Recently Launched ETFs to Watch in 2026

Published January 07, 2026 – By Aniket Ullal, SVP and Head, ETF Research & Analytics  

Congress Set to Return for Healthcare, ACA Showdown 

Published September 2, 2025 – By Tatiana Brown Johnson, Senior Vice President, Healthcare Policy, Laura Hobbs, Senior Vice President, Healthcare Policy and Monet Stanford, Senior Vice President, Healthcare Policy, and Ryan Visnovec, Washington Analysis Research Assistant

Congress Returns: Healthcare Policy in Focus

With Congress back on September 2nd, investors will be watching the September 30th government funding deadline. For healthcare, three market-relevant questions dominate:

1. Will Congress extend the enhanced ACA premium tax credits (EPTCs) set to expire on Dec. 31, 2025?
2. Will it waive the Statutory PAYGO to avert a 4% across-the-board Medicare cut?
3. Will it delay FY2026 Medicaid Disproportionate Share Hospital (DSH) payment reductions?

Our View: EPTCs Likely Renewed – Out of Consensus

Despite broad skepticism from ACA Marketplace insurers [UnitedHealthcare (UNH), Elevance (ELV), CVS/Aetna (CVS), Centene (CNC), Humana (HUM), and Oscar (OSCR)], we assign a 65% probability that EPTCs are extended, with adjusted eligibility and/or timeline, as part of a healthcare “grand bargain.” The political calculus is most acute in Republican-leaning, non-expansion states, where failure to act could heighten voter risk. Should EPTCs lapse without action by February 2026, we see potential for a rebranded version, likely tied to a Republican-led initiative, to advance before the PY2027 open enrollment period (Nov. 1, 2026). While proximity to the Nov. 4, 2026, midterms may blunt voter impact, a summer 2026 extension could provide Republicans a campaign policy win.

Countdown to Expirations: Key Healthcare Programs in Play

• Multiple healthcare extenders, including community health center funding, the teaching health center graduate medical education (GME) program, and Medicare low-volume hospital payments, also expire Sept. 30, 2025. We expect these to be included in a short-term continuing resolution (CR) until December, as well as in a year-end package.
• Congress is also expected to revisit provisions excluded from the One Big Beautiful Bill (OBBB), including the SUPPORT Act, which addresses substance use disorder programming, and PAHPA reauthorizations, which maintains funding for national security risks pertaining to healthcare and Medicare telehealth flexibility extensions.
• Policy riders removed during OBBB negotiations under the Senate Byrd rule may re-emerge, notably pharmacy benefit manager (PBM) reform, targeted Medicare/Medicaid adjustments, and possibly a narrowed site-neutral payment policy as a budget offset.
• Broader Medicaid reforms beyond OBBB remain a low probability.

“Grand Bargain” on EPTCs: The Bull and Bear Cases

The Bull Case

• Clearing the Decks – If a Republican-led Congress reaches a government funding deal with Democrats that incorporates their key healthcare priorities, it would effectively “clear the decks” of bipartisan items. This would reduce near-term policy overhang for healthcare investors, while also setting the stage for 2026, when narrower congressional margins and the midterm cycle are likely to make healthcare debates more partisan and less predictable.
• A “Glide Down Path” – A more likely path for extending the EPTCs is a ‘glide down’ approach, where credit amounts are gradually reduced over time or eligibility criteria are tightened. This approach maintains broad marketplace support while reducing federal outlays, balancing political priorities and minimizing near-term disruption for insurers and beneficiaries.
• Expiration of EPTCs Impact to Red States – As of 2024, “56% of Affordable Care Act (ACA) Marketplace enrollees reside in congressional districts represented by Republicans, and 76% of enrollees live in states carried by President Trump in the 2024 election,” according to KFF.
• It’s All Politics – Historically, midterm elections tend to favor the party opposite the sitting President. Issue dynamics also play a role: Democrats generally perform better in elections where healthcare dominates the agenda, while Republicans tend to benefit when economic concerns are front and center

The Bear Case

• EPTCs Weren’t Part of ACA’s original design – Instead, they were first enacted under the American Rescue Plan Act) and later extended by the Inflation Reduction Act. This distinction could allow Republicans to frame them as a temporary COVID-era policy, i.e. “Biden COVID Credits”, rather than a permanent ACA feature, providing political cover for their expiration.
• EPTCs Lead to “Fraud, Waste, and Abuse” – Leading Republican healthcare think tanks, including the Paragon Health Institute, oppose extending EPTCs, citing concerns over fraud, waste, and abuse, as illustrated by recent Department of Justice litigation against several ACA brokers.
• Exorbitant Cost – Extension of the EPTCs will likely cost between $33-40B a year; while we expect modification of the EPTCs if passed, the initial sticker shock could be off putting for some fiscal hawks.
• It’s All Politics, AKA “Let It All Blow Up” – If a deal acceptable to Democrats is not reached, they could leverage the expiration of EPTCs and the effects of the OBBB as an alternative campaign issue, shifting the narrative from “No Trump” to tangible healthcare impacts that resonate with voters.
• All or Nothing – Congress faces two potential paths for the upcoming government funding decision: 1) it can pass a clean funding package that covers only the bare minimum required to keep the government operating, or 2) it can approve a more inclusive package that incorporates a broader set of priorities for congressional leadership. In our view, Democrats may be less inclined for assist in passing a government funding package that does not include EPTCs.

Additional information is available upon request.  

Washington Analysis (“WA”) conducts economic, political, legislative, legal, and regulatory analysis. This document is for informational purposes only and provided on an as-is basis without any representation or warranty as to the accuracy, completeness, timeliness or availability of the information herein. This document is not intended to, and does not, constitute an offer or solicitation to buy and sell securities or advice to engage in any investment activity. Statements made herein are not directed to any particular investor or type of investor, and do not take into account any investor’s particular investment objectives, financial situations or needs. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors. Before acting on any recommendation in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Washington Analysis disclaims all liability arising from reliance on this information for investment or other purposes. Directors and/or employees of Washington Analysis may own securities, options or other financial instruments of the issuers discussed herein, however analysts do not receive any compensation in exchange for any specific recommendation or view expressed herein.  © 2025, Washington Analysis LLC, a CFRA Business. All rights reserved. 

The Specter of Stagflation: Noise or Near-Term Risk? 

Published August 29, 2025 –  By Paul Beland, Global Head of Research – Wealth Management 

U.S. inflation remains stubborn. Growth is cooling. Employment is wobbling. And financial advisors are navigating a uniquely complex macroeconomic environment, one where the term stagflation has re-emerged with serious implications. 

While the dreaded trifecta of high inflation, weak growth, and high unemployment hasn’t fully materialized, warning signs are building. From Jerome Powell’s recent Jackson Hole tone shift to tariff-fueled inflation risks and political pressure on the Federal Reserve, CFRA’s latest macro research outlines critical developments that wealth managers must watch closely. 

In this blog, we’ll explore several key macro signals—from weakening job trends to international equity implications and why advisors should brace for elevated volatility across asset classes. 

Inflation Is Cooling But Still Sticky 

Despite the post-COVID monetary tightening cycle, inflation remains above the Federal Reserve’s 2% target. Core PCE inflation has trended downward but remains elevated due to fiscal stimulus, tariff pressures, and lingering supply chain distortions. 

While advisors may have hoped for a textbook soft landing, inflation’s downward path has stalled. With new tariffs potentially adding 3% to consumer goods and up to 10% to investment goods in near-term price pressures, the inflation puzzle has become more complex. 

Growth Slowing, But Not Collapsing 

U.S. real GDP growth is expected to hover around 1.8% in 2025 and 2.0% in 2026–2027, according to CFRA forecasts. This moderate but stable growth outlook suggests we are not yet in stagflation territory but uncertainty abounds. 

Consumer sentiment has deteriorated, small business investment has slowed, and large corporations remain cautious amid trade policy headwinds. Wealth advisors should monitor the rising probability of job losses – a key indicator that could quickly tip the balance. 

Why Jerome Powell’s Jackson Remarks Matter 

Fed Chair Powell’s recent statements signaled a potential September rate cut, prompting speculation about a pivot. But this pivot isn’t necessarily driven by market-friendly optimism. 

Instead, the Fed faces a policy conundrum: cooling employment data is pushing against sticky inflation. With weekly jobless claims rising and non-farm payroll growth slowing to 85K/month in 2025 (vs. 168K in 2024), the Fed is being forced to rebalance its dual mandate—without sacrificing inflation control. 

Moreover, Powell’s comments come amid growing political scrutiny of the Fed’s independence, threatening credibility and potentially weakening the U.S. dollar. 

Download the full report to see CFRA’s forecast for the Fed Funds rate and interest rate policy path » 

The Job Market Has Peaked 

Unemployment remains low at 4.2%, but the trend is turning. Continuing unemployment claims are climbing. And the pace of job creation is decelerating sharply: 

• 2023 monthly avg. job gains: 251,000 
• 2024 monthly avg.: 168,000 
• 2025 YTD avg.: 85,000 

That’s a clear slowdown, one that hasn’t triggered a full recession signal yet but represents a cooling labor market with downside risk.

What It Means for Financial Advisors 

For financial advisors, this cooling trend means greater scrutiny on: 

1. Portfolio diversification across sectors and regions 
2. Fixed income positioning as yields remain elevated 
3. Equity valuation pressures and margin contraction 

CFRA’s full report highlights tactical shifts advisors may consider including lowering bond exposure and increasing international equities. 

The Inflation Trade: Not Quite Over 

The Tariff Effect 

CFRA’s macro research estimates that if a 30% tariff is passed through to finished goods: 

• Investment goods prices could rise ~10% 
• Consumer goods prices could rise ~3% 

But advisors shouldn’t panic just yet—many consumer-facing companies are absorbing the cost rather than passing it to buyers. Still, tariffs are a source of one-time inflation bumps, which add complexity to the Fed’s decision-making calculus.

What Clients May Be Asking You 

Your clients are reading headlines about inflation, dollar volatility, and rate cuts. They may be asking: 

• “Should we stay in cash or reinvest?” 
• “Is now the time to move internationally?” 
• “Will interest rates drop soon?” 

What’s Next for the U.S. Dollar? 

One of the lesser-discussed risks in financial media right now is the pressure on the U.S. dollar from both monetary and political fronts. 

• The U.S. Dollar Index (DXY) is down nearly 10% year-to-date. 
• Long-term interest rates remain volatile amid inflation risks. 
• Political challenges to Federal Reserve independence could weaken global confidence in the dollar’s reserve currency status. 

For global allocators, this opens opportunities in European and APAC equities where valuations are more attractive and central bank policies are more supportive. 

CFRA’s Macro Allocation Guidance for 2025–2026 

CFRA has made several allocation adjustments based on the evolving macro landscape: 

This reflects a preference for equities (especially outside the U.S.), shorter-duration fixed income, and maintaining liquidity. 

Access full portfolio construction insights in the complete CFRA macro report » 

Key Takeaways for Financial Advisors 

• Inflation is still elevated, and new tariffs could keep it sticky through 2026. 
• Growth is slowing, but recession is not base-case. 
• The Fed is likely to cut rates soon, but not aggressively. 
• Dollar weakness and Fed independence risks are underappreciated. 
• Rebalancing portfolios with more global equity exposure may be prudent. 

Read the Full Macro Report: Asset Allocation, Forecasts & More 

CFRA’s Stagflationary Impulses report is a must-read for financial advisors aiming to stay ahead of macro forces driving market volatility. The report provides: 

• Updated U.S. growth and inflation forecasts 
• Tactical asset allocation guidance 
• Fed policy outlook and interest rate forecast 
• Global equity opportunities 
• Strategic implications for portfolio positioning 

Download the full report here to get expert-level insights, charts, and actionable recommendations for 2025 and beyond. 

The Impact of Policy and Regulatory Changes on ETF Portfolio Construction

Published August 9, 2025 – By Aniket Ullal, SVP and Head, ETF Research & Analytics  

Key Takeaways 

• Government policy has become a critical driver of investor returns and flows as shown by the market cycles since the November 2, 2024, election in the U.S.
• Translating a policy related thesis into an investible action requires the careful screening and comparison of ETFs, such as choosing between healthcare ETFs in response to the Medicaid changes in the One Big Beautiful Bill.
• Another important consideration is timing, since ETFs will usually move in anticipation of policy changes. This is best highlighted by examining the price movement of the Invesco Solar ETF (TAN) over the last 10 years.
• Investors also need to assess the second order effects of policies, such as the impact on intra-sector stock dispersion and the U.S. dollar.
• CFRA’s Washington Analysis policy team and ETF research team can be useful resources in understanding how policy can shape outcomes for investors.

The Growing Impact of Trade & Regulatory Policy on Investment Outcomes 

As the Trump 2.0 agenda continues to take shape, government policy has become a critical driver of investor returns and flows. The current administration is attempting to re-shape the U.S. economy in fundamental ways through trade policy, sector specific industrial policy, and de-regulation. As a result, it is important for investors to monitor these issues and factor them into ETF portfolio construction and monitoring.

This can be seen in Figure 1, which shows the performance of specific asset classes prior to and after the re-election of President Trump. After the November 2024 election, the S&P 500 started rallying but then reversed in February after President Trump announced tariffs on U.S. trading partners. This sharp downturn lasted until April 8, 2025, when the first pause in reciprocal tariffs was announced. After that, the market largely returned to a “risk-on” environment, as shown by the returns for ETFs linked to U.S. large cap equities, the Nasdaq-100 (a proxy for the AI trade), bitcoin and U.S. small caps. It highlights how policy has been the primary driver of market cycles and investment returns in this current post-election environment.

Figure 1 – Price Return for Select “Risk On” ETFs – Market Cycles Post Nov ’24 Election

Source: CFRA’s FUNDynamix ETF database; As of June 30, 2025 

A Framework for Investors to Classify Policy Changes

Having a framework to classify policy issues is useful to placing these changes in a broader context. The table below shows the broad categories of policy changes with some historical examples. 

Table 1 – Broad Framework for Policy and Regulatory Changes in the U.S.

Source: CFRA analysis 

The policies of the current Trump administration and Congress correspond to most of these categories. Fiscal policy has been shaped by the One Big Beautiful Bill (OBBB) which includes extension of the tax cuts from the original Tax Cuts and Jobs Act (TCJA) of 2017. Tariff policies have also changed significantly in 2025, and the government is pursuing sector specific policies in areas like crypto, defense, semiconductors, and healthcare.

Translating Policy into ETF Selection Decisions 

For ETF investors, translating a policy related thesis into an investible action requires the careful screening and comparison of ETFs. Often policy actions may influence only specific stocks or sub-industries within a sector, and so the choice of the appropriate ETF is important. As an example, the recently passed One Big Beautiful Bill included Medicaid restructuring, including new Medicaid work requirements, which will negatively impact managed care organizations (MCOs) and hospitals. CFRA’s Washington Analysis policy team expects covered lives to decline beginning in 2027and the financial burden to shift more acutely to hospitals as rising uncompensated care costs accelerate into 2026 and 2027.  

There are two ETFs which provide exposure to the healthcare service provider sector – the iShares US Healthcare Providers ETF (IHF) and SPDR S&P Healthcare Services ETF (XHS). However, they have very different index weighting schemes, which result in varying exposures to specific constituent holdings. IHF is market cap weighted and its top 15 holdings include MCOs and hospitals such as Centene (CNC), Molina Healthcare (MOH), UnitedHealth Group (UNH), and Elevance Health (ELV). MOH and CNC are highly likely to be impacted by the budget bill, since they have the largest Medicaid businesses of the large insurers (Medicaid is 79% and 58% of their managed care businesses, respectively). CRA’s analysts also expect ELV and UNH to see top-line impacts.

In contrast, XHS is equal weighted with no single stock having a weight above 3%. It is therefore better designed to withstand downside risks to specific names like UNH, which makes up more than 20% of IHF. Being able to compare the security selection criteria, weighting schemes (for indexed ETFs), and underlying holdings is important in translating policy related themes into actionable ETF security selection. 

Table 2 – Comparison of Top 15 Stock Holdings for IHF and XH

Source: CFRA’s FUNDynamix ETF database; As of June 26, 2025 

Anticipating Price Changes Prior to Policy Enactment

Another important consideration is timing, since ETFs will usually move in anticipation of policy changes. This is best highlighted by examining the price movement of the Invesco Solar ETF (TAN). TAN had a 450% price between March 2022 (prior to Biden being elected) and Feb 2021 (one month after his inauguration), with much of that price appreciation in anticipation of an administration and Congress that would enact legislation more supportive of renewable energy. Similarly, TAN saw a significant decline in price after President Trump’s reelection, much before the changes to clean energy credits in the Inflation Reduction Act were put into the budget.

Figure 2 – 10 Year Relative Price Performance of Solar (TAN) and Oil Production (IEO)

Source: CFRA’s FUNDynamix ETF database; As of June 26, 2025 

These changes underscore how policy can drive ETF prices significantly even prior to actual legislation being enacted.

Examining Policy Trends for Second Order Investing Effects

Government policy can impact specific stocks and sectors, but it is important for investors to also assess second order effects of these policies. Often, these can have a higher impact on returns and portfolio construction. As an example, the current trade policies drove up dispersion between stocks in the first half of 2025 (see Figure 3). 

Figure 3 – Realized Dispersion for S&P 500 – Trailing 10 Years (June ‘15 – June ‘25)

Source: CFRA analysis; As of June 30, 2025 

This dispersion increase was most pronounced in the retail sector. In 2024, there was a 6% return differential between the low-cost retailers Dollar General (DG), Dollar Tree (DLTR) and Five Below (FIVE). In 1H ’25, the return differential between them rose to 20% due to differences in imports from China. DG has a much lower percentage of goods either directly or indirectly imported from China, at 10-15%. For DLTR and FIVE, that import percentage was much higher at 50-60%, making these stocks much more vulnerable to tariff shocks.  

Analysis by S&P Dow Jones Indices shows that higher stock dispersion results in a wider range of outcomes for active fund managers. Therefore, policy driven dispersion could result in an environment where investors seek out more active ETFs.  

Another example of second order effects is the impact of trade on the dollar. The US Broad dollar index (DTWEXBGS), which measures the dollar against a trade-weighted basket of currencies, was down 7% in 1H ’25 due to tariff policies. Although some of these declines have since been partially reversed, a weak dollar has important implications for investors, including favoring export-oriented firms that benefit from competitive pricing and favorable currency conversion back into dollars.

CFRA’s Policy Research and ETF Platform

Policy decisions influence capital flows and ETF returns and having the appropriate toolkit is important for investors. CFRA’s Washington Analysis policy team proves timely, in-depth coverage spanning market moving legislative, regulatory, judicial, and political developments with a focus on the sectors most impacted by policy developments, including healthcare, energy, financial services, defense, technology, media, and telecommunications. The team also forecasts and advises on cross-sector and market moving developments across tax, trade, fiscal and M&A issues. 

CFRA also offers a comprehensive set of data, ratings and research to track the global ETF industry. The ETF data consists of three components – constituent holdings, proprietary classifications, and daily statistics. The latter includes daily flows for individual ETFs, available via both feed and API. Flows data can also be accessed and analyzed using CFRA’s FUNDynamix ETF platform. Trial access for CFRA’s ETF data and tools can be requested here. 

Drug Pricing Reform 2025: Key Policies and Market Impact Under Trump Administration

Published July 22, 2025 – By Laura Hobbs, Senior Vice President, Healthcare Policy and
Monet Stanford, Senior Vice President, Healthcare Policy

2025 Drug Pricing Reform Highlights

• In an effort to lower drug costs, Congress and the second Trump Administration are pursuing several drug pricing reforms including establishing a Most Favored Nation price, imposing tariffs, modifying average sales prices by flattening Bona Fide Services Fees (BSFS), aligning prices in the 340B Drug Pricing Program as well as increasing regulatory oversight of specific third-party administrators.
• For healthcare policy investors, these proposals are not new but further target specific incentives within the pharmaceutical supply chain without considering broad market access dynamics.
• We believe these proposals will likely disincentivize drug manufacturers to offer certain discounts across the pharmaceutical supply chain, ultimately, increasing rather than decreasing out-of-pocket costs for patients.

Trump Administration’s 2025 Drug Pricing Strategy Explained

In their first seven months, the 119th Congress and the second Trump Administration have announced several pursuits in drug pricing reform, including establishing a Most Favored Nation price, modifying Bona Fide Services Fees (BSFS), aligning prices in the 340B Drug Pricing Program (340B program) as well as increasing regulatory oversight of specific third-party administrators. With pharmaceutical tariffs looming, we expect the first signpost (the release of the direct subsidy in Medicare for plan year 2026) at the end of July to reveal whether health plans are (or are not) factoring in the Administration’s rhetoric.

For Healthcare Policy investors, we know these federal proposals are not new but further target specific incentives within the pharmaceutical supply chain, however in our view, without considering market access considerations unique to the United States. Without a nuanced approach, the Administration and Congress are seeking to establish a revised regulatory infrastructure that could create conflicting incentives that keep drug prices high for branded medicines. Moreover, Capitol Hill’s narrow focus on the out-of-pocket costs a small number of patients pay overshadows the problem of increasing health insurance premiums for the masses. We do not believe these reforms address bigger questions of healthcare affordability or sustainability for plans, employers or state and federal governments.

We believe the proposals suggested to date addressed fragmented segments across the pharmaceutical supply chain creating paradoxical incentives to drug manufacturers that, without adjusting the mechanism by which drugs are placed on formulary, will continue to result in high costs for patients. For investors, anticipating manufacturers’ responses to these changes will be essential to understand how price concessions or rebate offerings could adapt to the future state of drug reimbursement.

Most Favored Nation Pricing & International Drug Cost Pressures

Our base case remains that the Department of Health and Human Services (HHS), the Centers for Medicare and Medicaid (CMS) is likely to direct the Center for Medicare and Medicaid Innovation (CMMI) to implement a variation of the Most Favored Nation (MFN) in Medicare Part B for a set number of products. While further details have not been released, we continue to expect the MFN benchmark will be used to inform a ceiling for the maximum fair price (MFP) as part of the Medicare Drug Price Negotiation Program. Final negotiated prices for the second wave of selected drugs are due in September 2025, with price applicability slated for 2027. We remain skeptical that Congress will pass a variation of MFN reform for products in Medicare Part D, due to non-inference clause or in Medicaid, due to conflicts with the Medicaid Best Price requirement. 

Additionally, the Trump Administration does not need to look at external markets to lower pharmaceutical costs. They could propose extrapolating the Medicaid Best Price to Medicare or setting policies that would align reimbursement between the two programs. As many companies have been announcing their intent to increase their U.S. production footprint, the Administration’s desire to seek a better “deal” from a drug manufacturer may be driving the policy rather than a pricing formula resulting in lower costs for patients.

Medicare Drug Price Negotiations: Is MFN the Ceiling? 

HHS released a statement that the agency is taking “immediate steps” to implement MFN as “HHS Secretary Robert F. Kennedy Jr., and CMS Administrator Dr. Mehmet Oz, the Department has identified specific targets pharmaceutical manufacturers” to satisfy the intent of the EO. While details are limited, HHS expects brand manufacturers that do not have generic or biosimilar competition to offer the “lowest price of a set of economic peer countries” (i.e., US Lowest Price). Potentially, these products could be the same ones that were selected for drug negotiation by the Biden Administration in January 2025. Notably, there has been an increased focus on price verification during recent FDA CEO Listening Tours, through the US Customs and Border Protections Agency and as we observed, we see an industry shift towards direct-to-consumer purchasing.  

Broadly, we think pharma companies with outsized exposure to government programs, particularly those with products selected for negotiations under the Inflation Reduction Act, and/or with a large delta between U.S. and ex-U.S. pricing are at elevated risk. 

The 340B Problem: Duplicative Discounts and Medicare Participation  

Health Resources & Services Administration (HRSA) announced the first steps to align reimbursement with 340B prices on insulin and injectable epinephrine. Now, HRSA-funded health centers are required to offer these products to low-income patients at or below the price paid by the center through the 340B Drug Pricing Program (340B program) as part of the updated award terms. There is further speculation that HRSA could look to reduce or eliminate Medicare’s participation in the program following an earlier executive order this year. Additionally, it is expected that HRSA will move the 340 Program over to CMS, a signal future meaningful rulemaking in the program is likely.  

If Medicare is removed as a participant in the 340B program, the problem of duplicative discounts related to the IRA negotiated MFP would be resolved. Additionally, in the most recent Calendar Year 2026 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center Proposed Rule, CMS has proposed resuming a hospital acquisition survey to move forward with reducing physician reimbursement in the program. We believe that this survey is a signal that the second Trump Administration will reduce physician reimbursement in the program from Average Sales Price (ASP) + 6% to ASP – 22.5 %. This was previously attempted and blocked by the Supreme Court. We believe once this survey takes place, HHS will be able to make the changes it could not advance in the first Trump Administration.   

Pharmacy Benefit Manager Reform in 2025: What’s Likely and What’s Not 

Despite its widespread socialization, we do not expect meaningful pharmacy benefit manager (PBM) reform to pass as part of the 2025 year-end spending deal, nor HHS issue a PBM-specific rule. We do believe that within a 2025 year-end spending deal, the three provisions proposed in a 2024 continuing resolution (banning spread pricing in managed Medicaid, 100 percent rebate pass through to self-insured plans governed under Employee Retirement Income Security Act (ERISA) and delinking the list prices of drugs in Medicare Part D) remain the most likely policies to pass in 2025. At the state level, we believe additional states, beyond Arkansas’ recent pharmacy divesture bill, will enact aggressive reforms that will likely see litigation through until 2026.  

We believe PBMs have a modest probability of blocking implementation of an Arkansas’s law banning them from having affiliated pharmacies in the state or shipping drugs direct to consumers in the state, although the state’s opposition brief has not yet been released. The dormant commerce clause argument remains, in our view, the PBM industry’s optimal stance and is strengthened by the legislature adding a provision that exempted Walmart from the ban. If the industry is successful, states would be less likely to pursue similar legislation. If they were not, we would expect many states to pursue pharmacy divesting legislation in 2026. 

EU & UK Views on U.S. Pharmaceutical Tariffs 

For European-based investors, we believe 1) key issues to watch include scrutiny of drug costs, as well as alleviable (in our view) risks from price controls and cost-effectiveness assessments; and 2) AI-powered drug development, digital therapeutics, and real-world data applications will be key differentiators as regulatory frameworks evolve to support innovation. 

The UK may be a nimbler market to respond to supply chain and pricing as compared to the European Union, especially in light of the recent free-trade deal with India. Nevertheless, for UK-based manufacturers, this deal may undermine longer-term intellectual property (IP) concerns. Additionally, we see an opportunity for branded drug manufacturers through a revised 2024 Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG). Even if the percent change is minimal, it could be perceived as a better “deal” for industry as well as potentially fulfilling the UK government’s ambition to appease President Trump and secure a longer-term trade deal.   

We believe an announcement on pharmaceutical tariffs sometime in August/September and expect the market to lurch when tariffs are announced by the Administration.  

Will 2025 US Drug Pricing Reforms Lower Costs? 

As the Trump Administration’s drug pricing reforms unfold over the coming months, investors should closely monitor the release of Medicare direct subsidies at the end of July and September’s second wave of negotiated drug prices as key indicators of policy implementation and industry expectations. The US government’s fragmented approach to pharmaceutical supply chain reforms, appear to target specific cost drivers, creating conflicting incentives that may ultimately fail to deliver meaningful affordability improvements for patients or sustainability for payers. We believe successful reform largely depends on whether the Administration can move beyond piecemeal regulations to address the fundamental market access dynamics that drive pharmaceutical pricing across the entire healthcare ecosystem.

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CFRA’s Public Policy Research
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2025 Bank Stress Tests Reveal Resilience and Opportunity for Regional Banks 

Published July 17, 2025 – By Alexander Yokum, Senior Vice President, Equity Research

All 22 Banks Passed But Not All Wins Were Equal 

The Federal Reserve’s 2025 stress test results are out, and the verdict is clear: every regional bank tested passed, showcasing the industry’s resilience even under simulated economic downturns. But while all institutions cleared the bar, a few emerged as leaders in capital strength, risk management, and return potential. 

Our latest thematic research report breaks down why some banks, including M&T Bank (MTB) and Wells Fargo (WFC), are now in a stronger position to return capital and drive shareholder value heading into 2026. 

Less Severe Stress, Stronger Results 

This year’s scenario was notably milder than in 2024: 

1. Real GDP contraction eased from -8.5% to -7.8%
2. Housing prices fell 33% vs. 36% a year ago
3. Aggregate capital drawdowns improved, with CET1 ratios declining just 180 bps (down from 280 bps in 2024) 

These shifts led to reduced capital requirements and a renewed focus on share buybacks and dividend growth across the industry. 

What’s Ahead for Regional Banks? 

Our research also explores proposed changes to the Fed’s stress test process, which could create more predictable capital planning, reduce volatility in regulatory requirements, and support higher long-term ROEs. 

Yet the key question remains: Which banks are best positioned to benefit?

What Popped and What Flopped: Regional Bank Q2 Recap

After regional banks successfully navigated the 2025 stress tests, attention turned to their quarterly performance. In this video, CFRA equity research analyst Alexander Yokum analyzes Q2 2025 regional banking earnings that delivered impressive growth—marking a significant recovery after years of declining profits due to the Silicon Valley Bank crisis and commercial real estate challenges. Yokum examines the key drivers behind this turnaround, including improved credit quality and steady net interest income gains, while also discussing persistent challenges like deposit outflows and intense competition for deposits. With regional banks holding strong capital positions and merger activity increasing, Yokum identifies his top investment picks and explains why the sector appears well-positioned for sustained growth through the remainder of 2025.

AI Agents and Lower Costs Are Fueling a Computing Boom

Published July 10, 2025 –  By Angelo Zino, Senior Vice President, Technology Equity Analyst

Data center spending is on track to surpass $1 trillion by 2028. Are you positioned for the AI infrastructure surge? 

With the rise of advanced reasoning models and AI agents, the computing economy is entering a phase of exponential growth. What was once driven by a handful of hyperscalers is now expanding to include a broader mix of enterprise, sovereign, and emerging infrastructure builders. This thematic shift has significant implications for investors, cloud providers, and semiconductor leaders alike. 

The Compute Revolution Is Just Beginning 

1. AI Agents Are Driving Demand into Overdrive: Agentic AI models, designed for reasoning, decision-making, and autonomy, require far more computing power than traditional GenAI. Some models now need 100x to 1,000x for the processing power of legacy workloads.
2. Total Cost of Ownership Is Falling Fast: NVIDIA’s architectural leap from Hopper to Blackwell is driving 85%+ efficiency gains. With Rubin and Rubin Ultra on the horizon, computing infrastructure costs are dropping sharply while opening the floodgates for expanded AI adoption.
3. From Big Four to Many: While Amazon, Microsoft, Alphabet, and Meta will remain central, new players like Tesla, Apple, CoreWeave, and sovereign governments are building their own AI infrastructure, unlocking the next wave of capex acceleration.
4. Compute Demand = Digital Oil: As costs drop and use cases explode, computing becomes the next indispensable resource. Like mobile data in the smartphone era, AI demand is poised to soar—even as costs decline. 

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