Federal legislation targeting Chinese biotechs

Federal legislation regulating People’s Republic of China (PRC) biotechnology companies has advanced through Congressional committees and appears to have strong support in the House and Senate. 

The BIOSECURE Act could prohibit federal agencies from contracting with or extending loans or grants to any company with current or future commercial arrangements with Chinese biotechnology companies which pose a threat to national security (Prohibited Company).  

The legislation specifically names PRC companies BGI, MGI, Complete Genomics, WuXi AppTec, and WuXi Biologics as falling within the scope of Prohibited Companies.

The BIOSECURE Act provides exemptions for Medicare and Medicaid drug contracts and contracts in effect prior to the legislation’s effective date. Certain government agencies can grant waivers on a case-by-case basis. 

If passed, the BIOSECURE Act could have a major impact on the operations of U.S. life sciences and pharmaceutical companies which rely on Prohibited Companies for supplies and services.  

U.S.  life sciences and pharmaceutical companies should review whether they have any contracts with named PRC companies or other Prohibited Companies and consider whether they need to change their supply chain or service providers. Screening relationships with Prohibited Companies should be part of investor and acquisition due diligence. 

For more information about the BIOSECURE Act, contact Jed Weiner, Founder of grIP Venture Studio and Head of Corporate at boutique law firm Mei & Mark LLP, at jweiner@gripventure.com.