How, When, and If the U.S. BIOSECURE Act Is Likely to Become Law

Both U.S. and P.R.C.-based biotechs are anxiously watching attempts to pass the U.S. BIOSECURE Act into law. Michael Borden and Andrew Shoyer explain what this month’s developments mean, and why the legislation, even with so much attention and publicity, may never actually become law.

The U.S. BIOSECURE Act proposes to ban five P.R.C.-based biotech companies from operating in the United States – and potentially to ban other “biotechnology companies of concern” – amid a backdrop of concerns that the Chinese government might obtain U.S. IP and exploit Americans’ genomic data. The prospect of this legislation being passed into law is already leading to meaningful shifts in market behavior. We have seen major strategy reconsiderations by both U.S. and P.R.C.-based biotechs in reaction to the proposed legislation, and some life sciences companies are already including in their contracts with PRC-based biotechs contingency language which hedges against the prospect of the BIOSECURE Act.

Particularly in this U.S. Presidential election year, there has been a bipartisan consensus in the U.S. Congress about the need to be “tough on China,” and a concern about the increasing reliance by U.S. biotechs on P.R.C.-based biotechs for R&D and manufacturing. However, the BIOSECURE Act is still only a proposal. Supporters of the BIOSECURE Act have tried to pass it before and failed, and they are still modifying the text to find a way to overcome the bicameral hurdle (the House and Senate need to pass identical versions) this year. As a result, the BIOSECURE Act is likely to remain a live issue until Congress adjourns at the end of the year, regardless of the winner of November’s U.S. elections.

Current intelligence indicates the sponsors of the BIOSECURE Act will seek to advance the draft legislation as a stand-alone proposal.  A stand-alone bill would be likely to achieve strong support in the U.S. House of Representatives, but would be expected to face greater challenges in the U.S. Senate.  However, if the BIOSECURE Act is going to become law this year, the legislation is most likely to be attached to a broader legislative package, such as the U.S. National Defense Authorization Act (NDAA), an annual bill to fund the U.S. military.

That said, on June 11 the House Rules Committee declined to allow the BIOSECURE Act to be considered as an amendment to the NDAA. The Rules Committee typically applies a “germaneness test” to proposed amendments. Its decision to exclude the BIOSECURE Act suggests that it did not find that restricting the business activities of “biotechnology companies of concern” relevant to the funding of the U.S. military.

However, the BIOSECURE Act could still be attached to the NDAA, either via the Senate’s version of the bill (though it is not currently included), or in the conference committee process where the House and Senate reconcile the differences between their versions. During the conference, the germaneness test is at times disregarded, and new amendments that are in neither the House nor Senate version of the bill could be added, whether germane or not.

Speaker of the House Mike Johnson announced in July another possible legislative path for the BIOSECURE Act. He said that the House is working on “a package of China-related legislation,” including the BIOSECURE Act, to pass this autumn. His goal is to have the package signed into law by the end of this year. Again, to do this requires the assent of the Senate. It is not clear whether he is negotiating with the Senate on the scope or contents of this package.

Whether a standalone bill, the House China legislation package or the NDAA emerges as the preferred route, the BIOSECURE Act has multiple, viable paths to passage and might become law by the end of 2024. Life sciences companies doing business in China should continue to track the BIOSECURE Act and monitor for developments that could impact business operations.

Our forthcoming blog post will look at five things which both P.R.C. and U.S.-based biotechs can do to prepare for the possibility that the BIOSECURE Act might become law.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.