Two big things for biotech trade and investment

January 16, 2020
Some positive news today for the future of biotech trade and investment. First, the United States and China signed the “phase one” agreement, and we have details on what it means for biotech. Then, we take a look at the final CFIUS regulations, which, thanks to our…
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Some positive news today for the future of biotech trade and investment. First, the United States and China signed the “phase one” agreement, and we have details on what it means for biotech. Then, we take a look at the final CFIUS regulations, which, thanks to our advocacy work, turned out to be much better for the industry and our ability to attract investment in new cures. Here are 771 words, which you can read in 3 minutes, 51 seconds.

The US and China stand down. Here’s what we know.

No, the U.S.-China trade war isn’t quite over yet—but the parties signed a “phase one” agreement in Washington yesterday, largely seen as a positive step towards addressing critical trade issues, especially for biotechnology. 

What it does: “The deal commits China to do more to crack down on the theft of American technology and corporate secrets by its companies and state entities, while outlining a $200 billion spending spree to try to close its trade imbalance with the U.S.,” reports Bloomberg

What it doesn’t do: “It does nothing to address areas like what U.S. authorities have long claimed is China’s state-backed hacking of American companies and government institutions. Nor does it require the Asian power to reform the vast web of state subsidies that form the spine of its model of state capitalism and have helped fuel the rapid growth of Chinese companies internationally,” continues Bloomberg

What about tariffs? They stay in place for now, though there won’t be any escalations—and if China behaves and holds up their end of the bargain, Trump said he’ll think about removing them in phase two.

What’s in it for biotech? While we’re still reviewing the details, we’re pleased to see the agreement includes important commitments for agricultural biotechnology, biopharma, and GM microorganisms—including an agreement from China to speed up review of products like genetically modified seeds and crops, which face long delays—as well as commitments related to forced technology transfer and IP.

But one caveat: At the crux of the deal, China’s theoretically agreed “to purchase at least an additional $12.5 billion worth of agricultural goods in 2020 and at least $19.5 billion over the 2017 level of $24 billion in 2021”—but commitments are based on “market conditions,” explains Reuters. Basically, TBD whether China buys or does what it says it will and what that means for the next phase.

To sum it up: “What we really need to see is how China implements this,” said Matt O’Mara, BIO’s VP for International Affairs.

 
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The CFIUS regs are here

In addition to the trade deal, which includes provisions related to biopharmaceuticals, we’ve got more positive news for the industry: the announcement of the final regulations regarding the ability of CFIUS to block investment in our industry, which addressed many of our concerns and will create more opportunities for investment in new cures.

The details: Treasury issued final regulations to “strengthen and modernize” the Committee on Foreign Investment in the United States (CFIUS), which reviews transactions involving foreign investment as they relate to national security.

This was required by the Foreign Investment Risk Review Modernization Act (FIRRMA), and the rules go into effect on February 13, 2020.

What’s biotech got to do with it? The regulations proposed in September would’ve unnecessarily inhibited investment in U.S. biotech companies by allowing CFIUS to review and block foreign investment in U.S. companies dealing with “critical technologies” or “sensitive personal data,” including genetic data.

However, the proposed rules were unnecessarily broad. While the categories of identifiable data had several scope limitations, genetic information was covered without any limitations. As BIO pointed out, covered genetic information should also be tailored to national security risks. For example, genetic data that could be de-identified presented no greater national security risks than other types of anonymized data.  

Treasury listened. They amended the final regs to significantly change the treatment of genetic information, addressing many of our concerns by more appropriately tailoring the definition of SPD. 

The bottom line: One of our main concerns about the proposed regulations was the broad definition of “genetic information.” The final regulations address many of our concerns and significantly pare back the types of genetic data covered by CFIUS where there is limited national security risk—which is positive news for investment in the industry and new cures.

Learn more at www.bio.org/CFIUS.

 
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President Trump’s Thursday: There’s not much on the official agenda besides an intelligence briefing then “announcing guidance on constitutional prayer in public schools,” which he said will be a “big” action…even though prayer in public schools is already legal. But we know today will be all about celebrating his two trade wins as he faces the impeachment trial.

What’s Happening on Capitol Hill: The House and Senate are in session, and the Senate’s expected to pass the U.S.-Mexico-Canada Agreement (USMCA) today with “overwhelming bipartisan support,” says POLITICO. (There are pros and cons for biotech in the updated NAFTA, which we’ll explore in a future edition.) Then, the impeachment trial will sort of begin, with some paperwork and Chief Justice John Roberts swearing in the Senators before they head home for the weekend.

 
 
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