backHHS Announces Employee Reduction Amid Downsizing and Restructuring Plans
On March 27, 2025, HHS announced a downsizing and restructuring plan that combines personnel cuts, centralization of functions, and consolidation of HHS divisions. Among other things, the plan aims to cut the HHS workforce by 10,000 employees and reduce the number of HHS divisions and regional offices by approximately half.
On February 11, 2025, President Trump issued an Executive Order titled “Implementing the President’s ‘Department of Government Efficiency’ Workforce Optimization Initiative.” In accordance with that Executive Order, HHS announced what it calls a “dramatic restructuring” of HHS, affecting agencies including CMS, FDA, NIH, and CDC.
HHS is reducing its workforce by approximately 10,000 full-time employees as part of this restructuring. According to HHS and when also accounting for other factors including early retirements and deferred resignations, the agency’s total workforce will downsize from 82,000 to 62,000 full-time employees. The reduction of employees from each agency is expected as follows:
- FDA will decrease its workforce by approximately 3,500 full-time employees. According to HHS, the workforce reduction will not affect drug, medical device, food reviewers, or inspectors;
- CDC will decrease its workforce by approximately 2,400 employees. According to HHS, the remaining employees will support the core mission of preparing for and responding to epidemics and outbreaks;
- NIH will decrease its workforce by approximately 1,200 employees. These personnel cuts, according to HHS, will result from centralizing procurement, human resources, and communications across NIH’s twenty-seven institutes and centers; and
- CMS will decrease its workforce by approximately 300 employees. According to HHS, the reorganization will not impact Medicare and Medicaid services.
In addition to reductions in workforce, HHS’s announcement also identified several organizational changes within HHS. The restructuring will reduce HHS’s twenty-eight divisions down to fifteen divisions. The number of regional offices within HHS is also expected to collapse from ten to five offices. HHS will also centralize functions such as human resources, information technology, procurement, external affairs, and policy.
HHS also announced the creation of the Administration for a Healthy America, which will combine the Office of the Assistant Secretary for Health (OASH), the Health Resources and Services Administration (HRSA), the Substance Abuse and Mental Health Services Administration (SAMHSA), the Agency for Toxic Substances and Disease Registry (ATSDR), and the National Institute for Occupational Safety and Health (NIOSH).
HHS will also create a new Assistant Secretary for Enforcement to oversee the Departmental Appeals Board (DAB), Office of Medicare Hearings and Appeals (OMHA), and Office for Civil Rights (OCR). Other reorganizations will include:
- The Administration for Strategic Preparedness and Response (ASPR), responsible for national disaster and public health emergency response, will transfer to the CDC;
- The Assistant Secretary for Planning and Evaluation (ASPE) will merge with the Agency for Healthcare Research and Quality (AHRQ) to create the Office of Strategy; and
- The Administration for Community Living (ACL) will be integrated into other HHS agencies, including the Administration for Children and Families (ACF), ASPE, and CMS.
HHS’s announcement is available here. HHS’s Fact Sheet is available here
Reporter, Michael L. LaBattaglia, Washington, D.C., +1 202 626 5579, mlabattaglia@kslaw.com
Saudi Arabia Permits Foreign Investment in Pharmacies
The Kingdom of Saudi Arabia issued Royal Decree number M/195 dated 03/09/1446H (corresponding to 03/03/2025G) (the Royal Decree), allowing foreign investment in retail pharmacies. This is a significant development as ownership of retail pharmacies has been restricted to only Saudi nationals. This Royal Decree is effective until a new health law is implemented.
The pharmaceutical industry in Saudi Arabia is governed by the Law of Pharmaceutical Establishments and Preparations, issued pursuant to Royal Decree number M/108 dated 22/08/1441H (corresponding to 15/04/2020G) (the Pharmaceutical Law).
The Pharmaceutical Law repealed the Law of Pharmaceutical Establishments and Preparations issued pursuant to Royal Decree number M/31 dated 01/06/1425H (corresponding to 18/07/2004G) (the Repealed Pharmaceutical Law). The Pharmaceutical Law also eased certain restrictions on foreign ownership in wholesale pharmaceutical warehouses, factories for pharmaceutical and herbal products, and scientific offices.
However, retail pharmacies and establishments that prepare and sell herbal products were subject to a carve out and remained governed by the Repealed Pharmaceutical Law. As such, retail pharmacies continued to be restricted to Saudi investors.
The Royal Decree lifted such restriction on ownership of retail pharmacies, offering investors greater certainty in exploring opportunities in Saudi Arabia’s pharmaceutical industry. This will likely increase foreign investors’ appetite in acquiring or establishing retail pharmacies in Saudi Arabia, driving mergers and acquisitions activity in the retail pharmacy sector.
As such, the Royal Decree is a welcomed development in the pharmaceutical industry as it will drive competition and innovation in the retail pharmacy sector.
The Royal Decree hints to a new integrated health law. Although it is anticipated that the new health law will continue to allow foreign ownership in retail pharmacies, investors in the pharmaceutical industry are encouraged to stay abreast of legal developments in this market.
Reporters, Nabil Issa, Dubai, +1 971 4377 9909, NIssa@kslaw.com, and Salma Alheraiqi, Riyadh, + 966 114669426, SAlheraiqi@kslaw.com.