US biotech security bill faces criticism over China loopholes

The Biotech Investment National Security Act (BINSA), introduced in June 2026, seeks to significantly expand federal oversight of biotechnology activities connected to China, encompassing pharmaceutical development, biologics manufacturing, and clinical research. This legislative effort builds on the earlier Comprehensive Outbound Investment National Security (COINS) Act by explicitly including biotech sectors in outbound investment screening, reflecting growing concerns about protecting U.S. national security and maintaining leadership in critical biotech innovation.

BINSA emerged as a direct response to recent multibillion-dollar R&D and licensing agreements between major U.S. pharmaceutical giants like Pfizer and Bristol Myers Squibb and Chinese biopharma firms, which lawmakers such as Rep. John Moolenaar have criticized as 'dangerous deals' threatening the future of American pharmaceutical production. By mandating that all U.S. pharmaceutical licensing deals, joint ventures, and equity investments involving Chinese-covered foreign persons undergo rigorous review by the Department of the Treasury, the bill aims to prevent the offshoring of critical biotech innovation and safeguard national interests.

To ensure a robust national security framework, BINSA requires interagency collaboration among the Treasury Department, Health and Human Services, Department of War, and the Director of National Intelligence, with regulatory measures to be implemented within one year of enactment. Additionally, the Secretary of Defense must conduct a national security assessment within 60 days to evaluate whether U.S. capital flowing into Chinese biotechnology adversely affects military readiness, underscoring the strategic imperative behind the legislation’s regulatory provisions.

Reflecting bipartisan consensus on the strategic importance of protecting the U.S. biotech sector, BINSA was introduced in the Senate by Senators Pete Ricketts (R-NE) and Elissa Slotkin (D-MI), with companion legislation sponsored in the House by Representatives John Moolenaar (R-MI) and Debbie Dingell (D-MI). This cross-party collaboration highlights the shared recognition that unchecked biotech investments linked to China pose a tangible risk to American innovation and national security.

China's biotech sector has undergone a remarkable transformation, expanding from producing just 1% of global drugs in development a decade ago to accounting for about 25% today, with some estimates placing its share of global deal flow at 50%. This surge is fueled by faster clinical trial recruitment enabled by its large patient population, lower development costs, and a strategic influx of US-trained scientists returning home, supported by aggressive government funding and venture capital. As Pfizer's Alexandre de Germay highlights, China now hosts 40% of global oncology clinical studies, signaling a significant shift in early-stage drug development dominance.

Despite legislative efforts to decouple from China, major U.S. pharmaceutical companies like Bristol Myers Squibb and Merck continue deep collaborations with Chinese firms, reflecting a reliance on China's burgeoning biotech innovation for their drug pipelines. This interdependence underscores the complex challenge of balancing national security concerns with the imperative to maintain competitiveness, as abrupt restrictions risk reducing pipeline candidates and limiting price competition, potentially harming patients. Dr. Nathan Goodyear aptly warns that 'We can’t ban our way out of this,' advocating for targeted approaches rather than blunt measures.

The U.S. biotech industry faces critical internal challenges that threaten its global leadership, including bloated trial paperwork, collapsing patient recruitment, and a gutted talent pipeline, which collectively stifle innovation. Ross Pettit emphasizes the need for reform, noting that the industry has not significantly changed its practices in 30 years and must embrace risk-based trial designs and streamlined regulations to remain competitive. Moreover, capital access remains a bottleneck, with Pettit warning that 'a strong asset doesn’t matter if the capital spigot is shut,' highlighting vulnerabilities in sustaining early-stage innovation amid China's rapid ascent.

China's strategic approach to biotech leverages lower labor costs, greater automation, and supply chain efficiencies to achieve 2x to 10x more scientific output per research dollar than the U.S., contributing to a narrowing scientific gap in key therapeutic areas. This efficiency, combined with the offshoring of startups and venture capital investment to China, risks hollowing out the U.S. biotech ecosystem, as noted by Rep. Nathaniel Moran who warns that investors chase profits where they foresee future growth. The shift threatens U.S. dominance in the early supply chain stages critical to drug development, raising national security concerns about dependence on China for active pharmaceutical ingredients and manufacturing.

While BINSA aims to shield U.S. biotech from Chinese competition, industry leaders warn that without addressing fundamental innovation incentives, the bill risks merely shifting early-stage biotech investment offshore. Executives caution that policies like MFN pricing and price controls could crush companies with only one commercial product, effectively seeding biotechnology to China or other regions. This systemic misalignment threatens to leave promising academic research languishing, undermining the very innovation BINSA seeks to protect.

Critics highlight a significant loophole in BINSA that may allow offshoring and foreign technology transfers to persist despite its national security intent. The bill’s enforcement mechanisms appear insufficient to prevent high-profile deals such as Pfizer and Bristol Myers Squibb’s multibillion-dollar R&D and licensing agreements with Chinese biopharma firms, which sparked congressional concern over American pharmaceutical production vulnerabilities. This gap raises questions about BINSA’s practical efficacy in curbing China-linked investments.

Beyond investment restrictions, experts emphasize that BINSA does not adequately tackle broader challenges undermining U.S. biotech competitiveness, including critical funding cuts to the NIH and university research. These reductions jeopardize the nation’s long-term biomedical innovation capacity, with ripple effects on national wealth and security. Without bolstering foundational research funding and reforming healthcare innovation incentives, BINSA risks being a narrow fix that fails to sustain U.S. leadership in a complex, capital-intensive sector.