What is it?
The BIOSECURE Act is a bill seeks to stop firms that receive federal funds from using select Chinese service companies. These include the genomics firms BGI, MGI, and Complete Genomics; and WuXi AppTec and WuXi Biologics. These firms are deemed by the bill as foreign “companies of concern”.
Why does it matter?
Many large and small pharmaceutical firms rely on contract manufacturers in China to actually make the drugs they have invented. Consider the contract manufacturer WuXi, for instance. The Economist reports:
WuXi is to big pharma what Foxconn, the Taiwanese assembler of iPhones, is to Apple—a high-quality supplier entrusted with sensitive IP. It says its clients include the world’s 20 biggest drugmakers. Dozens of American pharma firms have notified investors that, should the BIOSECURE bill pass, they may be unable to meet demand for their products or to complete clinical trials on schedule.
Would current contracts that pharmaceutical firms have with these “companies of concern” be impacted?
FiercePharma reports that at least initially, existing contracts (including option years) would be grandfathered in and would be considered exempt from national security review. However, firms would have until Jan. 1, 2032 to sever these ties.
The nearly eight-year period of immunity matches the timeline BIO’s members said they would need to switch away from Chinese contract research and manufacturing service providers.
How hard is it to change manufacturers?
Clearly this would not be an easy process in the short-run. In addition to logistical challenges. There are regulatory challenge as well. JD Supra reports:
…even if an attractive alternative partner can be identified, the process for qualification and validation is complex, costly, and will, at a minimum, likely trigger reporting requirements to the U.S. Food and Drug Administration (FDA) for changes that will impact manufacturing specifications. The qualification process can include:
* site audits, including evaluating existing Current Good Manufacturing Practice (cGMP) status;* evaluating potential impact of the change on a product; and
* validation studies,
The Economist reports that some drugmakers are considering switching to suppliers from India. Doing so, however, would require approval from American regulators, “who have longstanding concerns about Indian companies’ lax quality standards.”
Bottom line, how much will this legislation cost life science companies?
A lot. Again, the Economist weighs in:
Jefferies, an investment bank, reckons that replacing Chinese capacity would take big Western drug firms at least five years and almost certainly end up costing more. For biotech startups, which tend to rely on Chinese partners with proven records to save time and money on research and manufacturing, the BIOSECURE bill could be an existential threat. According to a survey conducted in March by BioCentury, a consultancy, biotech bosses and their investors expect a slowdown in drug development in the event of its passage.