Regulatory & Policy

US bill could subject China-to-US pharma licensing deals to national security controls

Category: Science & Innovation Policy | Regulatory Body: U.S. Congress (Senate) | Geography: United States | Policy Instrument: Legislation

Edited by Robert McTiernan··3 min read
US bill could subject China-to-US pharma licensing deals to national security controls

Senators Elissa Slotkin (D-MI) and Pete Ricketts (R-NE) introduced the Biotech Investment National Security Act (BINSA) on August 6, 2026, a bipartisan bill that would bring pharmaceutical licensing deals, joint ventures, and equity investments involving Chinese entities under the federal outbound investment screening framework established by the Comprehensive Outbound Investment National Security (COINS) Act. The legislation amends Title VIII of the Defense Production Act of 1950 to classify pharmaceutical development, biologics manufacturing, and clinical research capabilities as "prohibited" or "notifiable" technologies when transferred to covered foreign persons — principally entities subject to the direction or control of the People's Republic of China (PRC). Companion legislation was introduced in the House in June 2026 by Representatives John Moolenaar (MI-02) and Debbie Dingell (MI-06).

What it covers

BINSA would formally add biotechnology — defined to encompass pharmaceutical products, biological products, therapeutic compounds, drug discovery platforms, clinical research and development (R&D) capabilities, biologics manufacturing, and related intellectual property and know-how — to the list of sectors subject to federal outbound investment screening. Qualifying transactions could become prohibited or subject to Treasury notification requirements, depending on the implementing regulations, with the Department of Health and Human Services (HHS), the Department of Defense (DoD), and the Director of National Intelligence (DNI) set to define the precise parameters of the biotechnology sector.

The bill excludes agricultural biotechnology, industrial fermentation unrelated to pharmaceutical production, and basic academic research with no direct therapeutic application. Separately, the Secretary of Defense would be required to submit a report within 60 days of enactment assessing whether US capital flows into Chinese biotechnology — including through licensing transactions — negatively affect national security and military readiness.

Why it matters

The bill's congressional findings cite approximately USD 136 billion in cross-border out-licensing transactions between US and European pharmaceutical companies and Chinese biotechnology firms in 2025 alone — a figure the legislation characterizes as an accelerating transfer of pharmaceutical innovation capacity to entities under PRC direction. However, it should be noted that much of the recent dealmaking boom has involved Chinese biotechs licensing internally developed drug candidates to US and European companies — meaning IP rights flow westward while capital flows to China.

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If enacted, BINSA could reach pharmaceutical licensing transactions in both directions between US companies and covered Chinese entities. Notably, the bill would bring certain biotechnology transactions involving covered foreign persons — including pharmaceutical licensing — within the prohibited and notifiable transaction framework established under the Defense Production Act. The legislation also directs Treasury to give particular consideration to transfers of pharmaceutical IP, drug discovery platforms, clinical development capabilities, and biologics manufacturing know-how to covered foreign persons.

What to watch

  • Legislative pathway: BINSA has been referred to committee in the Senate; whether it advances independently or is folded into a broader vehicle such as the FY2027 NDAA — as the BIOSECURE Act was — will determine its timeline. House companion legislation is in place, but floor action is not assured.
  • Treasury rulemaking: The one-year rulemaking deadline grants Treasury significant discretion to determine which transaction types and technology categories fall within the prohibited versus notifiable tiers. The notice-and-comment process will be the operative compliance threshold for industry, and companies with China-facing deal pipelines should consider engaging during that period.
  • DoD national security report: The 60-day Defense Department assessment of US capital flows into Chinese biotech — which may include a classified annex — could provide a public evidentiary basis for accelerating or broadening the bill's scope, and may itself affect deal-making before any legislation is enacted.
  • Near-term deal scrutiny: Even absent enactment, the bill's introduction — alongside the existing BIOSECURE Act framework — is likely to increase legal and reputational scrutiny on China-facing licensing and co-development transactions. The rulemaking process could therefore become an important focus for pharmaceutical companies and investors with China-facing licensing and investment strategies.

US Senate press release: "Slotkin, Ricketts Introduce Bipartisan Legislation to Keep Biotech Industry in America, Not China" — published August 6, 2026. https://www.slotkin.senate.gov/2026/08/06/slotkin-ricketts-introduce-bipartisan-legislation-to-keep-biotech-industry-in-america-not-china/

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