The chief sponsor of the BIOSECURE Act in the US, Rep. Mike Gallagher, is leaving Congress early, but forecasts of the wide impact of the proposed legislation – which aims to restrict biotech’s involvement with firms under control of a “foreign adversary” – show no signs of abating.
Tensions around the potential for US and Chinese business dealings to impact national security have also been on display in interactions between the two countries' executive branches. During a phone call between US President Joe Biden and Chinese President Xi Jinping on 3 April, Washington again emphasized the need to prevent China's use of US technologies if they are not to become a national security threat to the US.
Biden reiterated to his Chinese counterpart that Washington will continue to "take necessary actions to prevent advanced US technologies from being used to undermine our national security, without unduly limiting trade and investment," noted a White House readout of the discussion.
In late February, US intelligence officials told the Senate that WuXi AppTec, the major contract developer and manufacturer whose business could be decimated by the legislation, had transferred US intellectual property to Beijing without sponsor consent. In response, the Chinese firm said it is not aware of any such unauthorized transfer and that the company posed no national security threat to any country.
China Feels The Heat
During the top-level conversation last week, Biden also emphasized to Xi the need to address what the US sees as China’s “unfair trade practices and non-market economic practices.”
In response, Xi cautioned that US restrictions on technology exports to China are increasing and the list of sanctions getting longer, which he said is not a way of “derisking” but instead “creating risks,” according to notes on the meeting on the website of China’s Foreign Affairs Ministry.
During last month’s China Development Forum, an annual networking event in Beijing attended by global industry leaders, Xi hosted a dinner with a group of US executives, including from the pharma sector. He warned that while China remains open to bilateral cooperation, Beijing won't sit idly by if the US persists in constraining Chinese high-technology development. (Also see "Stay Or Exit? Global Health Players Ponder New China Trajectory" - Scrip, 28 March, 2024.)
As Washington imposes additional restrictions on the export of semiconductor chip technology and pushes for an ownership change for China-owned social media platform TikTok, Beijing is increasingly feeling the heat.
Challenges keep popping up despite both sides making efforts to stabilize the bilateral relationship. In a sign of the increasing dialog, US Treasury Secretary Janet Yellen arrived in Beijing on 4 April for a five-day visit, her second in nine months, and expressed the US's main concerns as she wrapped up her trip.
She emphasized the ongoing difficulties around national security and transparency issues, stating US firms must feel confident to operate in China.
Between A Rivalry And A Hard Place
BIOSECURE has put biotech players in both countries in a delicate position as they look to carefully navigate a path forward. While few want to be caught up in geopolitical tensions, they also want to continue to do business with the best and most affordable contractors.
A key question is whether doing business with, or sourcing from, Chinese companies subject to regulation by the bill will invoke US sanctions, given that both sides seem determined to put biotech at the center of national security considerations.
Under new President & CEO John Crowley, the Biotechnology Innovation Organization has shifted its positions on the bill, endorsing the legislation as WuXi departs the trade organization. (Also see "Risks For Pharma Industry Remain As BIO Shifts Course On BIOSECURE Act" - Pink Sheet, 15 March, 2024.)
The move may give BIO a seat at the table in future discussions about potential changes to the legislation, which many in industry worry could lead to significant development delays and even drug shortages if the unwinding of biotech business from Chinese firms as currently envisioned in the bill comes to pass.
One complication for BIO as it hopes to revise the legislation is the departure of its top lobbyist, Nick Shipley, who left his post as chief advocacy officer for the organization on 5 April. Shipley joined the group in September 2021 from PhRMA during the relatively brief tenure of BIO CEO Michelle McMurry-Heath. Aiken Hackett is now serving as BIO's Interim Head of Advocacy.
Executive turnover at trade organizations is nothing new, especially with a new CEO, but Shipley's departure undoubtedly creates additional difficulties for BIO's legislative efforts.
Does New Committee Chair Change Momentum?
BIOSECURE's chief sponsor, Mike Gallagher, a Republican from Wisconsin, is leaving Congress early on 19 April. The week before his departure could be a very active period as he makes a final push for the bill, among other legislation.
Rep. John Moolenaar (R-MI) will become the new chair of the Select Subcommittee on the Chinese Communist Party. Moolenaar signed on as a cosponsor of BIOSECURE relatively recently, on 5 April, about two weeks after being tapped as the next subcommittee chair.
Immediate passage of the bill is highly unlikely, and it is also still up in the air if there might be amendments that would possibly shield ongoing arrangements with Chinese contract services, where WuXi is a large player and also provides important services to some US biopharma companies.
More Chinese biotechs could become subject to US restrictions on business dealings in the sector should BIOSECURE move into law. In a letter to US Secretary of Defense Lloyd Austin, members of US Congress expressed concerns that Chinese biotech companies suspected of working with the military in China may be able to make “synthetic pathogens.”
The letter, cosigned by Gallagher and the select subcommittee ranking member Raja Krishnamoorthi (D-IL), aims to prevent access to, and use of, Americans' genomic and other health data and lists several companies including Innomics, STOmics, OriginCell Therapeutics Co., Ltd. and Vazyme Biotech, among others.