America’s Moves Against Chinese Biotech Will Hurt Patients at Home
America’s crackdown on Chinese trade is broadening. On April 17th, President Joe Biden proposed tripling tariffs on steel imports due to China's unfair trade practices. After restricting China's access to advanced semiconductors and moving to ban TikTok, lawmakers now target biotechnology. A new proposal, the Biosecure Act, aims to end government contracts with any firms involved with Chinese biotech companies. This act could have unfortunate consequences for American consumers.
Impact on Biotech Firms
The bill uses the threat of ending lucrative federal contracts to sever ties between American firms and Chinese genomic sequencers, makers of sequencing machines, and producers of large-molecule drugs like weight-loss injectables. The ban extends to any biotech firm headquartered in an adversary country and explicitly names four Chinese companies.
Targeting BGI
One prominent target is BGI, formerly known as Beijing Genomics Institute. BGI is the world's largest sequencer of human DNA, operating in over 100 countries. The company supplies prenatal tests and diagnostic swabs for COVID-19 and other diseases. BGI, and others like it, offer health screenings at a low cost in exchange for retaining anonymized patient data, which is later used in drug development.
Lawmakers claim that BGI’s data could be accessed by Communist Party officials, although BGI asserts that this information is securely stored. In February, President Biden already banned exporting health data to adversaries, including China, making the Biosecure Act seem unnecessary.
The Scope of the Bill
The authors of the bill have widened their scope, including medical equipment makers and drug manufacturers like WuXi AppTec, which conducts research and manufactures compounds for major pharma companies. WuXi AppTec and its sister firm, WuXi Biologics, are the largest providers of contract drug discovery and manufacturing. While some diversification from Chinese producers might be justifiable, the bill aims for a wholesale decoupling.
Allegations and Overreactions
Lawmakers claim that Chinese biotech firms have stolen intellectual property (IP) and collaborated with the People’s Liberation Army (PLA) and the Chinese government's repression of Uyghurs. Although WuXi AppTec denies any unauthorized transfers of IP, the Biosecure Act is seen as an overreaction. Western biopharma firms are protective of their IP and should decide who handles their sensitive drug recipes.
Protectionism and Its Consequences
The legislation appears to be driven by old-fashioned protectionism, which risks hurting American consumers without delivering the promised security benefits. If passed, the act might lead to drug shortages and delayed clinical trials. Western pharmaceutical firms would need to abandon their current supply chains, finding new partners, which could particularly affect biotech startups that rely on affordable Chinese manufacturing. This would contradict another goal of the Biden administration: lowering drug prices.
Small gain, high price: The legislation's likely passage could result in higher drug costs and hinder access to essential medicines, negatively impacting American patients.
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