Life sciences year in review and what's ahead

2024 was eventful in the life sciences space – and key trends are expected to continue in the new year. Below, we outline key areas to watch in 2025.

Product liability

In recent years, several trends have heightened the risk of mass tort product liability litigation for life sciences companies.

• The continued expansion of social media, and the data collected by social media companies, which has enabled the plaintiffs’ bar to target potential plaintiffs to a much greater degree than in the past
  
  
• The increased use of litigation funding, which has allowed previously under-resourced plaintiffs’ firms to enter litigations that they might have previously avoided, file claims on behalf of plaintiffs they might previously have rejected, and become more entrenched in settlement and other negotiations due to the need to achieve higher returns on investment to pay off their funders, and
  
  
• Plaintiffs’ lawyers increasingly targeting litigations involving miniscule levels of carcinogens in products made by multiple companies.

As a result, litigations are becoming larger, involving both product liability and consumer class actions, with more defendants, posing significantly greater risk for life sciences and other companies.

Intellectual property

Pharmaceutical and life sciences companies are increasingly using artificial intelligence (AI) to assist in drug discovery and development efforts.

This has resulted in a rapid increase of the number of compounds in clinical development, potentially shortening development timelines and accelerating the introduction of breakthrough therapeutics to the market at a lower cost. Protecting these innovations with intellectual property will require careful attention to the rapidly evolving legal landscape addressing AI. For more information, see our webinar.

Transactions

Key transactions trends are expected in the new year, including the following:

• Continued focus on the supply chain is expected as a result of the uncertain regulatory environment, and political headwinds to offshore reliance for supply. The BIOSECURE Act, if passed, may contribute to this continued focus by companies on review and changes to supply chains, specifically for Chinese biotech companies and manufacturers, which was first highlighted during the COVID-19 pandemic.
  
  
• Gradual improvement in capital markets is anticipated for 2025, with an uptick of initial public offerings (IPO) in the life sciences sector.
  
  
• Given the market for the GLP-1 class of medications, transactions relating to these therapies, including the next generations, are expected to continue in all areas of the life sciences life cycle – including areas like research and development, licensing, supply, commercialization, and mergers and acquisitions.
  
  
• Buyers and strategic partners may continue to prefer flexibility in transactions by incorporating options that have become popular due to the unpredictability seen in 2024.

Antitrust

The incoming US presidential administration may be more supportive for mergers and acquisitions activity. This includes the acquisition of potential early-stage competitors and vertical mergers, marking a shift from the Biden Administration’s approach to addressing mergers. The change in administration may also impact the Federal Trade Commission’s litigation against pharmaceutical benefits managers (PBMs), and its efforts to challenge patents in the Federal Drug Administration (FDA)’s Orange Book.

Drug pricing also may come under scrutiny: The first Trump Administration brought criminal price-fixing charges against several generic drug manufacturers, and the President-elect has signaled an ongoing focus on pharmaceutical costs during his campaign.

Potential changes in federal enforcement, however, may be offset by more active state-level enforcers and private plaintiffs in the US, as well as other competition enforcers globally. An anticipated federal appeals court opinion in a private civil case about the use of patents to block generic competition may also have far-ranging impacts in the sector.

In Europe, the outcome of a challenge to a fine imposed by the European Commission (EC) for patent misuse and disparagement is expected to be a key issue. Additionally, the EC’s updated guidance on abuse of dominance could impact pricing and rebate practices practiced by a number of companies.

FDA regulatory

Recent developments in FDA’s regulation of diagnostic and therapeutic products are poised to impact the landscape in 2025 as well. Below, we look at some key events.

1. US Supreme Court issued its ruling in the Loper Bright case. The Court overruled the longstanding precent providing for Chevron deference. This doctrine required courts to defer to federal agencies when interpreting and implementing their statutory authority. Many believe this change will generally increase the likelihood that stakeholders will be successful in challenging agency action under the Administrative Procedures Act.
   
   
2. FDA is seeking to change its longstanding policy of enforcement discretion with respect to the regulation of laboratory developed tests (LDTs). As discussed in our May 2024 alert, the Agency has historically not required LDTs to engage in the premarket review processes that are generally required for medical devices. However, in recent years FDA has become increasingly concerned about the increase in prevalence of LDTs, and the risks that lack of regulation may pose.
   
   FDA has issued a final rule rewording the regulation defining “in vitro diagnostic tests” to specifically include LDTs, and announcing a phase-out of its enforcement discretion policy toward LDTs. FDA began this process before the issuance of the Loper Bright ruling, and two court challenges have been made against the final rule. Many believe the Loper Bright decision increases the likelihood these challenges – as well as other pending or contemplated legal challenges to FDA agency action – will be successful.
   
   
3. FDA has issued industry guidance stating that its determination of a biosimilar’s interchangeability will no longer necessarily require switching studies. A finding of interchangeability under the Biologics Price Competition and Innovation Act renders a biosimilar susceptible to being substituted at the pharmacy under many state laws. This regulatory change could effectively lower the regulatory burden for biosimilar applicants to meet this standard.
   
   
4. FDA is implementing enforcement of the Drug Supply Chain Security Act (DSCSA). The DSCSA was enacted in 2013, and requires parties in the supply chain of prescription drugs to use electronic interoperable tracking technology to enhance identification and removal of counterfeit or otherwise harmful drugs. FDA has previously provided serial delays in implementation and enforcement of the DSCSA, the most recent of which had established November 27, 2024 as the new date for required compliance. The DSCSA continues to present significant implementation challenges to stakeholders engaged in the manufacturing, distribution, and dispensing of pharmaceuticals. This area will be key to monitor for potential enforcement focus in 2025.
   
   
5. Part 820 has been updated to align with ISO 13485 and renamed as the Quality Management System Regulation (QSMR). As discussed in our prior alert, FDA issued a final rule amending its Quality System regulations (now referred to as QMSR) under 21 CFR Part 820. The final rule, issued in early 2024, addresses current good manufacturing practice requirements for medical devices. The amendments harmonized these requirements with ISO 13485:2016. In 2025, we anticipate industry members will be busy updating their quality management systems to meet the February 2026 enforcement deadline.
   
   
6. The new presidential administration contemplates key changes. The incoming presidential administration is contemplating changes to federal agency leadership that could significantly impact the way the government operates. These include the plan to nominate Robert F. Kennedy Jr. as Commissioner of Health and Human Services, as well as Dr. Marty A. Makary as the Commissioner of Food and Drugs, who previously opposed COVID-19-related mandates. These potential changes in 2025 could impart significant changes to the current functions of the FDA.

Drug pricing, BIOSECURE, and innovation

Drug pricing

The successful development of transformative treatments has put pressure on payers managing healthcare insurance costs. As patients often face high cost-sharing when paying for prescription drugs, drug pricing remains a key focus of cost containment efforts.

With the popularity of drug price reduction measures, states continue to show interest in Prescription Drug Affordability Boards, and federal policymakers tout the benefits of price controls in Medicare, Medicaid, and commercial insurance. However, the Inflation Reduction Act provisions for 2025 may shift more costs and risks onto insurers, likely resulting in more access restrictions and challenges for biopharmaceutical manufacturers in negotiating formulary placement. State price reporting and upper payment limits may add administrative burdens, and may limit access to some medicines. Since its inception, the 340B program has grown exponentially with limited oversight, and well-established evidence of duplicate discounts, making it a prime area for potential legislative restructuring.

These trends are expected to continue in the coming years. Key functions may need to be expanded, including price reporting, health plan access schemes, contract management, and evaluation of patient assistance programs.

Preparing for this access environment may include thoughtful regulatory strategy design, well-supported pricing decisions, novel uses of data to demonstrate value, and government affairs support to bolster advocacy with innovation-focused lawmakers and patient groups.

BIOSECURE Act

Drug development is an increasingly global enterprise, particularly in the early stages. Biopharmaceutical companies, both large and small, are looking to the markets around the world with scientific capabilities and clinical trial capacity to safely and efficiently design and conduct investigational clinical studies. This requires new types of collaboration for funding, data management, and regulatory strategy.

China, in particular, is taking on a larger share of early drug development, often in collaboration with multinational drug companies. However, the US and China (and, to some extent, Europe and China) are increasingly engaged in a combative trade and diplomatic exchange that may directly jeopardize this type of early-stage development and collaboration. These engagements require robust support through an intellectual property and quality oversight strategy, along with consideration of global regulatory acceptability and government affairs to facilitate advocacy in a time of geopolitical tension.

US and global regulatory agencies have concerns about intellectual property protection, supply chain security, data integrity, and data protection in China. Regulations and guidance are in development, and require thoughtful interpretation. Addressing these concerns effectively maximizes the value of global collaborations, and they are supported by robust government affairs and regulatory engagement. Diversification into other countries for drug development and manufacturing in Asia, Africa, and South America is a strategy to consider for risk mitigation.

Innovation

New technology and novel trial designs enable the development of innovative medicines. This includes remote-enabled trials, adaptive designs, surrogate endpoints, and information gleaned from large datasets with large language models. AI creates new possibilities for drug development that may inform the next generation of drug programs. Regulators and legislators are working to build the capabilities needed to evaluate the risks and benefits of these technologies, and to provide the guidance and oversight for novel drug development.

New drugs will be released into a health system that increasingly relies on remote tools, including telemedicine, apps to track health changes, and technology that may recognize physical or chemical body changes. However, regulatory systems are not yet prepared to determine how to incorporate these technologies into clinical trials, establish appropriate oversight, and balance the associated risks and rewards.

US lawmakers and regulators are expected to make these decisions soon, and they will need complete, balanced information. Careful planning to integrate advanced technology into development and commercialization strategies, along with a well-engaged government affairs organization, are key tools to enable commercial success in this technology-driven environment.

New presidential administration

President-elect Donald Trump has stated his intent to make changes to federal health programs by cutting red tape, reducing costs, and enhancing access through competition and transparency.

With Affordable Care Act (ACA) subsidies expiring at the end of 2025, Trump has stepped back from earlier attempts to repeal and replace it. Nevertheless, he has shown interest in making changes to the law, and potentially allowing the enhanced tax credits to lapse. Though Trump has stated his intent to preserve Social Security and Medicare, he has not yet clarified his plans for Medicaid.

Discussions regarding work requirements for able-bodied Medicaid beneficiaries may resurface in 2025, as well as renewed conversations surrounding Medicaid expansion. Other topics that may be included in a healthcare agenda, whether in the context of the ACA or otherwise, are telehealth, AI, and drug shortages.

In terms of the pharmaceutical industry, Trump appears to have abandoned his “most-favored nations” policy, which would have required Medicare to pay no more than other developed nations for prescription drugs. It remains unclear how Trump will address the Biden Administration’s Medicare drug price negotiation policy, particularly with the first round of negotiated prices set to roll out in 2026. His campaign has emphasized the need for greater price transparency across the healthcare industry, including drug prices, and insurer and pharmaceutical benefit manager (PBM) discounts.

Enforcement

Life sciences companies will be required to ensure greater transparency in the supply chain to comply with quality standards and ethical sourcing practices, and to prevent counterfeit products from entering the supply chain. Life sciences companies are expected to comply with several standards of good manufacturing practices across the globe, which have led to a rise of inspections of facilities worldwide, in coordination with foreign regulatory bodies.

AI and compliance

Given the Department of Justice (DOJ)’s updated guidance on the evaluation of corporate compliance programs, companies will be required to integrate AI risk management into their broader enterprise risk management strategies. This includes identifying and mitigating risks associated with AI technologies to ensure compliance with applicable laws.

Additionally, the DOJ's focus on AI requires companies to develop robust AI governance frameworks. These frameworks will ensure that AI systems are trustworthy, reliable, and used in compliance with legal and ethical standards.

Life sciences companies that take a proactive approach to regulatory expectations will leverage AI to monitor compliance in real-time, detect anomalies, and prevent potential compliance issues before they escalate. The use of AI and data analytics is expected to become more prevalent in compliance programs, helping to mitigate risks related to the False Claims Act, the Foreign Corruption Practices Act, mergers and acquisitions and other regulatory areas. These trends highlight the increasing importance of AI in compliance, and the evolving regulatory expectations for life sciences companies.