U.S. Proposes Investment Restrictions on China's Biotech Sector

The Treasury Department proposed rules Thursday that would restrict U.S. investment in China's biotechnology sector. The restrictions would be the pharmaceutical industry's first limits on foreign investment if the proposal becomes final. The proposal must become final by March under the law.

The proposed prohibitions would cover transactions involving certain biologically derived compounds or materials, biomanufacturing equipment and facilities, and biological design and sequencing technologies. The proposal would also prohibit investment in software or equipment used for automated scientific discovery or experimentation. Brain-computer interfaces and bioinformatics tools would also fall under the investment ban.

The drug industry spent months lobbying against strict investment restrictions before Treasury issued the proposal. Pharmaceutical companies and biotechnology investors increasingly seek drug candidates from developers in China to replenish product pipelines and fund promising early-stage molecules. Pfizer, Bristol Myers Squibb and Roche have signed licensing agreements worth billions of dollars with companies in China this year. Some agreements allow multinational companies and companies in China to jointly develop and commercialize drug candidates. Those development activities are important to Beijing's ambition to lead the global biotechnology sector.

A Treasury official said the proposal does not cover licensing agreements. The official declined to explain whether or how the restrictions would cover co-development and co-marketing agreements. China's government has also moved to strengthen export regulation of biopharmaceutical technologies to improve China's competitive position against foreign rivals. Beijing proposed prohibiting sales of biopharmaceutical innovations to foreign buyers last week, including cell-and-gene therapy technologies developed in China.

John Crowley, CEO of the biotechnology advocacy group Biotechnology Innovation Organization, argued that restrictions cannot produce success. Crowley urged Treasury to avoid an excessively broad approach that would create uncertainty for innovators and investors and could unintentionally weaken U.S. biotechnology competitiveness.

The Partnership for Safe Medicines filed a citizen petition with the Food and Drug Administration this week opposing compounding of certain peptides. The drug-safety advocacy group alleges that compounding the peptides violates the law and creates safety risks. The group's members include state pharmacy associations and PhRMA. The petition seeks to obstruct a forthcoming policy change concerning unapproved peptide products.

The Partnership for Safe Medicines urged the FDA not to place seven peptides reviewed at a July advisory committee meeting on the bulks list for retail pharmacy compounding. The group also urged the FDA not to permit compounding of those peptides through enforcement discretion. The White House is reviewing an interim access policy for certain peptides promoted for longevity and muscle growth. Health Secretary Robert F. Kennedy Jr. has promoted those peptides.

The Partnership for Safe Medicines also asked the FDA not to use the advisory committee meeting as a foundation for future rulemaking. The group alleged inadequate conflict-of-interest vetting of committee members. The group argued that evidence presented by FDA scientists does not justify allowing compounding. The petition argued that a contrary decision would lack a reasoned basis and violate the Administrative Procedure Act's requirements for reasoned decision-making.

FDA rules permit anyone to petition the agency to take or refrain from taking regulatory action. The FDA is expected to answer petitions within six months, although detailed responses often take years. The Partnership for Safe Medicines said petitions place scientific, legal and procedural arguments in the administrative record for consideration before agency action.

Groups supporting peptides have met or are scheduled to meet White House regulatory staff this week and next about the interim access policy. The groups include the American Academy of Peptide Medicine, the Alliance for Pharmacy Compounding and Hims and Hers.