US regulatory shifts in biotech and pharma

US policy is becoming increasingly complex for industries like biotechnology and pharmaceuticals. With developments like the Biosecure Act and a recent executive order impacting the dynamics of regulatory oversight, the US government appears to be focused on independence and domestic growth – but at what cost for the healthcare industry and patients? 

The Biosecure Act is an initiative by the United States Congress to protect its national interests and make the US more independent. It also aims to protect the US from the People’s Republic of China (PRC) and its ambitions in the biotechnology sector, which are driven by a strategy that closely integrates military and civilian efforts. 

This approach, often referred to as military-civil fusion, aims to enhance the nation’s military capabilities by utilising both public and private-sector advancements. A critical concern arising from China’s strategy is related to data security. Chinese laws require companies to share information with the government, which creates significant espionage risks for other nations. This fusion of sectors not only boosts China’s capabilities in biotechnology but also presents challenges for global data security and industry competition, feeding into the broader geopolitical dynamics. 

The US government has identified specific PRC-linked biotechnology companies as national security threats, leading to the creation of the Biosecure Act.  

The Biosecure Act aims to implement restrictions on the procurement of biotechnology equipment and/or services from specified companies with ties to the PRC for entities that receive federal funds.  These restrictions are designed to ensure that US funds are not used to support potential adversaries in biotechnology. Waivers are available under certain conditions.  

At the time of publication of this blog post, the act has been received by the senate and referred to the Committee on Homeland Security and Governmental Affairs. 

Impact of the Biosecure Act on biotech companies 

Some ramifications are inevitable. Supply chains could face disruption, forcing pharmaceutical companies to seek alternative suppliers, which could in turn lead to increased costs. Companies may also encounter increased compliance expenses as they navigate these new regulations.

Next steps for companies receiving federal funds 

As far as immediate actions are concerned, start by reviewing all contracts and procurement processes to ensure compliance with the Biosecure Act. This is a priority to prevent any inadvertent violations.  

Conduct a thorough audit of the company’s supply chain, identifying any potential links to entities associated with the PRC. This audit will lay the foundations for developing a robust compliance strategy that aligns with the Biosecure Act’s requirements and ensuring that your operations meet new regulatory standards. 

Analyse potential fallback solutions for your supply chain and operational models, considering alternative sourcing options. Establish relationships with suppliers and service providers that have no connections to PRC entities, thus securing a more resilient supply chain. 

Recommendations for all companies collaborating with PRC-linked companies 

Furthermore, the implementation of practices that address potential espionage and data security threats will be vital in safeguarding your business interests. It’s also important to actively engage with key stakeholders, including suppliers, partners and industry regulators in order to successfully navigate this new regulatory landscape. 

An executive order issued on 18 February 2025 aims to bolster oversight of independent regulatory agencies by the President.  

The executive order mandates that all executive departments and agencies, including independent regulatory agencies, submit significant regulatory actions for review by the Office of Information and Regulatory Affairs (OIRA) within the Executive Office of the President before publication. 

The executive order requires that all proposed and final significant regulatory actions be reviewed by OIRA before publication, effectively ensuring that regulations cannot be issued without presidential oversight. 

By requiring these agencies to submit significant regulatory actions for presidential review, the order seeks to align their actions with the Trump administration’s broader policy goals. This could lead to more rigorous scrutiny of pharmaceutical regulations and bring them into line with administrative priorities. 

The executive order further states that all federal employees must follow the President’s and Attorney General’s interpretation of the law, eliminating legal independence. 

Consequently, the Federal Drug Administration (FDA) – as an independent agency – may also experience changes in its operational dynamics and regulatory timelines as a result of this executive order. 

The implications of this executive order are twofold. On the one hand, there could be improved efficiency in regulatory processes, benefiting pharmaceutical companies by expediting certain approvals. On the other, increased oversight could lead to stricter regulations, posing challenges for companies in terms of compliance costs and approval timelines for certain medicines.  

Companies should closely monitor and assess any regulatory publications from the FDA (e.g. with agentic AI tools) and anticipate the potential impact of the administration’s policy goals on their product portfolio (primarily medicines indicated for reproductive health, psychotropic medications and certain vaccines, amongst others).