The MedTech industry continues to experience significant policy shifts, driven by recent actions from the Trump administration and key legislative developments. This quarter's update highlights the U.S. federal government’s push for a deregulated environment in healthcare, alongside efforts to reduce reliance on non-U.S. entities within the healthcare and biotechnology sectors.

Trump administration reveals AI Action Plan

The Trump administration has published its artificial intelligence (AI) action plan, detailing policy recommendations for AI implementation across multiple sectors, including healthcare. The plan aligns with the administration’s stated objectives of accelerating AI innovation, investing in U.S. AI infrastructure, and asserting global leadership in AI diplomacy and security.

The plan reflects a deregulatory, “try-first” approach for the healthcare sector, arguing that the industry has been "especially slow" to adopt AI due to "distrust or lack of understanding of the technology, a complex regulatory landscape, and a lack of clear governance and risk mitigation standards.”

Notably, the action plan empowers the Federal Communications Commission to identify state-led initiatives deemed “burdensome” and aims to restrict federal funding for such regulations. This could directly impact existing state legislation, such as requirements in Utah and Colorado for "reasonable care" in the use of "high-risk AI" in healthcare settings.

Proponents of the plan suggest that by promoting regulatory sandboxes for safe experimentation and launching domain-specific efforts related to healthcare, the plan could accelerate drug development and foster innovations in personalized medicine.

Conversely, critics caution against a sweeping deregulatory approach to AI, citing concerns regarding less-rigorous evaluation standards, reduced protections in clinical use, and potential patient privacy breaches. Some AI researchers further warn that current AI models may inadequately integrate real-world patient care data and that in certain spaces, models lack sufficient data volume to ensure accurate outputs.

BIOSECURE Act reintroduced in FY2026 NDAA

The BIOSECURE Act, previously stalled in Congress, has been reintroduced for potential inclusion in the FY2026 National Defense Authorization Act (NDAA), a legislative vehicle often used to move forward unrelated legislation. The amended draft largely mirrors the original, maintaining restrictions on federal funding and contracts with "biotechnology companies of concern" for the procurement of equipment or services.

The revised draft no longer explicitly names specific entities (such as WuXi AppTec, MGI, BGI, Complete Genomics, and WuXi Biologics in earlier House versions). Instead, a definitive list of "biotechnology companies of concern" would be published within one year of the Act's passage. That list would automatically incorporate any entities designated by the Department of Defense as Chinese military companies operating in the U.S. under Section 1260H of the FY2021 NDAA (the 1260H List), which currently includes MGI and BGI.

A critical distinction is the grace period for existing contracts: there would be no grace period for entities on the 1260H List, thus requiring immediate termination of existing contractual arrangements. Companies would have five years to terminate existing contracts with other entities subsequently identified as companies of concern.

The BIOSECURE Act's ultimate fate remains uncertain despite its reintroduction into the NDAA. Key committee chairs, such as Senator Rand Paul (KY) of the Senate Homeland Security and Government Affairs Committee who was previously opposed to the BIOSECURE Act, possess significant authority to mandate changes or entirely block proposed legislation. Clarity on the bill's inclusion in the final NDAA package (or another legislative vehicle) is anticipated in Q4 of 2025.

FDA releases new data on Breakthrough Device Program

The FDA has released new data concerning its Breakthrough Device Program, designed to expedite the development and market entry for medical devices capable of effectively treating life-threatening or irreversible medical conditions, especially those addressing healthcare disparities. As of early Q3 2025, 126 breakthrough device designations have been granted, with cardiovascular and neurologic devices leading in designations.

Despite the program's objectives, concerns persist regarding the sufficiency of safety and effectiveness evidence provided by recipients. Researchers point to an overreliance on surrogate endpoints and a perceived lack of post-market studies for ongoing evaluation as two significant risks that may be associated with designated devices.

The balance, however may be difficult to strike—the logistical and financial difficulties of designing robust clinical trials sufficient to achieve marketing approval are even more pronounced for programs focusing on rare diseases, and companies that are unprepared to conduct a pivotal trial that aligns with the expectations of the FDA may see their programs languish despite the breakthrough device designation.

Consequently, the program's efficacy in delivering an accelerated pathway and the ultimate value of the designation for medical device developers remain subjects of ongoing debate.