Congress targets Chinese influence in health tech. It could come with tradeoffs
WASHINGTON — A California biotechnology company that helps doctors detect genetic causes of cancer is among drugs that could be banned from the U.S. market because of ties to China, raising potential trade-offs between health innovation and a largely bipartisan pressure in Congress to counter Beijing’s global influence.
The competition among the world’s superpowers is hurting Complete Genomics, whose employees, some in white lab coats with American flag patches, spin samples in test tubes and huddle around computers in San Jose. The founder and chief scientific officer said he’s frustrated that geopolitics is getting in the way of science.
“It’s just a loss for research and for the industry,” said Radoje Drmanac.
The U.S. House of Representatives this week overwhelmingly passed the BIOSECURE Act, which cites national security as grounds for preventing federal funds from benefiting Complete Genomics and four other companies with ties to China. They work with U.S. pharmaceutical companies to develop new drugs or help doctors diagnose diseases.
It is part of a comprehensive package of accounts aimed at countering China’s influence and power, particularly in the technology space, which Congress largely supported this week. The biotech measure, which passed the House of Representatives by a vote of 306-81, now heads to the Senate.
Supporters say the legislation is needed to protect Americans’ health care data, reduce dependence on China in the medical supply chain and ensure the U.S. has an edge in biotechnology, which both countries consider critical to their economies and security.
Opponents say the bill, which would ban companies with ties to China from working with firms that receive U.S. government money, would slow clinical trials and hamper the development of new drugs, raise drug costs and hurt innovation.
Rep. Brad Wenstrup, an Ohio Republican and the bill’s sponsor, said the House’s passage was the first step in protecting Americans’ genetic data and reversing the trend of reliance on Beijing for genetic testing and basic medical supplies.
“For too long, U.S. policy has failed to recognize the dual economic and national security threats posed by China’s dominance of certain markets and supply chains,” he said.
Rep. James Comer, a Kentucky Republican who chairs the House Oversight Committee, said it is imperative to protect American interests before these companies “become more embedded in the American economy, university systems and federal contracting base.”
Rep. Jim McGovern, D-Mass., argued that the legislation he opposed should not name specific companies without due process. He said, “If one of those five companies doesn’t belong on the list, too bad, Congress doesn’t like you, and that’s that.”
Drmanac of Complete Genomics, a subsidiary of Chinese company MGI, said the privacy of Americans’ personal data is not an issue because his company’s instruments are only connected to local servers in the U.S.
The company also argues that Congress should apply data protection standards and requirements broadly rather than targeting a small group of companies.
Some analysts see the issue as more a matter of competition within the industry than a matter of protecting people’s personal data from the Chinese government.
“You want to make sure that American pharmaceutical companies and biotech companies are on an equal footing in terms of their ability to compete, both in the U.S. marketplace and outside of it,” said Andrew Reddie, a professor of public policy at the University of California, Berkeley, who researches the intersection of technology, politics and security and founded the Berkeley Risk and Security Lab.
Complete Genomics is listed in the legislation along with BGI, MGI, WuXi AppTec and WuXi Biologicis. MGI is a spin-off of BGI, a heavyweight genomics company based in China that offers genetic sequencing services for research purposes in the US.
BGI Group called the bill “a false flag that attacks companies under the pretext of national security” and said: “We strictly adhere to the rules and laws, and we do not access Americans’ personal information in any of our work.”
MGI said the bill “would only serve to stifle competition and promote a monopoly on DNA testing.”
WuXi AppTec and WuXi Biologics operate as contractors providing research, development and manufacturing services to U.S. drugmakers. Such services are considered critical for U.S. pharmaceutical companies to develop and manufacture new drugs.
WuXi AppTec said it and others in the industry are concerned about the bill’s impact on biotech innovation, drug development, patient care and health care costs. It urged the Senate not to move forward without addressing “these serious implications.”
Dozens of U.S. biotech companies have cited the BIOSECURE Act as a concern in filings with the U.S. Securities and Exchange Commission, saying it could have major implications for the pharmaceutical supply chain because of the industry’s extensive partnerships with Chinese companies.
Pharmaceutical company Eli Lilly says its third-party suppliers are “sometimes the only global source for a compound,” but the company has worked to bring some of the development and manufacturing closer to home, which typically takes several years “due to the scientific and regulatory complexities and the need to ensure process and product quality.”
BIO, the largest advocacy group for U.S. biotech companies and research institutions, supports the bill, saying it underscores the industry’s national security interests.
The bill, which gives U.S. companies eight years to cut ties with Chinese firms, has provided “a reasonable time frame” for decoupling, said the group’s CEO John Crowley.
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Daley reported from San Jose.