Congress targets Chinese influence in health tech. It could come with tradeoffs

WASHINGTON — A California biotechnology company that helps doctors detect genetic causes for cancer is among those that could be cut out of the U.S. market over ties to China, underscoring the possible tradeoffs between health innovation and a largely bipartisan push in Congress to counter Beijing's global influence.

The competition between the world's superpowers is hitting Complete Genomics, whose employees, some in white lab coats stitched with U.S. flag arm patches, spin samples in test tubes and huddle around computers in San Jose. Its founder and chief scientific officer said he's frustrated that geopolitics is interfering with science.

“It’s just a loss for the research and for the industry,” Radoje Drmanac said.

The U.S. House this week overwhelmingly passed the BIOSECURE Act, which cites national security in preventing federal money from benefiting Complete Genomics and four other companies linked to China. They work with U.S. drugmakers to develop new medications or help doctors diagnose diseases.

It is part of a sweeping package of bills aimed at countering China’s influence and power, especially in technology, that Congress largely backed this week. The biotech measure, which cleared the House with a 306-81 vote, now heads to the Senate.

Supporters say the legislation is necessary to protect Americans’ health care data, reduce reliance on China in the medical supply chain and ensure the U.S. gains an edge in the biotech field, which both countries call crucial to their economy and security.

Opponents say the bill, which would ban China-linked companies from working with firms that receive U.S. government money, would delay clinical trials and hinder development of new drugs, raise costs for medications and hurt innovation.

Rep. Brad Wenstrup, an Ohio Republican and the bill's sponsor, said House approval was the first step in protecting Americans’ genetic data and reversing the trend of relying on Beijing for gene testing and basic medical supplies.

“For too long, U.S. policy has failed to recognize the twin economic and national security threats posed by China's domination of particular markets and supply chains,” he said.

Rep. James Comer, a Kentucky Republican who chairs the House Oversight Committee, said it's necessary to protect U.S. interests before these companies “become more embedded in the U.S. economy, university systems and federal contracting base.”

Rep. Jim McGovern, D-Mass., argued that the legislation, which he opposed, should not name specific companies without due process, saying, “If one of these five companies does not belong on the list, too bad, Congress doesn't like you, and that's that."

Drmanac of Complete Genomics, a subsidiary of China-based company MGI, said the privacy of Americans' personal information is not a concern because his company’s instruments are only connected to local U.S. servers.

The company also has argued that Congress should broadly apply data protection standards and requirements rather than targeting a small subset of companies.

Some analysts see the issue as more about industry competition than protecting people’s personal information from the Chinese government.

“You want to make sure that American pharmaceutical companies and biotechnology companies are on an even footing in terms of their ability to compete both inside the U.S. market and then also abroad,” said Andrew Reddie, a public policy professor at the University of California, Berkeley, who studies 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 Biologics. MGI is a spinoff of BGI, a heavyweight genomics company based in China that offers genetic sequencing services for research purposes in the U.S.

BGI Group called the bill “a false flag targeting companies under the premise of national security" and said, "We strictly follow rules and laws, and we have no access to Americans' personal data in any of our work.”

MGI said the bill would “serve only to stifle competition and foster a monopoly in DNA testing.”

WuXi AppTec and WuXi Biologics work as contractors providing research, development and manufacturing services for U.S. drugmakers. Such services are considered crucial for American pharmaceutical companies to develop and make new drugs.

WuXi AppTec said it and others in the industry are concerned about the bill’s impact on biotechnology innovation, drug development, patient care and health care costs. It urged the Senate not to move forward without addressing “these serious consequences.”

In filings with the U.S. Securities and Exchange Commission, dozens of U.S. biotech companies have flagged the BIOSECURE Act as a concern, saying it could have major effects on the pharmaceutical supply chain because of the industry's extensive partnerships with Chinese companies.

Drugmaker Eli Lilly says its third-party suppliers are “sometimes the sole global source for a component” but it has been working to move some development and manufacturing closer to home, which typically takes several years “due to scientific and regulatory complexity 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 reinforces the industry’s national security imperative.

The bill, which gives U.S. companies eight years to break ties with Chinese firms, has provided “a reasonable timeframe” for the decoupling, group CEO John Crowley said.