision to allow a manufacturer’s audit, the government filed a motion to dismiss.
In a case by a covered entity against the government, the court granted the covered entity motion for leave to file a response to the intervenors’ amicus brief.
A drug manufacturer filed a complaint challenging a Hawaii state law governing contract pharmacy arrangements.
In a case challenging HRSA’s policy limiting the circumstances in which covered entities can use their group purchasing arrangements to purchase non-340B drugs, the plaintiff filed a combined reply in support of its motion for summary judgment and opposition to defendant’s cross motion for summary judgment.
In three cases challenging state laws in Tennessee, South Dakota, and Nebraska governing contract pharmacy arrangements:
Tennessee: The defendant filed a response in opposition re motion for preliminary injunction.
South Dakota: The plaintiff filed a memorandum in opposition to defendant’s motion to dismiss.
Nebraska: The defendant filed a reply to plaintiff’s brief in opposition to defendant’s motion to dismiss.
Oregon SB 951, Regulating the Corporate Practice of Medicine, Awaits Governor’s Signature
SB 951, which bolsters existing Oregon law prohibiting the corporate practice of medicine (CPOM), passed the state House of Representatives on May 28 and now awaits the signature of Governor Tina Kotek.
As EBG noted in a recent blog, the majority of states have some form of CPOM restriction. Oregon’s doctrine stretches back to 1947, when the state supreme court in State ex. rel. Sisemore v. Standard Optical Co. of Or. banned corporations from owning medical practices, practicing medicine, or employing physicians.[1]
Since then, however, Oregon has sought to strengthen its CPOM rules legislatively, as entities have “sought to circumvent the ban through complex ownership structures, contracting practices, and other means,” as SB 951 states.
The bill is designed to disrupt historically accepted CPOM structures by banning certain arrangements that are inherent to Friendly PC models and placing limitations on Management Service Organizations (MSOs). The sponsors of SB 951 claim the bill is said to close loopholes where private equity firms, management companies, and/or corporations employ or contract with physicians who are listed as owners but do not necessarily control the practice—helping to ensure that physicians retain authority over clinical decision making. SB 951 thus aims to
Restrict the control of MSOs over the clinical and operating decisions of physician-owned practices;
Prevents dual employment arrangements where MSOs employ physicians to bypass a CPOM ban; and
SB 951 also limits noncompetition, nondisclosure, and nondisparagement agreements.
The Restrictions
Section 1. The bill prohibits MSOs—defined as those providing management services to a professional medical entity, under a written agreement and in return for monetary compensation—or MSO shareholders, directors, members, managers, officers, or employees from
Owning or controlling a majority of shares in a professional medical entity with which the MSO has a contract;
Serving as directors, officers, employees, independent contractors of (or otherwise receiving compensation from) the MSO, in order to manage or direct the management of a professional medical entity with which the MSO has a contract;
Exercising control or entering into an agreement to control or restrict the sale or transfer of a professional medical entity’s shares or cause a professional medical entity to issue shares of a professional medical entity; and
Exercising de facto control over administrative, business, or clinical operations of a professional medical entity in a manner that affects the entity’s clinical decision making or the nature or quality of care that the entity delivers. Includes hiring and terminating, setting work schedules or compensation for, specifying terms of employment of medical licensees; setting clinical staffing levels, making diagnostic coding decisions, and more.
Bullet number two is one of the most significant restrictions contained in SB 951 because it severely limits the overlapping ownership and control between the MSO and the professional medical entity, a key characteristic of Friendly PC models that ensure alignment between the MSO and the professional medical entity. Bullet number three is also a major restriction because, subject to some limited exceptions, it essentially prohibits stock transfer restriction agreements between a MSO and an owner of a professional medical entity, another common feature of the Friendly PC model.
An MSO is not prohibited from:
Providing services that do not constitute an exercise of de facto control over administrative, business, or clinical operations of a professional medical entity in a manner that affects the entity’s clinical decision making or the nature or quality of care that the entity delivers;
Purchasing, leasing, or taking an assignment of a right to possess the assets of a professional medical entity in an arms-length transaction with a willing seller, lessor, or assignor;
Providing support, advice and consultation on all matters related to a professional medical entity’s business operations.
Exceptions. SB 951 has been criticized for creating “numerous carveouts” that discourage competition and investment by mandating who may participate in the health care market and who may not.
“Exempt providers include: Hospitals, behavioral health facilities, PACE organizations, crisis lines, tribal health programs, care facilities, and independent practice organizations. These are all exempt…continuing business as usual while independent providers face burdensome regulations,” Rep. Ed Diehl of the Oregon House of Representatives wrote in testimony. ”If this is such a good idea, why exempt these organizations?”
These prohibitions do not apply, for example, to an individual who provides medical services or health care services for or on behalf of a professional medical entity if the individual
Does not own or control more than 10 percent of the total shares of or interest in the professional medical entity;
Is not a shareholder in or a director, member, manager, officer, or employee of an MSO; and
Is compensated at the market rate for the medical services or health care services and the individual’s employment and services regarding the MSO are entirely consistent with the individual’s professional obligations, ethics and duties to the professional medical entity and the individual’s patients.
As noted above by critics, the exemptions include
An individual owning shares or an interest in a professional medical entity and an MSO with which the professional medical entity has a contract for services, under certain conditions;
A professional medical entity and the shareholders, directors, members, managers, officers, or employees of the professional medical entity; under certain conditions;
A physician who is a shareholder, director, or other officer of a professional medical entity and who also serves as a director or officer of a MSO with which the professional medical entity has a contract for management services, under certain conditions, including if the professional medical entity contracting with the MSO is solely and exclusively, for example; a hospital or hospital-affiliated clinic; long-term care facility; residential care facility; PACE organization; behavioral health care provider; mental health or substance abuse disorder crisis line provider; and more.
Telemedicine or coordinated care organizations, under certain conditions.
Sections 2 and 3. With exceptions, these sections amend ORS 58.375 and 58.376 to restrict how a professional corporation (PC)—i.e., a corporation organized for the purpose of practicing medicine/rendering professional health care services—may remove directors or officers, or how it may relinquish or transfer control over the PC’s administrative, business, or clinical operations. PCs may remove a director or officer by means other than a majority vote of shareholders if the director violated a duty of care, was the subject of a disciplinary proceeding, engaged in fraud, etc.
Section 5. SB 951 provides that all officers of a PC, except the secretary and treasurer, must be naturopathic physicians who must hold a majority of each class of shares of the professional corporation that is entitled to vote and be a majority of directors of the professional corporation. An employee or person who holds an interest in the professional corporation may not direct or control the professional judgment of a naturopathic physician who is practicing within the professional corporation.
Section 7. This voids 1) noncompetition agreements that restrict the practice of medicine or nursing, under certain conditions; and 2) nondisclosure or nondisparagement agreements between medical licensees and MSOs, hospitals, and/or hospital-affiliated clinics, under certain conditions.
Takeaways
Contracts or other agreements between MSOs and professional medical entities or medical licensees that violates the provisions of SB 951 may be void and unenforceable; too, MSOs may face an action by a medical licensee or professional medical entity suffering a loss of money or property.
If SB 951 is signed into law by Governor Kotek it will take effect immediately, with the following caveats:
Section 1 first applies on January 1, 2026, to 1) MSOs and professional medical entities incorporated or organized in the state on or after the effective date of the legislation; and 2) sales and or transfers of ownership or membership interests in such MSOs or professional medical entities occurring on or after the effective date of the legislation.
Section 1 first applies on January 1, 2029, to 1) MSOs and professional medical entities existing before the effective date of the act and to 2) sales or transfers of ownership or membership interests in such MSOs or professional medical entities that occur on or after January 1, 2029.
Sections 5, 7, and 8 and amendments to ORS 58.375 and 58.376 apply to contracts entered into or renewed on or after the effective date of the legislation.
We do expect litigation regarding this bill and will keep you updated on further developments.
Epstein Becker Green Staff Attorney Ann W. Parks contributed to the preparation of this post.
ENDNOTES
[1] 182 Or. 452 (1947).
Understanding OSHA’s Updated Site-Specific Targeting (SST) Inspection Plan
What You Need to Know:
OSHA’s Updated SST Plan Targets High-Risk Workplaces Using New Data: The revised Site-Specific Targeting (SST) Inspection Plan now relies on injury data from OSHA’s Injury Tracking Application (ITA), focusing on high-hazard, non-construction establishments with 20+ employees.
Key Changes Include More Inspections and Industry Focus: The plan expands the number of inspections and emphasizes industries with high injury rates, while dropping “record-only” inspections for sites mistakenly flagged.
Proactive Compliance Strategies Are Essential: Companies should prioritize accurate record-keeping, comprehensive safety training, internal audits and building a strong safety culture to ensure compliance and readiness for surprise inspections.
The Occupational Safety and Health Administration (OSHA) has recently updated its Site-Specific Targeting (SST) Inspection Plan, a critical development for companies across various industries. This blog will cover the SST Plan, its recent changes, and practical steps to ensure compliance and readiness for inspections.
Site-Specific Targeting Inspection Plan Explained
The SST Inspection Plan is OSHA’s primary method for targeting high-hazard, non-construction workplaces with 20 or more employees. The Plan uses data from the OSHA Data Initiative (ODI) to identify establishments with high rates of injuries and illnesses. By focusing on these sites, OSHA aims to reduce workplace hazards and improve safety standards.
Key Changes in the Updated SST Plan
There are three important changes that the updated SST Plan introduces:
Data Utilization: The new plan places greater emphasis on data from the OSHA Injury Tracking Application (ITA) to identify establishments for inspection. This shift underscores the importance of maintaining accurate and timely injury and illness records. The SST Plan will select establishments for OSHA inspection based on data from Form 300A for the period 2021 to 2023.
Increased Inspections: The updated plan expands the scope of inspections, potentially increasing the number of establishments subject to review. This change highlights the need for companies to be prepared for inspections at any time. But there is some good news: now, if an establishment is targeted in error, OSHA won’t continue on with a “record-only” inspection. Rather, it will just leave the premises.
Focus on High-Risk Industries: The SST Plan now prioritizes non-construction industries with historically high rates of workplace injuries and illnesses. HR professionals and those involved with safety initiatives in these sectors should be particularly vigilant in ensuring compliance with OSHA standards.
Advice for Companies
To navigate the updated SST Plan effectively, companies should consider the following strategies:
1. Maintain Accurate Records
Accurate record-keeping is as crucial as ever under the new SST Plan. Companies should ensure that all injury and illness records are up-to-date and accurately reflect workplace incidents. This includes regular audits of OSHA 300 logs and ensuring that all required documentation is readily available for inspection.
2. Enhance Safety Training
Investing in comprehensive safety training programs is essential. HR professionals should work with safety officers to develop training sessions that address specific workplace hazards and promote safe practices. Regular training not only helps prevent accidents but also demonstrates a company’s commitment to safety, which can be beneficial during an OSHA inspection.
3. Conduct Internal Audits
Regular internal audits can help identify potential safety issues before they become problems. HR professionals should collaborate with safety teams to conduct thorough inspections of the workplace, ensuring compliance with OSHA standards. These audits can also serve as a valuable tool for preparing for potential OSHA inspections.
4. Foster a Safety Culture
Creating a culture of safety within the organization is perhaps the most effective way to ensure compliance with OSHA standards. Companies should encourage open communication about safety concerns and involve employees in safety planning and decision-making. Recognizing and rewarding safe practices can also motivate employees to prioritize safety in their daily activities.
The Importance of Compliance
Compliance with OSHA’s SST Plan is not just about avoiding fines and penalties; it is about ensuring the safety and well-being of employees. By understanding the updated SST Plan and implementing the strategies outlined above, companies can play a pivotal role in creating a safer workplace.
What the New SST Inspection Plan Means for Employers
The updated SST Inspection Plan represents a significant shift in OSHA’s approach to workplace safety. For companies, this means taking proactive steps to ensure compliance and readiness for inspections. By maintaining accurate records, enhancing safety training, conducting internal audits, and fostering a safety culture, companies can not only meet OSHA’s requirements but also create a safer, more productive work environment.
Federal District Court Upholds Authority of HHS to Pre-Approve 340B Rebate Programs; HRSA Submits Proposed 340B Rebate Guidance
A federal judge in D.C. recently ruled in favor of the U.S. Health Resources and Services Administration (“HRSA”), an administrative agency under the U.S. Department of Health and Human Services (“HHS”), by finding that drug manufacturers must obtain pre-approval from HRSA before implementing rebate models under the 340B Program. Specifically, U.S. District Judge Friedrich (“Friedrich”) found that HHS and HRSA did not exceed their authority when they required Eli Lilly & Co., Bristol Myers Squibb Co., Sanofi-Aventis U.S. LLC, Novartis Pharmaceuticals Corp. (“Novartis”) and Kalderos Inc., a health care tech company (together, the “Companies”) to seek pre-approval of the rebate plans they offered.[i]
Cases Impacted by the Decision
The five separate lawsuits on which Friedrich ruled involve claims from the Companies that HHS illegally blocked their efforts to implement rebate models instead of offering up-front drug price discounts to 340B covered entities. Friedrich held that the 340B statute “contemplates that the Secretary may ‘have as a condition’ or ‘stipulate’ how any rebate or discount is accounted for in the price ultimately paid by [340B] covered entities. That plain text provides authorization for [HRSA] to regulate the implementation of price reductions.” Friedrich further found that HHS and HRSA did not act arbitrarily and capriciously by requiring the Companies to get their rebate plans pre-approved before implementing them.
Origin of the 340B Rebate Disputes
Last year, Johnson & Johnson Health Care Systems Inc. (“J&J”) proposed that hospitals should pay full price for two popular J&J medications, and then file a claim for a rebate in order to receive the discounts to which the hospitals are entitled under the federal 340B program. Following objections from HRSA officials and hospitals, J&J reportedly ceased “implementation of its 340B rebate proposal” and last November, J&J sued HHS and HRSA.[ii] Manufacturers have taken the stance that a rebate model is permitted by the 340B statute and that the rebate model provides better control and protection against duplicate discounts. [iii] Advocates opposing the rebate model argue that the 340B statute does not permit a retroactive discount and that the rebate model would create significant financial and operational hurdles for safety net hospitals and other entities participating in the 340B Program. [iv]
What’s Next?
While the ruling is considered a temporary win for 340B covered entities, Friedrich did not conclude that rebate models are prohibited under the 340B statute. At the time of the ruling, HRSA had only formally rejected Sanofi-Aventis’s rebate model, while the others remain pending a final decision from HRSA. As to Sanofi, Friedrich ruled that HRSA had not provided adequate justification for its denial of the rebate model and ordered HRSA to reconsider Sanofi’s proposal. On June 1, 2025, HHS and HRSA submitted their proposed 340B Rebate Guidance to the Office of Management and Budget for regulatory review, It is unclear when the review will be finalized and made available to the public. Once the guidance is released, 340B covered entities should determine how it may affect their operations and consider consulting with their 340B attorneys on navigating any new requirements or implications.
FOOTNOTES
[i] Eli Lilly & Co. et. Al. v. Robert F. Kennedy Jr. et al., (Case No. 24-cv-03220); Bristol Myers Squibb Co. v. Robert F. Kennedy Jr. et al., (Case No. 24-cv-03337); Sanofi-Aventis U.S. LLC v. Robert F. Kennedy Jr. et al., (Case No. 24-cv-03496); Novartis Pharmaceuticals Corp. v. Robert F. Kennedy Jr. et al., (Case No. No. 25-cv-00117); and Kalderos Inc. v. Robert F. Kennedy Jr. et al., (Case No. 21-cv-02608).
[ii] See American Hospital Association, J&J sues government over 340B proposal; AHA says J&J’s legal arguments ‘completely meritless’ (Nov. 13, 2024).
[iii] Craig Clough, Feds Get Early Win In Drugmakers’ Suit Over 340B Rebates (May 19, 2025).
[iv] Amicus Curiae Brief of American Hospital Association, National Association of Children’s Hospitals, Inc., d/b/a Children’s Hospital Association, Association of American Medical Colleges, and America’s Essential Hospitals in Support of Defendants, Eli Lilly & Co. v. Kennedy, Nos. 24-cv-3220, 24-cv-3337, 25-cv-0117 (DLF) (D.D.C. filed Mar. 4, 2025), ECF No. 31-1.
Listen to this post
Employment Law This Week: Abortion Protections Struck Down, LGBTQ Harassment Guidance Vacated, EEO-1 Reporting Opens [Video, Podcast]
This week, we cover the striking down of abortion protections for workers and LGBTQ harassment guidance, as well as the beginning of a brief EEO-1 reporting season (concluding on June 24).
Abortion Protections for Workers Struck Down
A Louisiana federal judge vacated portions of a rule implementing the Pregnant Workers Fairness Act that defined abortion as a medical condition and required accommodations.
Federal Court Vacates LGBTQ Harassment Guidance
The U.S. District Court for the Northern District of Texas has moved to strike portions of the Equal Employment Opportunity Commission’s (EEOC’s) guidance on workplace harassment against LGBTQ employees. The court ruled that the Biden-era EEOC guidance expanded “the scope of sex beyond the biological binary.”
EEO-1 Reporting Opens with a Tight Deadline
The EEO-1 reporting period is now open. All private employers in the United States with 100 or more employees are required to file, as are federal contractors with 50 or more employees that meet certain criteria. The deadline to file is just weeks away—June 24—so employers are moving quickly.
Makary Says Psychedelics Are Maybe Okay, M’Kay?
Drugs are bad, m’kay. But what if they’re not? Psilocybin continues to be in the limelight for its potential medicinal uses, including most particularly its potential to combat the nation’s growing mental health crisis. Last week, we reported on the fact that President Trump’s surgeon general nominee was a potential proponent of the use of psychedelics like psilocybin. Now, another member of Trump’s administration has chimed in, and this time it’s someone from the Food and Drug Administration.
The head of the FDA has advised that “exploring the therapeutic potential for psychedelics such as psilocybin and ibogaine is a top priority for the Trump Administration.” According to FDA Administrator Matt Makary, who spoke on News Nation recently,
When it comes to some of these psychedelics and other plant-based therapies, I don’t think we’re listening to patients… I don’t think the medical establishment is listening to doctors. When I listen to the individuals who have tried some of these for real medical conditions—post-traumatic stress disorder, severe refractory depression—people tell me that they believe that psilocybin was successful. It was a curative, or significantly helped, their severe mood disorder.
People have told me that other psychedelics, like MDMA, have been helpful in treating PTSD. Doctors have told me that they’ve sent patients for this therapy… Ibogaine has been used to treat PTSD. There are trials now looking at it for traumatic brain injury—things we have had nothing for in the past. What have we had to treat traumatic brain injury and PTSD that has really had great results up until this time?
To be sure, Makary has said he is not necessarily endorsing these plant-based medicines but does think it’s important to be sure the FDA doesn’t “get in the way with red tape.”
We’ve become used to seeing administrative and executive officials, including the VA and members of Congress, acknowledging the potential benefits of psychedelics as medicine. But last year, under a different administration, FDA dealt a significant blow to the industry, deciding not to approve Lykos Therapeutics, Inc.’s MDMA-assisted PTSD therapy. Makary’s recent statements may mean a sea change for the FDA. We think it’s likely that companies supporting psychedelics research will be emboldened and may become more aggressive in seeking trials and approval under this administration. But much remains to be seen, and Makary has definitely left himself with plenty of ways out. Stay tuned.
Listen to this post
FTC Revives Orange Book Listing Challenges
On May 21, 2025, the Federal Trade Commission (FTC) issued its third round of warning letters – and its first under the Trump administration – against pharmaceutical manufacturers for allegedly improper listing of patents in the Food and Drug Administration’s (FDA) Orange Book. The FTC made clear that its prerogative under President Trump’s leadership is to seek “transparent, competitive, and fair healthcare markets.”
The FTC issued renewed warning letters to drugmakers that did not delist previously challenged Orange Book listings, disputing more than 200 patents across 17 brand-name pharmaceuticals. The patents relate to device components of combination drug-device products treating asthma, diabetes, and chronic obstructive pulmonary disease (COPD). The FTC alleges the device patents constitute improper listings that allow brand-name manufacturers to delay – or even prohibit – generic competition. These patents were previously the subject of warning letters the FTC issued in November 2023 and April 2024 to more than a dozen pharmaceutical manufacturers. Although some manufacturers delisted patents in response to the initial warning letters, others chose to continue listing the targeted patents in the Orange Book.
In Depth
BACKGROUND
The FTC issued a policy statement in 2023 under Chair Lina Khan declaring that “improper” pharmaceutical patent listings in the Orange Book may constitute an unfair method of competition in violation of Section 5 of the FTC Act. The patents are listed for the purpose of putting generic rivals on notice to deter patent infringement. The FDA, however, takes only a ministerial role as to listing patents and does not assess whether patents are properly listed in the Orange Book. Following the 2023 policy statement, the FTC issued a series of warning letters to manufacturers.
In the FTC’s recent warning letters, the agency cites the December 2024 US Court of Appeals for the Federal Circuit decision in Teva Branded Pharm. Prods. R&D, Inc. v. Amneal Pharms. of N.Y., LLC as support for their assertion that the previously identified patents are improperly listed. The Federal Circuit affirmed a lower court’s order requiring Teva to delist five patents associated with its ProAir® HFA inhaler, a drug-device combination product, from the Orange Book. The court found Teva had improperly listed its ProAir HFA inhaler patents in the Orange Book for primarily two reasons:
First, Teva had misinterpreted the requirements set forth in the listing statute by arguing that the term “drug” encompasses any component of an article that treats a disease, and therefore its patents claiming the device components would also “claim the drug.” The Federal Circuit rejected this argument, holding that determining whether a patent is properly listed “requires what amounts to a finding of patent infringement,” and the mere fact that a product could infringe a patent does not mean the patent “claims” the underlying drug.
Second, Teva argued that a patent can be listed when it claims any part of the product other than the active ingredient, and therefore its patents that claim the device component are valid. The Federal Circuit rejected this argument, holding that in order for a patent to claim the “drug” and be listed in the Orange Book, the patent must claim at least the active ingredient of the approved product, as the active ingredient provides the primary mode of action of the drug.
The Federal Circuit subsequently denied Teva’s request for an en banc rehearing in March 2025. Notwithstanding Teva’s petition seeking Supreme Court review, Teva must now delist the five patents.
WHAT’S NEXT
On the day following the Federal Circuit’s opinion, the FTC issued a press release applauding the Federal Circuit’s holding and reiterating its position that, due to the 30-month statutory stay triggered by listing patents in the Orange Book, improper listings can negatively affect competitive conditions permitting generic entry of competing drug products. The press release, however, was issued in the waning days of Chair Khan’s tenure with a Democratic majority at the FTC, and practitioners and industry stakeholders alike questioned whether the FTC’s policy on Orange Book listings would continue under a Republican-led FTC. The recent warning letters suggest that, under current Chair Andrew Ferguson, the FTC appears to be sticking to the prior administration’s policy and remains focused on enhancing competition between brand-name and generic pharmaceuticals to lower healthcare costs.
The Federal Circuit’s decision vindicated the FTC’s position against improper listings in the Orange Book and likely empowered the agency to undertake the most recent enforcement efforts despite the change in administration. The agency’s continued scrutiny of patent listings in the Orange Book indicates it is possible the FTC may pursue enforcement actions concerning its Orange Book challenges in the future. Therefore, brand-name manufacturers are advised to carefully review their current listings, paying particular attention to the underlying claim of the patent, as patents that do not claim the active ingredient in the drug may be considered improperly listed. Brand-name manufacturers are encouraged to proactively seek counsel when conducting such reviews to ensure compliance.
Texas House Approves ‘Make Texas Healthy Again’ Bill
On May 26, 2025, the Texas House passed SB 25 with bipartisan support. SB 25, also known as the ‘Make Texas Healthy Again’ bill, focuses on promoting nutritional awareness and physical education in schools and improving food labeling practices. The bill would also establish a Nutrition Advisory Committee to help establish, develop, and maintain nutritional guidance within the State.
SB 25 also requires food manufacturers to either remove prohibited ingredients listed within the bill—such as Red 40 and titanium dioxide—or place a warning label on the product that reads: “WARNING: This product contains an ingredient that is not recommended for human consumption by the appropriate authority in Australia, Canada, the European Union, or the United Kingdom.” This language was amended from what was reported on in a previous blog post. The latest version of the bill makes clear that it does not apply to dietary supplements (among other listed situations).
Notably, the bill removed high fructose corn syrup from the list of prohibited ingredients following opposition from numerous food companies after it was introduced. The industry’s opposition letter also urged legislators to remove the warning label requirement, but the proposed amendment did not pass through the House.
SB 25 is now heading to Governor Greg Abbott’s desk to be signed into law. The bill would take effect on September 1, 2025.
House Subcommittees Will Hold Hearing on “Pursuing the Golden Age of Innovation: Strategic Priorities in Biotechnology” on June 5
On June 5, 2025, the House Science and Technology Subcommittees on Energy and on Research and Technology will hold a joint hearing on “Pursuing the Golden Age of Innovation: Strategic Priorities in Biotechnology.” The Subcommittees will hear from the following witnesses:
Dr. Drew Endy, Hoover Institution Science and Senior Fellow, Martin Family Fellow in Undergraduate Education for Bioengineering, Stanford University;
Ms. Deborah Gracio, Associate Lab Director, National Security Directorate, Pacific Northwest National Laboratory;
Dr. Stephen Techtmann, Associate Professor of Biological Sciences, Michigan Technological University; and
Dr. Kelvin Lee, Institute Director, National Institute for Innovation in Manufacturing Biopharmaceuticals.
MAHA Report Cites Nonexistent, likely AI-Generated, Studies
The Make America Healthy Again (MAHA) Commission published its report detailing what it claims to be the main causes of chronic diseases. The report is receiving increased scrutiny after News of the United States (NOTUS), a nonprofit digital news site, published an article on Thursday, May 29 stating that many of the citations in the report either had large errors or even cited nonexistent studies. Some cited authors who were contacted by NOTUS were surprised to hear of their citation and denied ever working on the studies referred to in the MAHA Report.
Both The Washington Post and The New York Times published articles later that same day referring to even more errors and inaccuracies. The Washington Post article quoted artificial intelligence experts who suspect that many of the citations in the MAHA Report were likely produced by AI. Indeed, no authors are identified for the MAHA Report itself, which leaves considerable questions as to the scientific accuracy of its findings. The article points to the use of the text “oaicite” (OpenAI Cite) in some of the citation URLs within the report, which is “a marker indicating use of OpenAI, a U.S. artificial intelligence company.” This suggests that the conclusions reached in the report may have preceded the citations.
When asked about the NOTUS article and the potential reliance on AI, White House press secretary Karoline Leavitt referred to any inaccuracies as “minor citation and formatting errors.” The MAHA Report has since been updated to remove the incorrect citations at issue in the NOTUS article.
Separately, following public complaints from a number of grower groups regarding the MAHA Report, The America First Policy Institute (AFPI), a nonprofit think tank that was founded in 2021 by current Secretary of Agriculture Brooke Rollins, released its “Farmers First agenda for responsible nutrition policy” Driving Responsible Nutrition Policy on May 29.
The AFPI paper outlined the following principles:
Federal programs should allow states to incentivize healthier eating.
Federal government must ensure our domestic food supply is transparent, safe, and upholds nutritional integrity.
Federal nutrition programs must be reserved for the truly needy and must aim to restore the dignity of work.
Government and the private sector must collaborate to reduce food loss and waste.
Driving responsible nutrition policy also means supporting the domestic specialty crop sector, including fruit and vegetable farmers.