S-5316-119
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Sponsored by Pete Ricketts (R-NE)
What it does
This bill would amend the Defense Production Act of 1950 to add biotechnology—including pharmaceutical products, biological products, and therapeutic compounds—to the list of "prohibited" and "notifiable" technologies subject to outbound investment screening. It would direct the Treasury Secretary to issue a rule within one year further defining "biotechnology" for this purpose, in consultation with HHS, DOD, and the Director of National Intelligence, and requires the Secretary of Defense to report within 60 days on whether U.S. capital flows into China's biotechnology sector harm national security.
Who benefits
U.S. biopharmaceutical and biotech firms competing with Chinese counterparts, who may face less competitive pressure from licensing deals that transfer U.S. intellectual property abroad; national security agencies (DOD, ODNI) gaining new screening tools; domestic biomanufacturing and clinical research sectors that could see increased U.S.-based investment if capital is redirected away from China.
Who is hurt
U.S. pharmaceutical and biotech companies that currently profit from licensing agreements, joint ventures, and equity deals with Chinese firms, who would face new regulatory review or outright prohibition on some transactions; investors and venture capital firms active in cross-border biotech deals; potentially patients if reduced cross-border collaboration slows drug development timelines or increases costs.
Supporters argue
Supporters argue that the $136 billion in 2025 cross-border biotech licensing deals with China represents a rapid transfer of pharmaceutical innovation capacity to entities under Chinese government direction, creating strategic dependency risks similar to those already recognized for semiconductors and rare earth elements. They contend that since biotechnology has dual-use military applications, treating it like other sensitive technologies under the Defense Production Act is a logical extension of existing bipartisan efforts, including the 2026 BIOSECURE Act provisions.
Opponents argue
Opponents argue that expanding outbound investment screening to biotechnology could chill legitimate scientific collaboration and slow drug development by adding regulatory friction to routine licensing and research partnerships that benefit U.S. patients. They contend the broad definitions of "biotechnology" and "therapeutic compounds" risk sweeping in ordinary commercial transactions, and that Treasury's rulemaking discretion under Section 4 could be applied unpredictably, creating compliance costs and uncertainty for an industry that depends on international collaboration.
Constitutional context
Congress has broad authority under the Commerce Clause (Art. I, §8, cl. 3) to regulate foreign commerce and investment, and this bill operates through that authority combined with national security powers rather than the war powers framework typically at issue in defense legislation; no landmark case directly constrains this type of outbound investment screening, though courts assessing Treasury's implementing rule post-Loper Bright would independently review whether the statutory delegation supports the rule's scope.
Checks and balances
Congress expands executive branch authority by directing the Treasury Secretary to define and implement biotechnology screening rules, with required interagency consultation (HHS, DOD, ODNI) and congressional reporting requirements serving as oversight checks, but courts could still review Treasury's rule for exceeding statutory bounds.
Historical precedent
The 2023 Executive Order on outbound investment screening and the 2026 BIOSECURE Act (Public Law 119-60) established similar frameworks targeting semiconductors, artificial intelligence, and biotechnology-related national security risks from China, making this bill a direct extension of that existing regulatory approach.