Chinese biotech crackdown would reset U.S. drug development
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Lawmakers in the House of Representatives on Wednesday are expected to set in motion a massive reordering of how U.S. pharmaceuticals are developed and made, by advancing a contracting ban on five key Chinese research firms.
Why it matters: It's a sign of how trade and national security concerns have spread from steel, semiconductors and TikTok to the life sciences, where U.S. biotechs and drugmakers are highly reliant on China for testing, ingredients and, in some cases, manufacturing.
The big picture: The bipartisan Biosecure Act would by 2032 end U.S. contracting with Chinese firms like WuXi AppTec and others deemed a threat to national security, effectively locking them out of the market.
- U.S. companies' workarounds could bode well for rival genomics companies like Illumina and Samsung.
- But the crackdown could also bring higher drug prices and even the specter of more shortages if key ingredients get scarce or supply chains get squeezed, experts say.
- The bill's sponsors say they're concerned Chinese companies collect genetic information that could be used to develop targeted bioweapons.
Driving the news: The legislation is expected to advance by a wide margin in the the House Oversight Committee on Wednesday.
- It's likely to be folded into the annual defense authorization bill later this year, though the outcome of the election and control of Congress could complicate prospects.
Friction point: The Senate version of the bill didn't forecast a major effect on drug access or pricing. But the House version could be deemed to hurt drug development and possibly add significant costs to federal programs, said Max Reale, analyst for Compass Point.
- That could derail the bill or force major revisions, he wrote in a note this week.
What they're saying: After expressing reservations about earlier bill drafts that would have forced U.S. companies to cut Chinese ties much earlier, the trade group representing U.S. biotechs said legislation now strikes the right balance between national security and maintaining the biopharmaceutical supply chain.
- In the meantime, the government and private sector will need to invest tens of billions of dollars in building up domestic drug manufacturing to help keep the biotech industry afloat, said John Crowley, CEO of the Biotechnology Innovation Organization.
- "It's going to require a massive and coordinated effort to replace the capacity and capabilities that will go away, but we've got time now to do that," Crowley said.
- Major drug companies like Novartis have already started making plans to sever ties with Chinese contract manufacturers in anticipation of the bill becoming law.
Zoom out: Policymakers more broadly have sought to crack down on China's involvement in the American health care sector in recent months.
- The Biden administration on Tuesday raised tariffs on Chinese medical supplies for items that it said were critical to the COVID-19 response, such as syringes and personal protective equipment.
- House Oversight Chair James Comer (R-Ky.) earlier this month pushed the National Institutes of Health to explain how the biomedical research agency prevents Chinese government influence in its work.
- "I do think you're seeing a trade war develop between China and the U.S. on health-related items," said Chris Meekins, managing director at Raymond James.
