Discover compliance and risk management changes in our 2025 Life sciences regulatory outlook

In the dynamic life sciences sector, effective compliance and risk management is essential. The rapid integration of digital technologies and innovative business models necessitates that compliance teams adapt swiftly. Traditional data collection methods are inadequate, highlighting the need for continuous monitoring to facilitate timely oversight of compliance risks.

Continuous monitoring involves maintaining ongoing awareness of potential risks within an organization. This proactive approach can enable early detection and mitigation of issues, potentially preventing minor concerns from escalating.

The advent of generative artificial intelligence (GenAI) has marked a pivotal transformation for many organizations. It offers efficiencies, insights, and enhanced customer engagement but also introduces new and heightened risks, some of which can be mitigated through model validation and continuous monitoring. GenAI presents new and amplified risks that can adversely affect an organization if not properly managed. Some of these risks include privacy breaches, hallucinations, data leakage, prompt injection, toxicity, unintended bias, adversarial attacks, and IP infringement.

If these risks are not mitigated, they can lead to significant enterprise consequences such as financial loss, reputational damage, poor strategic decisions, operational disruptions, and regulatory violations. GenAI model validation and monitoring are crucial in helping mitigate these risks.

Internet influencers, also known as digital opinion leaders (DOLs), may be compensated by pharmaceutical and medical device organizations for sharing their expertise. This practice has been common in the life sciences industry, with DOLs being the latest group of health care professionals to educate audiences.

Unlike traditional media, the internet enables DOLs to reach vast audiences quickly. High-profile DOLs with more than a million followers can attract the demographics and engagement organizations desire. Compensation for DOLs often depends on follower tiers and social media metrics, including engagement rates, which measure likes, comments, views, and shares.

Earned media exposure, or the ability to drive conversations beyond their own posts, also influences DOL compensation. Life sciences organizations of different sizes consider working with DOLs, with multinational corporations and those targeting rare diseases recognizing their value.

In 2024, the life sciences sector saw a decline in M&A activities due to the absence of blockbuster deals, high global interest rates, and increased anti-trust enforcement. Despite this, medtech M&A rebounded, driven by significant investments in cardiovascular assets. Predictions for 2025 include continued big pharma M&A to offset revenue losses from patent expirations, increased medtech consolidation, and a rise in diagnostics and neurology M&A. Overall, the sector anticipates a bullish outlook for 2025 with strategic growth in key therapeutic areas. As these M&As take place, organizations will have to keep risk management and due diligence at the forefront.

Organizations in the life sciences industry often operate with limited budgets for third-party risk management, benefiting significantly from integrated platforms that foster a risk-based approach. These platforms serve as central hubs for risk identification, enhancing risk categorization and due diligence through technology. They provide near real-time insights for quicker issue remediation and facilitate continuous improvement through feedback loops. Automating basic screenings for lower-risk third parties can reduce costs, enabling teams to focus on higher-risk audits, which is crucial in a highly regulated sector.

Chemicals of concern (CoCs) are substances found in pharmaceuticals, medical devices, consumer products, and food that pose significant health and environmental risks. Examples of these chemicals include per- and polyfluoroalkyl substances (PFAS), titanium dioxide (TiO2), benzene, and nitrosamines. Regulatory bodies such as the European Medicines Agency, US Food and Drug Administration, European Chemicals Agency, and US Environmental Protection Agency are actively evaluating and implementing regulations to manage these substances. The implications of these regulations are substantial, potentially leading to loss in revenue, lawsuits, and the removal of essential medicines from the market. CoCs are prevalent in everyday items like dry shampoo, makeup, and nonstick pans, which has led to heightened consumer awareness and regulatory scrutiny. This increased scrutiny can be seen in a variety of regulatory actions across the globe. For example, global regulators setting nitrosamine limits in pharmaceuticals, European regulators setting restrictions on the use of TiO2 in foods, and the enforcement of reporting requirements, maximum contaminant levels, and restrictions on the use of PFAS in various products drawing concern from both executives and consumers. In 2025, we anticipate a continued rise in the restriction of common ingredients.

To harness AI’s potential while remaining in alignment with regulatory standards, medtech organizations should focus on three main areas: establishing ground rules for AI deployment, shaping internal governance systems, and promoting transparency and accountability. This involves documenting AI algorithms, ensuring data privacy, and maintaining model transparency. Additionally, organizations should train their employees to become fluent in AI applications, confirming they are aware of both the opportunities and limitations posed by this technology and to be able to validate the AI’s output. Enhancing workflows to integrate AI efficiently can also help in aligning with regulatory requirements and improving operational efficiency.

As medtech organizations embrace AI, they are encouraged to develop a strategic blueprint that aligns AI initiatives with both business objectives and regulations. Medtech organizations should have global regulatory intelligence capabilities to stay abreast of the changing regulatory environment by region and country as they differ and some things might be allowed in one part of the world but not in others. Identifying high-value opportunities that comply with the regulatory framework is important, as is establishing teams or centers of excellence to govern AI investments. By fostering responsible AI usage, setting clear guidelines, and ensuring transparency in AI processes, medtech organizations can be positioned to mitigate risks and build trust among stakeholders. Ultimately, these measures can not only strengthen compliance but also pave the way for sustainable innovation within the industry.

The 340B Drug Pricing Program, established by the Veterans Health Care Act of 1992, is a federal program in the United States that mandates drug manufacturers to provide outpatient drugs to eligible health care organizations and covered entities at significantly reduced prices.¹ The intent of the program is to enable these entities, which often serve vulnerable and underserved populations, to stretch limited federal resources as far as possible, reaching more eligible patients and providing more comprehensive services. By reducing the cost of pharmaceuticals, the 340B program aims to improve access to medications and health services for those who need them most.

The 340B program has faced numerous challenges from various stakeholders, including health care providers, pharmaceutical manufacturers, and policymakers. The program has experienced exponential growth over the years: Sales through the 340B channel are estimated to exceed $124 billion and are growing faster than non-340B channels.² Critics argue that the rapid expansion has led to some entities potentially exploiting the program’s benefits, diverting resources away from the intended low-income patients.

Drug manufacturers are actively pushing for changes to the 340B program, including proposing rebate models, engaging in audits, and initiating legal action, all aimed at reducing perceived abuse of the program. At the same time, parties from the provider side of the program seek to educate and advance alternative perspectives. Regardless of point of view, it is certain that the program will continue to be challenged. With multiple rebate-related suits from manufacturers against the HRSA and multiple audit-related suits from covered entities against the HRSA, outcomes of these cases will change the landscape whether or not the HRSA acts.