Insights

While the 2024 Presidential and Congressional election cycle featured limited discussion of health care, 2025 has featured intense focus on the industry as President Trump staffs his administration and a full Republican lineup looks to pay for extending Tax Cuts and Jobs Act policies. Robert F. Kennedy, Jr. and Dr. Mehmet Oz represent a new type of political appointee for HHS and CMS, respectively. RFK, Jr. takes the helm at HHS as the Trump administration looks to reduce staff across HHS and reduce funding, including for NIH grants. For Dr. Oz, there are questions about how he will handle Inflation Reduction Act (IRA) drug pricing negotiations as well as Medicare Advantage policy. In Congress, Republicans look to extend tax cuts, Medicaid has been at the top of the list of potential cuts. The list of potential policies range from repealing Biden Medicaid rules, to imposing work requirements, to major changes to the program including limiting annual Medicaid growth and reducing the Medicaid expansion federal matching rate to the traditional Medicaid rate, which would eliminate expansion in many states. The search for Medicaid cuts has created tension among House and Senate Republicans, with fiscal hawks arguing for larger cuts while more moderate members and those from battleground states and districts uncomfortable with even more modest cuts. Congressional Republicans are intent on passing an extension of the tax cuts, so this will continue to be an issue until that goal is satisfied. Another key issue is the fate of the enhanced Affordable Care Act (ACA) exchange subsidies, initially passed as part of the American Rescue Plan in 2021 and extended in the IRA in 2022. Since 2021, over 12 million new enrollees have joined the exchanges, but the subsidies are set to expire at the end of 2025. It is not clear how Congressional Republicans could get on board with an extension, but there will be intense lobbying from providers, payors, and patients throughout 2025. Beyond these 2 major issues, there are a host of other issues, including physician fee schedule reform, the impact of the Department of Governmental Efficiency on Medicare and other government systems, and any read through from the IRA on pharma, Part D sponsors, and related entities, such as CROs. We hope you enjoy our latest Washington Health Care Policy Report.

The NHS priorities and operational planning guidance for 2025/26 presents an evolving landscape for investors and service providers, characterised by greater flexibility in funding, digital enhancements, and workforce optimisation. With increased financial flexibility granted to local systems, streamlined procurement processes, and an emphasis on best-value frameworks, this changing landscape presents investors with new opportunities. Investors and operators who are able to strategically align with these priorities may stand to capitalise on the UK healthcare sector’s shift towards sustainability, efficiency and modernisation.

NHS dentistry has been significantly impacted in recent years, with the COVID-19 pandemic exacerbating systemic weaknesses. Pre-existing issues including chronic underfunding, workforce issues, and unattractive NHS contracts have collided with pandemic-related disruptions to leave millions of patients waiting for care. With the recent uplift in NHS dental contract falling short of the recommendations from the Review Body on Doctors’ and Dentists’ Remuneration (DDRB), the Labour government has failed to alleviate the funding challenges associated with NHS dentistry, and intensified financial pressures on NHS dental providers. As investors look towards the rest of 2025 and beyond, one key question is this: how are these challenges accelerating uptake of private dentistry within the UK dental landscape, and what new investment opportunities may they present in the future? In this paper, Marwood examines the implications of the NHS contract uplift and broader funding constraints, assessing their impact on the competitive landscape of UK dentistry. We explore key market trends, identify potential areas of growth for private providers, and outline strategic considerations for investors seeking to capitalise on emerging trends in dental care.

Penetration of VBC initiatives in Medicaid, particularly those that are risk-based, has historically lagged the more significant growth in VBC within the Medicare Advantage population. However, as Medicaid Managed Care plans and states face cost pressures while aiming to improve outcomes and increase access, there has been an increasing shift away from fee-for-service reimbursement models tied to volume and towards alternative payment models (APMs) that more closely tie reimbursement to outcomes and align incentives by gradually encouraging providers to take on more risk. As a result, there is growing interest among a diverse group of stakeholders including investors, providers, MCOs, and healthcare technology companies in pursuing new revenue opportunities within Medicaid VBC. Programs that effectively realign incentives to prioritize outcomes and value can generate savings for states and MCOs and lead to improvement in the overall quality of care for patients. Herein we address opportunities for VBC for the Medicaid population, identify major challenges facing stakeholders, and examine differences between states that may facilitate greater adoption and success.

Italy is expanding the scope of its Innovative Medicines Fund which will undergo a restructure to now include specific spending ceilings for conditionally innovative medicines and specific antibiotic drugs in 2025, as indicated by the 2025 Budget Law. Alongside this, the Italian Medicines Agency (AIFA) is expected to review the current evaluation criteria for the attribution of innovative status by 31 March 2025, and is likely to include new criteria which are expected to focus on a wider combination of technological and clinical factors that spans the entire pharmaceutical life cycle such as production technology and impact on patients’ lives. This reform presents an important shift for the innovative medicine landscape in Italy by offering ring-fenced funding for specific drug categories and allowing more drugs to be eligible for funding. In this piece, Marwood analyses the changing landscape for innovative pharmaceuticals in Italy and how this may impact investors as well as manufacturers.

Over the last few years, the biotech market has grappled with a global pandemic, numerous drug shortages, burdensome supply chain disruptions, escalating trade tensions, and a difficult funding environment. Underlying these broader issues is the threat to each nation’s biosecurity. Historically, the term has mostly referred to practices that prevent the spread of harmful pathogens, such as disinfection or quarantine. Today, nations have broadened the term to encompass practices that improve the health of their biotech industries. After all, fostering domestic biotech innovation with self-sustaining, high-quality supply chains inarguably does bolster a nation’s biosecurity. On the other hand, enabling a country’s biotech startups to access foreign, low-cost supplies and services also fosters domestic innovation. Providing citizens with expedited access to breakthrough treatments approved in foreign countries also bolsters a nation’s biosecurity. China, as the world’s fastest-growing hub for biotech development, manufacturing, and research services, is now causing western nations to grapple with this delicate balance; some through domestic stimulus and others through punitive restrictions. As the current market leader in biotech innovation, the US seems to favor the latter approach.

The Autumn Budget 2024 is the first budget by a Labour Government in more than a decade. On 30 October 2024, Rachel Reeves, Chancellor of the Exchequer delivered a one-year budget (Phase 1) setting out both an updated 2024/25 spend and planned funding for next year. A longer-term Spending Review will follow in Spring of 2025 (Phase 2). A public audit in July 2024 showed that the new Labour Government inherited a budget deficit with a projected overspend of £22 billion in 2024/25. Therefore, this Budget’s objectives are to keep public spending on a sustainable path, grow day-to-day departmental spending to support public services, and to boost capital investments with a greater focus on value for money and long-term growth. This is a significant event for investors in healthcare and provider entities as it highlights the Labour Party’s priorities and ambitions. In this publication, Marwood provides an overview of key budgetary announcements that affect the health and social care sectors in the UK.

In recent years, the European Union (EU) has commenced several reforms in the life sciences sector. However, to drive the EU towards a more competitive environment in the health and life sciences sectors, more needs to be done. This is the assessment of Mario Draghi’s new competitiveness strategy, published in September 2024. In the second of a two-part series, Marwood examines how the recommendations from the European Commission’s (EC) new competitiveness strategy will steer the EC’s work to improve attractiveness in the fields of Artificial Intelligence (AI) and digital health. In this piece Marwood provides insights on the impact that the new recommendations may have on the EU’s AI and digital health sector over the next few years.

The European Union (EU) has undertaken several reforms in the life sciences sector, such as in pharmaceuticals, clinical trials, Artificial Intelligence (AI), and digital health. To guide the EU on a path towards a more competitive environment in the healthcare and life sciences sectors, the European Commission (EC) published a new competitive strategy in September 2024, and its findings will steer the EC’s work to improve its attractiveness to this industry. In the first of a two-part series, Marwood analyses how these recommendations may develop over the medium-term and assesses the impact they may have on the EU’s pharmaceutical and clinical trials sectors.

Following the two-year anniversary of the signing of the Inflation Reduction Act (IRA), Marwood takes a closer look at the state of clinical trials. In this piece, Marwood analyzes the IRA’s potential impact on clinical trial starts for industry-sponsored mid-(Phase II) and late-stage (Phase III) trials. Additionally, Marwood examines Phase I trial starts, which is likely more closely linked to early-stage biopharma companies. Marwood notes that for early stage companies the current challenging capital market environment may also be an influence on clinical trial activity.

Skilled home healthcare is a growing area of interest as the industry experiences strong tailwinds driven by an aging US demographic. Home health has always appealed to patients and providers as it allows patients to remain in their preferred setting and reduces costs for providers. The increase in the US population that typically receives home healthcare creates an opportunity and challenges, such as staff shortages, that must be addressed to serve this growing market. In this piece, Marwood explores the outlook for the skilled home healthcare market, including growth drivers and ways in which providers are navigating through potential challenges to prepare for the increasing market demand.

Following The Labour Party’s election win on 04 July 2024, Marwood takes a closer look at how the change in Government may impact the volume of National Health Service (NHS) outsourcing to the Independent Sector (IS). In this piece, Marwood examines Labour’s 2024 manifesto pledges around reducing wait times for elective care in the context of the current economic and social climate, as well as historic precedence. On the one hand, Labour campaigned hard on saving our NHS, implying a negative impact on the IS, and on the other they promised reductions in waiting times and lists for elective care. In this piece Marwood weighs these seemingly conflicting policies and examines the net potential impact of this change on NHS outsourcing of elective activity to the IS.

On May 6, 2024, the Food and Drug Administration (FDA) issued a landmark Final Rule clarifying that in vitro diagnostics (IVDs) marketed as laboratory developed tests (LDTs) under the Clinical Laboratory Improvements Amendment (CLIA) are now explicitly designated medical devices with the accompanying regulatory requirements. Although the FDA did carve out certain exceptions subject to their enforcement discretion including, most notably, grandfathering exceptions for certain quality system and FDA submission requirements, this decision will still be costly and burdensome for the IVD space as a whole. However, for those LDT diamonds in the rough with superior clinical validation, this Final Rule could instead present a significant market access opportunity if developers are quick to adapt.

Physician practices and other provider groups have always been at a disadvantage when it comes to negotiating with managed care companies and payors for initial fees or fee increases. Managed care organizations and payors have access to proprietary provider claims data, patient demographics and benefit utilization data that is not generally available to providers. In addition to access to proprietary data, payors have internal teams of professionals who are trained to specialize in provider reimbursement. Physician practices and other providers must be prepared to have detailed discussions with payors regarding reimbursement and other contractual obligations. Reimbursement, while important, should not be the only area of focus of a contractual relationship negotiation with a payor. This paper provides an overview of some of the key considerations for physician practices and other provider groups as they look to navigate the complexities of contracting with payors.

Pharmacy management systems (PMS) and associated software and data solutions are evolving as patients access a greater diversity of traditional and clinical services from pharmacies. At the intersection of patient, provider, payor, and other pharma industry stakeholders, interoperability is key. Stakeholders in PMS and broader pharmacy interoperability extend beyond health plans and manufacturers to other healthcare providers where bidirectional electronic health record (EHR) communication is vital. Regulation, legislation and resultant standards bodies are now actively engaged in developing recommendations to guide the industry and have moved swiftly, partly due to needs that expanded in magnitude during the pandemic. Correspondingly, more robust information exchange capabilities and pointed data solutions will continue to differentiate pharmacy-focused HIT market players. The analysis herein highlights historical challenges, evolving stakeholder needs, and resulting opportunities this has created for solutions providers in the space.

Over the past decade, the autism therapy sector has solidified itself as one of the fastest growing healthcare sectors. Federal and state mandates have driven broad coverage across payor types as the prevalence of Autism Spectrum Disorder (ASD) continues to increase, now 1 in 36 children (up from the previous rate of 1 in 44). Applied Behavior Analysis (ABA) is still considered one of the only evidence based treatments for children with ASD and continues to be the therapy modality most often covered by payors. Herein we address the history of the sector, some of the major challenges facing providers today, and opportunities providers will have to be successful over the next 5–10 years.

The infusion market has experienced remarkable growth over the past several years, fueled by an increasing number of infused medications across indications in an aging US population. Offsetting hospital and physician office demand has been the growth of alternative sites of care including site-based ambulatory infusion centers, home infusion and hybrid infusion suite models. Herein we compare and contrast provider, pharmacy, and payor roles in these sites of care and their reimbursement structure, delineating key considerations in evaluating opportunities in the space.

Over the past decade, durable medical equipment (DME) has become a growing area of interest for mergers and acquisitions (M&A) and investment activity as the industry experiences increasing levels of demand, product innovation, reimbursement stability, and a degree of market fragmentation across suppliers and manufacturers. In this piece, Marwood explores the outlook for the DME market, including growth drivers, payor contracting dynamics, and reimbursement considerations, while addressing how the space has evolved to meet the risk appetite of investors.

The European Union Artificial Intelligence Regulation, the world’s first comprehensive AI Regulation, will take effect from mid-2025 onwards with most of its provisions taking effect in 2026. In this piece, Marwood analyses the upcoming regulatory changes affecting AI systems in the EU and the potential impact it may have on companies developing or promoting AI applications in healthcare, or investors with existing or potential investments in these companies.

Health insurance claims data are an increasingly widespread and valuable source of information for use in analyzing the healthcare space. This report presents an overview of health insurance claims data, including some of the specific sources integrated into Marwood’s analytics platform, and the possibilities for this data, understanding the complexities of a full patient encounter when undergoing a common esophagus endoscopy procedure.

AI in the life sciences has evolved from its roots in machine learning to applications of generative AI, natural language processing, deep learning and increasingly combinations of the latter 3. These tools are being applied to accelerate target discovery as well as improve design and processing, information aggregation and synthesis, as well as the repurposing of existing drugs. Herein we define and describe leading and emerging applications of AI in preclinical drug development and provide examples of models and companies shaping this burgeoning space.