Pharmaceutical companies seeking new drug prospects in China face heightened intellectual property risks, experts said on July 28, as U.S. lawmakers increase scrutiny through the BIOSECURE Act.
Jonathan Barnett, an intellectual property lawyer and co-lead of the Eira Initiative at the Berkeley Policy Institute, said that supply chain security became a concern during the COVID pandemic. “The People’s Republic of China has a documented history of weaponizing supply chain positions in markets where they’re dominant, and I think that’s the underlying concern coming out of D.C. about these deals.”
The BIOSECURE Act is prompting the U.S. government to create a list of Chinese manufacturers that companies should avoid using. Many licensing deals between multinational pharmaceutical firms and Chinese biotechs involve assets intended for the U.S. market but not yet at the manufacturing stage. Barnett noted there is a downstream risk if initial manufacturing was conducted by a company later banned by U.S. authorities, which could force pharmaceutical firms to find new manufacturers or face litigation.
Doug Bucklin, patent attorney with Volpe Koenig, said it is important for patent attorneys to scrutinize intellectual property protections from their foundation across all regions involved in business activities. He highlighted differences between U.S. and Chinese patent rules: “You want to make sure that your application from the foundation was prepared properly.” Bucklin explained that while both countries have similar rules, ownership defaults differ—companies automatically own inventions made by employees in China but not necessarily in the United States.
Bucklin also addressed complications arising from BIOSECURE Act restrictions on working with certain Chinese entities designated as biotechnology companies of concern (BCC). “If you produce a therapeutic agent, and you have a CRO or CDMO that’s doing the workload on that biologic, and they become a BCC, you’re going to have to transition away from that company,” he said.
Barnett stated he does not believe lawmakers intend to ban innovative products but aim instead to protect consumers while avoiding excessive reliance on Chinese manufacturing sectors: “There’s innovation coming out of China, and so the question at the business level is how to take advantage of that while understanding the mix of business, legal and geopolitical risk.”
Both experts agreed it remains critical for companies entering partnerships involving China to understand local laws regarding authorization and legal standing before proceeding.
