‘Biosecure Act’: New bill forces California biotech firms to cut ties with Chinese companies

Tucked inside a 3,000-page national defense bill signed into law last month is a set of new regulations that could upend the way some California biotech companies do business.

The Biosecure Act, as it is known, is focused on what it describes as “biotechnology companies of concern,” or BCCs. The legislation, contained within the National Defense Authorization Act, specifically bars biotech entities that receive federal dollars from working with companies connected to foreign adversaries — namely China, but also Russia, North Korea and Iran.

The bill will force most biotech firms to re-evaluate their relationships with foreign companies of concern — or hope for a federal waiver, say lawyers and biotech compliance experts.

“This will impact the entire pipeline,” said Matt McLoughlin, senior vice president of compliance and categories at Scientist.com.

Working from his Solana Beach office, McLoughlin advises more than 140 biopharmaceutical companies, including pharma giants with local offices like Sanofi, Novartis, and Pfizer — all of which could be affected by the legislation.

A number of smaller companies — like Biopharma, Neurocrine, and Kura Oncology — will also have to review their foreign relationships.

For 25 years, McLoughlin as helped oversee compliance and procurement-related aspects of outsourcing scientific services, helping large biopharma clients manage complex, globally distributed supply chains.

“Most major pharma players have engagements with Chinese suppliers,” McLoughlin said. “Early startups that don’t have direct relationships will still be affected, as their suppliers may somehow be connected to a BCC. These firms will have to go through thousands of contracts to evaluate how they may be impacted.”

By December 2026, the Office of Management and Budget must publish a list of all biotechnology companies of concern, according to the legislation. Given that deadline, it could still be some time before the legislation fully goes into effect.

“I do believe it won’t be until the end of 2026 before they finalize the list, and I expect there’s going to be quite a bit of back and forth over who is and isn’t on it,” McLoughlin said.

The companies targeted by the bill are defined as firms that operate under the control of foreign adversaries; are in any way involved in the manufacturing, distribution, provision or procurement of biotech equipment or services; and “pose a risk to the national security of the United States” by engaging in joint research with an adversary’s intelligence agency, providing data to a foreign adversary or obtaining data without consent.

The bill also requires the government to examine how foreign countries might misuse “multiomic” data — sensitive health data from American companies.

The OMB will create the list, review and modify it at least once a year, according to the legislation.

Many firms are already discussing how they will adapt.

“It’s not a simple process to move things away. It’s incredibly tight and controlled from a regulatory perspective, and it would normally take three to five years,” McLoughlin said. “You’re not producing pencils. These are very tightly controlled programs that are regulated by the FDA.”

First introduced in 2024, the Biosecure Act became a concern for pharma companies as the legislation forced drug manufacturers to cut ties with a handful of Chinese biotech companies over alleged national security concerns. The companies explicitly named were BGI Genomics, MGI Tech Co., WuXi Biologics, WuXi AppTec and Complete Genomics.

This summer, a new version of the act was brought to Congress by Sens. Bill Hagerty, R-Tenn., and Gary Peters, D-Mich.

While the act that passed no longer explicitly names these companies, it does focus on Chinese entities. It also includes a waiver process and an appeal request for designated companies of concern.

“The key takeaway with all of these changes is that the drafters have added additional due process protections,” said Bobby McMillin, managing director of Arnold & Porter, an international regulatory law firm based in Washington.

Big pharma lobbyists have worked to ensure this iteration included an avenue to appeal.

“There can be extremely valid reasons why a particular company was selected, but there may be no alternative because of the nature of what you’re doing with the science,” McLoughlin said.

Jeff Stein, CEO of Cidara, manufactured drugs for his clinical trials in WuXi, China — and he says that’s the status quo. Today, most pharmaceutical products are manufactured in WuXi and negotiated through relatively “straightforward contracts,” he said.

McMillin said he expects that the Biosecure Act won’t be the end of this discussion,

“Different policymakers have different objectives,” he said. “For some, it’s a narrow concern about national security. For others, they would like to see a complete decoupling. As the administration releases guidance and regulations, we will get a better sense of how strictly the law will be implemented.”