With bipartisan support and global implications, the Biosecure Act was introduced by the U.S. House of Representatives in January 2024. If passed, the bill will impact how pharmaceutical and life science companies do business inside the United States—and who they can do business with.
As one of the nation’s leading logistics partners in these industries, the team at Langham Logistics is following this bill closely. In this article, we answer some of the biggest Biosecure Act questions so our clients can stay ahead of this potential legislation as well.
What is the Biosecure Act?
The Biosecure Act (H.R. 7085) is a proposed piece of legislation aimed at enhancing the security of pharmaceutical and life science manufacturing in the U.S. The bill prohibits federal contracting with biotechnology providers associated with foreign adversaries and those considered “a biotechnology company of concern.” The bill specifically names four companies operating out of China: BGI, MGI, Complete Genomics, and WuXi AppTec.
If passed, the bill would prohibit federal agencies from:
- Procuring or obtaining any biotechnology equipment or service provided by a biotech company of concern.
- Entering or renewing contracts that require direct use of equipment or services from these companies.
- Issuing grant funds or loans for activities connected to these companies.
The bill defines “a biotechnology company of concern” as an entity: 1) subject to the direction of a foreign adversary’s government, 2) involved in the manufacturing and distribution of biotech equipment and services, and 3) posing a risk to U.S. national security based on these activities.
The bill does allow executive agencies to waive the restrictions on a case-by-case basis under certain circumstances for a limited period. The Office of Management and Budget will be responsible for updating the list of organizations considered companies of concern.
Why was the Biosecure Act introduced?
The bill asserts that through governmental and business collaborations, the People’s Republic of China (PRC) has gained access to millions of American’s genomic data. Research indicates the country is using the information for a competitive business advantage to control the global pharmaceutical market and potentially military purposes. Legislators wrote the Biosecure Act to prevent this from continuing by stopping U.S. taxpayer money from fueling these hostile biotech practices.
The bill does not restrict independent U.S. pharma companies from doing business with these foreign entities but does prohibit them from receiving any governmental funds if they do. The federal government is the largest purchaser of prescription drugs in the U.S. and funds billions in pharmaceutical research and development every year. That means the bill would affect most pharma companies operating in the U.S.
What is the expected impact on U.S. companies?
Many pharma companies, including the 20 largest, heavily rely on the named biotechnology companies of concern as contract manufacturers, especially WuXi. The company has contributed to the development of several drugs in the US.
Opponents of the bill believe the legislation will slow drug development while companies cut ties and find different manufacturers. The move also could disrupt the industry by driving smaller biotechs that rely solely on these foreign companies out of business. The domino effect could lead to drug shortages.
One of the biggest appeals of collaborating with Chinese companies is the low price of producing and sourcing active pharmaceutical ingredients (APIs). Therefore, U.S. consumers could see drug cost fluctuations as companies partner with alternative manufacturers.
Proponents of the bill see the benefits of pharma companies diversifying their supply chains rather than relying on contract partners primarily in one country. Many companies are already reviewing existing relationships and looking at new sourcing partners in India, Europe, and domestically. The legislation could prompt pharmaceutical and life science manufacturers to reshore at least a portion of their operations, which would be a boost to the U.S. economy.
What is the legislation’s future?
Several additional legislators—from both sides of the aisle—have signed onto the Biosecure Act indicating it has a strong chance of passing. A similar bill is moving through the Senate. Therefore, some form of this legislation is likely to become law in the months following the 2024 presidential election. Since its introduction in the House, the bill has been modified to allow existing contracts to be grandfathered until 2032 to avoid drug shortages.
Even without the legislation, drug companies are taking action to get ready. At Langham Logistics, we are too. We already support global supply chains and pharmaceutical manufacturing worldwide. Domestically, we have temperature-controlled warehouses strategically positioned across the country to meet critical drug delivery deadlines. In fact, our facilities are rated among the top 3% in the country.
We partner with pharma and life science companies every day to reduce costs, improve speed, and meet the most rigorous quality standards. Should the Biosecure Act pass, Langham Logistics will be ready to work with new manufacturers, service different locations, and stay at the forefront of pharmaceutical innovation.
