News

BIOSECURE stalls, will not become law in 2024

23 December 2024

Earlier this week, efforts to reduce U.S. reliance on biotechnology companies in China stalled when the BIOSECURE Act (“BIOSECURE” or the “Act”) was left out of this week’s continuing resolution (CR). As a result, BIOSECURE will not be enacted into law this year. Industry and observers had been watching to see if BIOSECURE would be included in the year-end legislative package, which could have served as a stopgap measure to fund the federal government through early next year. The CR was the last potential vehicle for enactment after BIOSECURE had been excluded from the National Defense Authorization Act (NDAA) for fiscal year 2025 in early December.

While Chinese contract manufacturing and development organizations (“CDMOs”), such as WuXi Biologics and WuXi Apptech that were named as “companies of concern” in the BIOSECURE Act, and their business partners likely have let out a collective sigh of relief, this may only be a temporary reprieve. The incoming administration is expected to continue to find ways to put pressure on China, and with Republicans set to control both the Senate and House come January, BIOSECURE could be taken up again in 2025.

BIOSECURE prohibitions

The bill, which was introduced and touted as a national security measure, would have banned U.S. Executive agencies from acquiring “biotechnology equipment or services” from certain “companies of concern,” a group of five Chinese CDMOs. BIOSECURE specifically names the five Chinese companies and specifically defines a “company of concern” to mean: BGI, MGI, Complete Genomics, Wuxi Apptec, and Wuxi Biologics, and any subsidiary, parent affiliate, or successor of such entities. The term also includes, more broadly, any entity subject to the jurisdiction, direction, control, or operates on behalf of the government of a foreign adversary (e.g., North Korea, China, Russia, Iran); is to any extent involved in the manufacturing, distribution, provision, or procurement of a biotechnology equipment or service; and poses a risk to the national security of the United States.

Given the far-reaching ban that BIOSECURE placed on U.S. Executive agency acquisition of biotechnology equipment or services supplied by companies of concern, it would have impacted companies that use or deliver these biotechnology products and/or services in the performance of Federal contracts. More specifically, BIOSECURE would have prohibited Federal agencies from contracting with biopharmaceutical and other manufacturers who would supply biotechnology products or services obtained from these identified companies of concern in the performance of their Federal contracts. Given the nature of this prohibition, subcontractors and suppliers linked with these Federal contracts would have been impacted, as well. The BIOSECURE restriction on “biotechnology equipment and service” is wide-reaching, covering all equipment for genetic sequencers, mass spectrometers, polymerase chain reaction machines, and any other instruments, components, and accessories used for research, development, production, or analysis of biological materials. Biotechnology services include research, development, production, analysis—and even advising, consulting, and related support services.

Further, the Act only provided for waiver of this restriction on a case-by-case basis, and for a limited duration. In its most recent form, the scope of BIOSECURE was narrowed such to extend only to procurement contracts, grants, and loans. Accordingly, non-procurement agreements implementing Federal health programs, such as Medicare and Medicaid were not subject to BIOSECURE.

Concerns regarding BIOSECURE

BIOSECURE has garnered strong bipartisan support despite the inability of sponsors to add it to the NDAA or CR. Legislators, most prominently Sen. Rand Paul (R-KY) and Rep. Jim McGovern (D-MA), expressed concerns that the BIOSECURE restrictions could impact access to needed biotherapies within the embedded Veterans Administration and Department of Defense TriCare Federal health programs, and that the restrictions on the companies of concern are “premature,” based on industry surveys showing an insufficient number of ex-China CDMOs able to step up to supply services currently provided by BIOSECURE’s companies of concern. There also were concerns that the specific companies of concern were targeted without sufficient basis and/or an opportunity for due process.

We will continue to follow BIOSECURE developments closely to see whether the bill gets picked up in 2025 as standalone legislation or as part of a wider package—which has yet to be proven successful.

For further information or assistance regarding these developments, please contact any of the authors or the Hogan Lovells attorneys with whom you regularly work.

Authored by Joy Sturm, Allison Pugsley, William Ferreira, Mike Scheimer, Mike Mason, Stacy Hadeka, Tim Bergreen, Mike Druckman, Ajay Kuntamukkala, Ashley Roberts, Cybil Roehrenbeck, Ashley Ruhe, and Lauren Colantonio.