BY Blinn E. Combs, Esq. and Michael R. Alexander, Esq., Brown & Fortunato, P.C.
On April 1, Robert F. Kennedy, Jr., newly installed Secretary of the federal Health and Human Services Department (“HHS”) began implementing changes announced on March 27 as part of the Trump Administration’s Make America Healthy Again initiative. The press release and related fact sheet promised large-scale restructuring of the HHS and the many departments operating under it. Released plans included the reduction of 20,000 full-time federal employees (about a quarter of the HHS workforce); a rough halving of the HHS’s 29 divisions into 15, a reduction from 10 to 5 regional offices, and the merger of several administrative and policy sections into a single office. Annual savings from the 
restructuring are projected to be around $1.8 billion, about 0.1% of the department’s total budget and about 1.4% of its discretionary funding.
Although the ultimate outcome of the reorganization is far from certain, four agencies are facing the bulk of cuts: The Food and Drug Administration (“FDA”), losing 3,500 employees; the Centers for Disease Control and Prevention (“CDC”), losing 2,400 employees; the National Institutes of Health (“NIH”), losing 1,200 employees; and the Centers for Medicare and Medicaid Services (“CMS”), losing 300 employees. Although these agencies are broadly publicly known, their various legal functions are sometimes obscure. But as the HHS shrinks and various programs are eliminated, it is critical that industry participants remain updated so they can consider and account for how these changes will impact their operations and the patients they serve.
The Food and Drug Administration
The FDA is by law the sole interpreter and enforcer of the federal Food, Drug, and Cosmetic Act (“FD&CA”). This means that in most cases, courts defer questions about the safety or efficacy of FDA-regulated products to the FDA. Its mission is to protect public health by overseeing the safety and efficacy of human and veterinary pharmaceutical products and medical devices and the safety of the food supply and cosmetics. The FDA oversees and regulates the entry of drugs and medical devices into U.S. commerce and polices drug and device manufacturers. It inspects domestic drug manufacturing facilities and importing facilities abroad, industrial food producers and importers, and cosmetics manufacturers, promulgating industry guidance for the maintenance of safe and sanitary production and accurate labeling and advertising of potentially dangerous consumer products.
Prior to the restructuring, the FDA Commissioner oversaw six administrative offices and an additional 15 sub-agencies, including the Center for Biologics Evaluation & Research, the Center for Devices & Radiological Health, the Center for Drug Evaluation & Research, the Center for Tobacco Products, the Center for Veterinary Medicine, the Office of External Affairs, the Human Foods Program, and the Office of Inspections and Investigations. The Office of Minority Health & Health Equity has been slated for elimination. The only program spared as of the time of writing is the Oncology Center of Excellence.
The Centers for Disease Control and Prevention
The CDC focuses on the research, detection, and prevention of disease, injury and disability in the U.S. and globally, paying special attention to infectious diseases, food-borne illnesses, and environmental monitoring and safety. Prior to the restructuring, it consisted of 11 centers, institutes and offices, including the National Center for Immunization and Respiratory Diseases; the National Center for Emerging and Zoonotic Infectious Disease; The National Center on Birth Defects and Developmental Disabilities; the National Center for Chronic Disease Prevention and Health Promotion; the National Center for Environmental Health; the National Center for Injury Prevention and Control; the National Institute for Occupational Safety and Health; the Public Health Infrastructure Center; the Global Health Center; and an additional 10 scientific and policy offices operating under the Immediate Office of the Director.
The National Center for HIV/AIDS, Viral Hepatitis, STD, and TB Prevention, the Office of Smoking and Health, the Climate and Health Program, as well as divisions dealing with reproductive health and environmental disaster teams, have been either dramatically reduced or eliminated.
In January, the CDC staff was ordered to terminate work with the World Health Organization, and in February, an initial 1,300 CDC employees were terminated.
The National Institutes of Health
With an annual budget of over $50 billion prior to the restructure, the NIH was the world’s largest public funder of medical research, consisting of 27 offices and centers. The NIH funds the majority of medical research in the U.S., overseeing research grants to major research universities, medical schools, research hospitals and other centers of medical innovation. A recently announced 15% cap on grant funding of indirect costs—funds for facilities and administration usually bound up with multiple projects—is at present blocked by a temporary restraining order. However, the planned cuts have prompted wide uncertainty over the future of research projects and personnel, including lead researchers and students that rely on grant funding. If enacted, Texas universities could lose hundreds of millions of dollars in indirect costs funding, with the University of Houston expecting losses in excess of $10 million. M.D. Anderson Cancer Center stands to lose over $3 million annually.
The Centers for Medicare and Medicaid Services
CMS oversees both federal fee for service Medicare and the federal funding of state-administered Medicaid programs. Traditional Medicare insures about half of U.S. seniors. While the Trump Administration has publicly promised not to cut Medicare or Medicaid, because federal funding accounts for almost 70% of Medicaid expenditures, the program is particularly vulnerable to federal funding cuts.
Medicaid accounts for 20% of all U.S. health care spending, contributing to the care of over 83 million Americans, including more than half of the costs of long-term care. 40% of U.S. children participate in Medicaid, a figure that includes 80% of children in poverty. Approximately 1 in 4 adults with disabilities rely on Medicaid for medical care, as do almost half of U.S. adults with income below the federal poverty level. Over 40% of births in the U.S. are funded by Medicaid.
The announced cuts come with little precedent in U.S. agency law. Past restructurings have typically been announced and organizational structure shared prior to the enactment of personnel cuts pursuant to reorganization. Given the uncertainty surrounding HHS’s ability to continue its legally mandated activities in the wake of the firings, protracted litigation is virtually certain. The reduction in services provided by these agencies will undoubtably create ripple effects throughout the industry and the broader public health infrastructure.