As Congress considers a bill that aims to distance U.S. biopharma from five Chinese companies, the industry must emphasize the importance of prioritizing patient care over power plays.
The U.S. Congress will reconvene on September 9, and the legislative focus on China-related issues is intensifying. Bloomberg reports that Republican congressional offices have been notified to expect House votes on key measures, including the BIOSECURE Act, which will lead to ripple effects in global collaboration for drug development and manufacturing. If the BIOSECURE Act is passed, it will become more important for the affected U.S. and Chinese pharmaceutical companies to tell a coherent narrative that highlights the potential patient care impact of such disruptions.
The BIOSECURE Act initially seemed to be losing traction when it missed its first chance to be considered by Congress on June 11, 2024. At that time, the U.S. House Rules Committee did not include it in the list of amendments to the National Defense Authorization Act (NDAA). While this development might have suggested the bill was petering out, the latest Bloomberg report indicates it is again gathering steam. After factoring in the strong bipartisan support shown by a 40-1 House Oversight Committee vote in May, Bloomberg Intelligence forecasts a high likelihood of the bill’s passage.
There are potentially long-term consequences for Chinese companies mentioned—BGI Group, MGI, Complete Genomics, WuXi AppTec and WuXi Biologics—as well as their U.S. biotech and pharmaceutical customers. According to a survey from the industry association Biotechnology Innovation Organization (BIO), 79% of 124 biopharma companies surveyed have at least one contract or product with a China-based or China-owned CDMO/CMO. Although the latest markup of the legislation grants up to eight years to switch away from named manufacturing partners, the effects will likely be felt quickly, as U.S. companies are already looking to distance themselves from these firms.
This is against the backdrop of an already-strained U.S. drug supply chain. According to the American Society of Health-System Pharmacists, the number of active drug shortages in the U.S. stood at 300 in the second quarter of 2024. Additional restrictions imposed by the BIOSECURE Act are likely to exacerbate these shortages if the legislation is passed.
U.S. pharmaceutical companies like Gilead Sciences and Vertex Pharmaceuticals have raised concerns about this bill in their filings, citing potential increased costs, delays in clinical trials and FDA submission challenges. Even though the latest May House amendment limits the BIOSECURE Act to Federal Acquisition Regulation (FAR) contracts, excluding Medicaid and Medicare, more companies may express similar sentiments if this bill passes. This bill could significantly impact the broader pharmaceutical ecosystem, though the extent depends on how federal agencies interpret it.
Smaller U.S. pharmaceutical companies should also be prepared to communicate the increased costs they may face. A U.S. CEO interviewed by the Boston Business Journal initially believed her startup wouldn’t be affected since it doesn’t collaborate with the companies named in the bill. However, she soon recognized that rising demand for U.S. domestic R&D and contract research organization (CRO) services could drive up costs, noting that the bill may make development more expensive in the short and potentially long term.
By framing the narrative around a fact-based discussion on the impact and risks to patient care, U.S. companies could minimize potential unintended effects. Their communications strategy should focus on educating stakeholders, including the media, policymakers and patients, about the crucial role partnerships with China-based firms play in ensuring a stable supply of various medications.
In addition, both U.S.- and China-based pharmaceutical companies might wish to carefully consider their next steps with the relevant industry associations such as BIO and others. Engaging with these associations to further illustrate the potential impact on U.S. patients could be a crucial strategy. Silence in the face of uncertainty could lead to worse outcomes.
As for Chinese biotech companies, whether they are named in the BIOSECURE Act or not, they should step up the cadence of their international communications, reassuring clients and signaling their commitment to the global market. Engaging in open dialogue with stakeholders, including U.S. clients and investors, could go a long way toward mitigating concerns and building trust.
Given the geopolitical factors, navigating this situation requires a delicate balance between maintaining a low profile and ensuring that the right messages reach the right audiences at the right time. Ultimately, by proactively managing their narratives, these companies can help safeguard patient care while also protecting their position in the global market.
