How administrators can tell when 'voluntary' agreements substitute for rulemaking—and what that means for accountability
In 2026, the Department of Health and Human Services has secured "voluntary" drug pricing agreements with pharmaceutical manufacturers and negotiated prior authorization reforms with major insurers, all outside the notice-and-comment rulemaking process that the Administrative Procedure Act was built to guarantee. For practitioners with an MPA or a public policy degree who are responsible for designing, monitoring, or auditing these instruments, the operational stakes are immediate: agreements reached under implied funding threats may satisfy contract formation rules yet still fail basic tests of public legitimacy. As the Petrie-Flom Center at Harvard Law School recently observed, doctrines like economic duress and unconscionability can render formally signed agreements voidable, meaning the legal ground beneath a negotiated health policy may be thinner than the press release suggests.
Federal health policy in 2026 is increasingly delivered not through formal regulation but through negotiated agreements between executive agencies and private entities. This shift redefines how administrators design, implement, and defend the rules that govern drug pricing, insurance practices, and clinical services.
Governance by consent describes a model in which policy outcomes are achieved through voluntary agreements rather than through the public policy making process of notice-and-comment rulemaking established under the Administrative Procedure Act. Instead of publishing a proposed rule, soliciting public input, and issuing a final regulation, an agency negotiates directly with a regulated party and secures a commitment to act (or refrain from acting) in a specific way. As Wendy Netter Epstein outlined in a September 2026 analysis for the Petrie-Flom Center at Harvard Law School, several high-profile health policy developments now follow this pattern, from pharmaceutical pricing pledges to insurer commitments on prior authorization reform.
Under ordinary contract law, a valid agreement requires mutual assent to sufficiently definite terms, a bargained-for exchange, and the absence of defects in the bargaining process. Crucially, contract doctrine does not demand equal bargaining power or an equally advantageous deal. That standard may satisfy a court, but it does not satisfy the public accountability requirements that administrators are trained to uphold. Notice-and-comment rulemaking creates a docket, invites affected parties to participate, and produces a record that courts and legislators can review. Consent-based instruments sidestep all three of those evidence-based policymaking safeguards.
For MPA and MPP practitioners, the stakes are concrete:
The tension at the center of these examples is straightforward: an agreement can be legally valid under contract principles and still lack political legitimacy in the eyes of the public it affects. Resolving that gap is the administrator's problem to solve.
Several major health policy shifts in 2025 and 2026 have been delivered not through the traditional notice-and-comment rulemaking process but through executive-branch negotiations, voluntary pledges, and informal enforcement threats. None of the instruments below followed the Administrative Procedure Act's formal rulemaking pathway, yet each carries significant consequences for patients, providers, and public trust. The comparison below highlights what administrators need to understand about the type of instrument used, the parties involved, the current status, and the legitimacy concern each case raises for public administration practice.
| Case | Type of Instrument | Key Parties | Status (as of September 2026) | Core Legitimacy Concern |
|---|---|---|---|---|
| Most-Favored-Nation Drug Pricing Agreements | Voluntary executive-branch agreements with pharmaceutical manufacturers to align U.S. prescription drug prices with the lowest prices paid in other developed nations | Trump Administration and 26 manufacturers (including Pfizer, AbbVie, Eli Lilly, Novo Nordisk, Merck, Johnson & Johnson, and others), collectively covering roughly 89% of the branded drug market | 26 manufacturers have signed; administration expects to extend agreements to most sole-source brand-name drug and biologic makers | Effective price benchmarks traditionally set through legislation or formal rulemaking are instead being established through bilateral executive negotiation, raising questions about transparency, statutory authority, and whether future administrations can easily reverse or modify terms |
| CMS GENEROUS Medicaid Drug Pricing Model | Voluntary CMS-led innovation model under demonstration authority, offering supplemental Medicaid rebates to align net prices with international benchmarks | Centers for Medicare and Medicaid Services, participating state Medicaid programs, and drug manufacturers that opt in | Launched January 2026 for a five-year period; state applications closed September 10, 2026; manufacturer participation is voluntary | Uses CMS demonstration authority rather than statutory mandate, prompting debate over whether broad international reference pricing for Medicaid should require congressional action rather than administrative discretion |
| HHS Prior Authorization Reform Pledges | Voluntary pledges by private health insurers to streamline and reduce prior authorization requirements across Medicare Advantage, Medicaid managed care, Marketplace, and commercial plans | HHS Secretary Robert F. Kennedy Jr., CMS Administrator Dr. Mehmet Oz, and a group of private insurers collectively covering about 75% of Americans | Insurers committed to reducing services subject to prior authorization by January 2026 and expanding real-time approvals to 80% of requests by 2027 | Because the pledges are not codified as regulation, HHS lacks formal enforcement tools if insurers fall short of promised timelines or scope, creating accountability gaps that patients and providers cannot challenge through standard administrative review |
| Gender-Affirming Care Funding Threats to Hospitals | Informal enforcement actions (letters, subpoenas, a proposed rule to cut Medicare and Medicaid funding) targeting hospitals providing pediatric gender-affirming care | Trump Administration HHS, hospitals providing transgender-affirming care nationwide (including UW Health in Wisconsin), federal courts | Proposed funding-cut rule shelved as of July 2026; a March 2026 federal court ruling found HHS Secretary exceeded his authority; threats described as paused but not fully resolved | A federal judge ruled that using Medicare and Medicaid funding loss as leverage exceeded lawful administrative powers, highlighting civil-rights and due-process risks when agencies substitute coercive funding conditions for properly promulgated rules |
| University and Law Firm Federal Agreements | Highly publicized bilateral agreements between the federal government and individual universities and law firms, typically reached under pressure of threatened funding or regulatory action | Federal executive branch agencies and specific universities and law firms | Multiple agreements in place by mid-2026, with terms varying by institution | Agreements reached under implicit or explicit threat of funding withdrawal or regulatory sanction raise economic duress concerns, as described in Wendy Netter Epstein's September 2026 analysis published by the Petrie-Flom Center at Harvard Law School, because the affected parties may have had no reasonable alternative but to assent |
Formal assent and meaningful consent are not the same thing. Contract doctrine starts with the former: a valid agreement requires mutual assent to sufficiently definite terms, a bargained-for exchange, and absence of defects in the bargaining process. But courts have long recognized that a signature, a press release, or even a signed settlement does not close the legitimacy question when the bargaining process itself was corrupted, a difference between policy and law that administrators cannot ignore.
At its core, an ordinary contract needs agreement on material terms, an exchange of value, and bargaining free from procedural defects. Contract law does not require equal bargaining power or an equally advantageous bargain. Regulators and regulated entities rarely negotiate as equals, and an unfavorable deal is not automatically voidable. The legal question is narrower: whether assent was real, terms were definite, and the process was free from improper coercion.
Economic duress is the main doctrine for testing consent under pressure. The Court of Claims in Urban Plumbing & Heating Co. v. United States (1969) invalidated a contractor's release after finding three elements: involuntary assent, no reasonable alternative, and coercive acts by the opposite party. Mere reluctance or financial embarrassment is not enough; duress must come from the government's wrongful or oppressive conduct, not from the contractor's own necessities. The Federal Circuit adopted the same framework in Systems Technology Associates, Inc. v. United States (1983), noting that government acts can be lawful in isolation yet still violate fair dealing or defeat a party's will. Common elements across these decisions include an improper threat or act, involuntary assent, absence of a reasonable alternative, and causation by the alleged coercer.
Unconscionability offers a second path. Even when formal assent exists and no duress is proven, courts may refuse to enforce an agreement that is so one-sided or procedurally unfair that enforcement would offend basic fairness.2 The doctrine appears most often in consumer and arbitration cases, not in regulatory settlements, but it remains available as an independent ground for challenging enforcement despite a signed agreement.
For health administrators, the practical problem is not healthcare administration leadership skills; it is that direct precedent is thin. No published decision applies duress or unconscionability to a hospital, university, or corporate settlement with a federal health agency.32 The closest authority is federal procurement and contract-modification law, not enforcement settlements. That does not mean such arguments cannot be made; it means they would be analogies rather than established doctrine. Administrators should treat the legal test as a framework for internal review, not as a guaranteed litigation result.
Legitimacy is the practical question of whether people accept an agency's decision as one they should follow, and health agencies draw that acceptance from two very different sources. One flows from legal authority. The other flows from the appearance, and often the reality, of voluntary agreement.
Mandate-based legitimacy rests on statutory authority and electoral accountability. When an agency issues a rule through notice-and-comment, it can point to a statute, a public record, and a reasoned response to comments. Even when people disagree with the outcome, the process gives them a way to see how the decision was made and to challenge it in court.
Consent-based legitimacy rests on voluntary buy-in. A pharmaceutical manufacturer, an insurer, or a hospital signs an agreement and, in theory, signals that the terms are acceptable. The agreement can feel more flexible than regulation and can produce results faster. But consent-based legitimacy is fragile when the negotiation starts from a position of serious imbalance or when one party believes refusal will trigger funding loss, exclusion from programs, or other penalties.
When health policy moves through negotiated agreements instead of notice-and-comment, administrators lose several built-in accountability features. There is no official public comment docket. There may be no administrative record that explains why certain terms were chosen. Judicial review, which depends on that record, becomes much harder. Affected parties may have no clear avenue to contest the reasoning because the reasoning was never published in the form rulemaking requires.
Recent health policy examples illustrate the risk. Federal officials announced voluntary drug pricing agreements with manufacturers, insurers negotiated prior authorization reforms with HHS, and hospitals faced pressure tied to funding. Even when those moves are technically lawful, the public may read them as coercion rather than consent. When every 'voluntary' agreement appears to follow a threat, the word loses meaning. Compliance may continue, but trust, the longer-term basis for public cooperation with health agencies, does not.
public administration professionals protect legitimacy by documenting negotiations, recording alternatives considered, preserving the legal basis for each agreement, and creating review or appeal avenues for affected parties. Records, reasoned explanations, and a visible chain of authority are not bureaucratic overhead. They are the difference between an agreement the public can live with and an arrangement it merely endures.
Administrators evaluating whether a negotiated health policy instrument carries genuine legitimacy, rather than merely formal assent, can draw on established academic frameworks that break legitimacy into three dimensions: input (who participated), throughput (how the process worked), and output (what results were achieved). The Scharpf and Schmidt model, widely applied in European governance and adapted for health policy analysis, provides the foundational structure. The table below translates each dimension into operational indicators that can be tracked and scored using methods documented in public administration research.
| Legitimacy Dimension | Indicator | What It Measures | How to Track or Score |
|---|---|---|---|
| Input | Inclusiveness of Stakeholder Participation | Whether affected parties, including patient groups, providers, insurers, and community organizations, had meaningful roles in shaping the agreement. Draws on Scharpf's concept of 'government by the people' and procedural justice research on authentic preference representation. | Review participation logs, invitation records, and public comment submissions. Score by comparing the range of invited stakeholders against a mapping of all affected populations. Conjoint experiments or post-process surveys (as described by Strebel, Kuebler, and Marcinkowski) can gauge whether participants felt their input was genuinely considered. |
| Input | Representativeness of Decision Making Bodies | Whether negotiating panels or advisory committees reflect the demographic, geographic, and economic diversity of affected communities, not just well-resourced industry actors. | Audit committee rosters against census and beneficiary data. Track the ratio of industry representatives to consumer, patient advocate, and frontline provider voices. Document any populations absent from the table. |
| Throughput | Transparency of Information and Rationale | Whether the agency made its objectives, data, legal authority, and decision rationale publicly accessible throughout the negotiation. Central to Schmidt's throughput legitimacy concept, which emphasizes accountability, transparency, inclusiveness, and openness. | Conduct content analysis of published policy documents, meeting agendas, and data portals. Score using a checklist: Were negotiation terms posted? Were the legal bases cited? Were meeting minutes or transcripts released? Leiden University and SSOAR throughput research recommends scoring clarity and public accessibility of procedural rules. |
| Throughput | Accountability Mechanisms and Reporting Lines | Whether clear lines of responsibility exist so that decision makers can be held answerable for commitments made during negotiations. Covers both internal chain of command and external oversight (congressional, judicial, or inspector general review). | Map reporting structures in governance documents. Verify whether the agreement specifies an enforcement body, an audit schedule, and a dispute resolution process. Stakeholder evaluations of accountability conditions, collected through structured surveys, provide a perception based complement. |
| Throughput | Procedural Fairness and Legal Compliance | Whether the process adhered to applicable legal standards, including Administrative Procedure Act requirements, nondiscrimination obligations, and due process protections. Relevant to algorithmic governance research at Oxford, which assesses throughput through fairness audits and explainability. | Review the instrument against statutory checklists. Conduct fairness audits of any scoring or selection criteria used during negotiation. Survey participants on perceived fairness using validated procedural justice scales. |
| Output | Policy Effectiveness and Problem Solving | Whether the negotiated instrument actually delivers measurable improvements in the targeted health outcome, such as lower drug prices, reduced prior authorization delays, or expanded access. Corresponds to Scharpf's output legitimacy: 'solutions to common problems.' | Track pre and post implementation outcome data (cost trends, authorization turnaround times, service utilization rates). Compare results against the benchmarks specified in the agreement. Annual performance reports with publicly available metrics allow ongoing assessment. |
| Output | Compliance Rates and Voluntary Adherence | Whether parties to the agreement are actually following its terms without coercion, and whether compliance is sustained over time. Low voluntary compliance may signal that initial assent was driven by duress rather than genuine consent. | Monitor compliance through periodic audits, self-reported data from signatories, and independent verification. Calculate the percentage of parties meeting each material term. Track withdrawal or renegotiation rates as a leading indicator of legitimacy erosion. |
| Output | Perceived Performance by Affected Populations | Whether the people served by the health system view outcomes as improved and the process as fair. The BMC Health Services Research framework for fragile settings emphasizes population surveys that capture perceived legality, justification, and performance. | Deploy population surveys and focus groups among beneficiaries and frontline staff. Use validated instruments to measure trust in the administering agency, perceived service quality, and belief that the process was justified. Qualitative interviews add context to quantitative scores. |
Notice-and-comment rulemaking asks the public to react to a finished draft; consent-based legitimacy asks them to help shape the question before a draft exists. That difference in depth, not just in procedure, is why administrators increasingly look to deliberative and participatory tools alongside the formal rulemaking docket.
Citizen juries convene a small, demographically selected panel that hears evidence, cross-examines experts, and produces a reasoned recommendation, typically over several days. They have been used in the United Kingdom for health priority-setting1, where panels weigh competing claims on scarce resources in ways a written comment period cannot replicate. Deliberative polling, as detailed in Citizen Participation and Engagement in Health Policy, goes further on representativeness: a random sample is surveyed, briefed with balanced materials, given moderated small-group discussion, and surveyed again, producing a measured shift in informed opinion rather than a raw preference count.
Participatory budgeting hands citizens direct authority over a defined slice of public money, an approach documented in health-related governance reviews2 and used alongside citizen dialogues and consultative commissions in Sweden's regional and municipal systems.3 Community advisory boards and health councils, used in Australia, Canada, and the UK, sit at the other end of the formality spectrum: standing bodies with reserved seats that advise or co-decide on an ongoing basis at local, regional, or national levels, rather than convening once around a single question. Citizen panels blend consultative and deliberative functions, while focus groups and open consultations remain the lightest-touch option, useful for gathering views but offering little of the sustained scrutiny that builds durable trust.5
Notice-and-comment invites written reaction; these models invite reasoning, negotiation, and sometimes binding authority over outcomes. That depth is precisely what makes agreements reached through negotiation, rather than public rulemaking, feel thinner by comparison when they touch drug pricing or prior authorization under the Trump Health Policy Second Term.
The trade-offs are real. Citizen juries and deliberative polling demand significant staff time, facilitation expertise, and budget to recruit and brief representative participants. Participatory budgeting requires sustained administrative infrastructure to translate citizen votes into enforceable line items. Advisory boards risk becoming captured by whichever community voices have the time and standing to serve long-term. Administrators choosing among these tools are really choosing a point on a curve between speed and cost on one axis and depth and representativeness on the other, and that choice shapes whether the resulting policy reads as genuinely consented to or merely consulted upon.
Federal health agencies have two formal tools for converting policy goals into binding rules, and the choice between them determines how much of the public actually gets to weigh in. Notice-and-comment rulemaking under the Administrative Procedure Act is the default for HHS, CMS, FDA, and NIH when a rule carries the force of law.1 Agencies must publish a notice describing legal authority, terms, and subjects at issue, then accept public comments for at least 30 days, with most agencies setting 30 to 60 days.2 For certain Medicare regulations, Azar v. Allina Health Services requires Federal Register notice and no less than 60 days of comment.3 HHS in 2025 rescinded a prior policy extending notice-and-comment procedures to rules involving public property, loans, grants, benefits, and contracts, returning to the APA's narrower text for those categories.4
The Negotiated Rulemaking Act, 5 U.S.C. §§ 561-570, allows an agency to convene a balanced committee of affected interests before drafting a proposed rule.5 This reg-neg process is optional and supplemental. It does not replace APA notice-and-comment.6 The agency must publish a Federal Register notice covering the scope, issues, affected interests, proposed members, and schedule, and it must allow at least 30 calendar days for comments or applications on forming the committee.5 Once the committee is convened, the Federal Advisory Committee Act imposes open meeting, charter, and recordkeeping requirements.6
Negotiated rulemaking works best when the affected parties are identifiable, the issues are technical, and a realistic consensus exists. It is a poor substitute when an agency is resetting obligations without clear statutory authority, when the affected public is broad and diffuse, or when the central problem is accountability rather than technical calibration. If a consensus draft becomes a proposed rule, the usual APA comment period still applies, and the final rule must respond to significant comments and survive judicial review. A private side agreement announced through a press release bypasses those checks.
Administrators should maintain a comment log linking each material public comment to the agency's response. Keep a consent panel roster showing who participated, which interests they represented, and when negotiation occurred. Publish final terms, underlying data, and the basis for any funding condition or exclusion. That record is what separates bargaining that builds legitimacy from bargaining that merely shifts risk.
When HHS pressured hospitals to withdraw gender-affirming care by threatening federal funding, most institutions complied before any formal enforcement action existed. That sequence, threat first, compliance second, formal process never, is the pattern administrators now need to plan around, since those threats reportedly remain shelved rather than resolved.
Hospitals and universities facing funding-withdrawal threats have generally responded the same way: quiet compliance, minimal public pushback, and internal memos rather than litigation. That pattern is not evidence of genuine agreement. It reflects asymmetric bargaining power, where one party controls essential revenue and the other cannot afford to test the threat in court. Recognizing this dynamic matters because it changes how administrators should document a decision internally, even if they ultimately comply.
Not every funding condition is coercive. Grant terms tied to genuine program goals, safety standards, statutory requirements, or a federal state collaboration framework are ordinary conditions of funding. A demand starts to look like duress when it meets several of these markers:
The more of these present, the stronger the case that consent was not freely given.
Waiting until a threat lands to figure out a response is the most common institutional failure. Administrators should establish, in advance:
Agencies that build this capacity now through public administration education are better positioned to distinguish real conditions of funding from pressure dressed up as consent.
The tension for administrators is speed versus staying power: negotiated agreements deliver policy faster than notice-and-comment rulemaking, but they only hold up if the process behind them can withstand public scrutiny. Legitimacy has to be built into the design of a consent-based instrument, not bolted on after the press release.
A concrete next step: pull your agency's active negotiated agreements and score each one against the input, throughput, and output indicators covered above. Where documentation, participation, or refusal-risk safeguards are thin, that is where the legitimacy gap will surface first.
