HHS Secretary Kennedy Defends FY 2027 Budget Focus on Chronic Diseases and MFN Drug Pricing

HHS Secretary Kennedy defended the department’s proposed $111.1 billion discretionary budget for fiscal year 2027 during a hearing last week in Washington. Officials said the budget focuses on combating chronic diseases through prevention and primary care investments while codifying Most Favored Nation drug pricing to lower costs and improve access.

The proposed $111.1 billion discretionary budget for fiscal year 2027, aligned with the Make America Healthy Again agenda, prioritizes combating chronic diseases through expanded prevention and primary care programs, officials said during a series of congressional hearings last week in Washington. HHS Secretary Robert F. Kennedy Jr. testified before the House Energy and Commerce Health Subcommittee and the Senate Appropriations Subcommittee on April 21, 2026, defending investments aimed at addressing rising rates of diabetes, heart disease, mental health conditions, and substance use disorders, which federal officials identified as major drivers of government health expenditures.

The MFN program, which has negotiated prices with the 16 largest pharmaceutical companies, is estimated by CMS to generate net savings of 44%, or approximately $12 billion, on 15 cancer drugs.

The budget includes $14.7 billion earmarked for high-impact areas such as maternal and child health, mental health services, and substance use treatment, according to department documents. It also proposes a $1 billion allocation to establish a new National Center for Chemicals and Toxins, intended to enhance the federal response to environmental health threats. Officials emphasized that the budget seeks to shift from crisis-driven interventions to community-based solutions targeting vulnerable populations, a strategy designed to slow long-term healthcare cost growth and improve health outcomes.

A key component of the budget is the codification of the Most Favored Nation (MFN) drug pricing policy, originally initiated under the Trump administration. This policy mandates that drug prices negotiated by the Centers for Medicare & Medicaid Services (CMS) match the lowest prices paid by other comparable countries, according to HHS records. The department also highlighted dramatic price reductions for other medications, including an 83% decrease for in vitro fertilization treatments, an 89% reduction for glucagon-like peptide-1 (GLP-1) drugs, and insulin, chronic obstructive pulmonary disease (COPD), and asthma medications priced at the lowest levels globally.

Biologics, which account for 5% of prescriptions but 51% of drug spending, are targeted in the budget for measures to reduce development costs and accelerate patient access. The department also finalized hospital price transparency rules requiring disclosure of actual, comparable prices for services and proposed insurance coverage transparency measures, officials said. Secretary Kennedy noted efforts to reform prior authorization processes by convening insurance CEOs and cited a CMS proposal to implement electronic prior authorization (ePA) for drugs covered under federal plans to reduce delays.

Despite these initiatives, the budget proposal has drawn criticism for significant cuts to core public health programs. According to a detailed analysis by public health advocates, the budget would reduce funding for state and local health departments by 20 to 30%, affecting epidemiology, laboratory capacity, and workforce development. Programs targeting heart disease, diabetes, cancer prevention, tobacco control, and injury and violence prevention would also face reductions or restructuring. Maternal and child health investments are slated for trimming or consolidation into broader block-style funding, replacing categorical programs, records show.

In addition to chronic disease and drug pricing priorities, the department highlighted recent accomplishments supported by current funding levels. These include extensions of Medicare telehealth and hospital-at-home coverage, the elimination of pharmacy benefit manager incentives that previously steered patients toward higher-cost drugs through bipartisan legislation, and the removal of Medicaid barriers to specialized pediatric care. The FDA received $632 million to streamline human drug approvals and $9 million to advance manufacturing technologies, according to agency budget documents. HHS also launched a robotic surgery program and awarded rural health grants in every state.

The budget was released prior to the April 21 testimonies, with the fiscal year set to begin October 1, 2026. Secretary Kennedy also testified the previous week before the House Ways and Means Committee and the House Appropriations Subcommittee on Labor, Health and Human Services, and Education, defending the proposal amid discussions on drug pricing, Medicare, and Medicaid reforms. The department’s focus on chronic diseases and drug price transparency reflects broader efforts to contain healthcare costs while expanding access, officials said.