Biotechnology and National Security: Washington’s Expanding Scrutiny of the Life Sciences

Biotechnology is increasingly viewed in Washington through a national security lens. What was once treated primarily as a matter of public health and commercial competition is now the subject of an expanding web of investment restrictions, export controls, data-transfer prohibitions, and procurement bans. For companies operating in the pharmaceutical, biotechnology, and broader life science sectors, the regulatory landscape is shifting quickly, and several measures under discussion in Washington could materially expand the universe of restricted activities and counterparties. This Legal Update summarizes the principal biotechnology-related national security concerns motivating policymakers, surveys the legal authorities currently in force, and previews potential measures which could affect the industry in the near future.

Background

The increased US scrutiny of biotechnology transactions has coalesced around three topics: supply chain dependence, biotechnology competition, and biosecurity.

Supply Chain Dependence: The People’s Republic of China (“PRC”) currently commands what some observers have described as a “choke point” of the world’s supply of pharmaceutical ingredients. For example, China dominates the upstream inputs for essential medicines, controlling the raw or key starting materials for 94% of amoxicillin, 74% of heparin, and 70% of acetaminophen. This concentration means that a deliberate cutoff, export-control retaliation, or even a natural disruption at a small number of Chinese facilities could ripple quickly through the U.S. public health system.

Biotechnology Competition: Policymakers worry that China could surpass the United States in advanced biotechnology and then exploit that lead. A 2025 report from the congressionally-chartered National Security Commission on Emerging Biotechnology (“NSCEB”) warns that “[d]rone warfare will seem quaint if we are faced with genetically enhanced PLA super-soldiers with fused human and artificial intelligence. [...] [I]f China gets there first, no matter how fast we run, we will never catch up.” In a similar vein to supply chain dependence, the NSCEB Report also contemplates the prospect that China could develop life-saving biotechnology first and then leverage the resulting dependency for geopolitical ends. Highlighting these concerns, in June 2026, Chairman John Moolenaar (R-MI) of the House Select Committee on the Chinese Communist Party (“House CCP Committee”) sent letters to various US pharmaceutical companies, requesting information on their reported clinical trials in China, including those conducted at hospitals affiliated with the PRC military.

Biosecurity: US policymakers are also concerned about the PRC government’s potential access to US biometric data, genomic data, health data, and other sensitive biodata. Separately, there is heightened scrutiny of biolabs (especially PRC biolabs), a concern underscored by the House CCP Committee report on an illegal biolab discovered in California. The facility, run by PRC nationals, was found to house infectious agents and laboratory mice without required licensing or biosafety oversight. The episode crystallized concern that adversarial actors could obtain or mishandle dangerous pathogens on US soil.

Current Authorities

A number of legal authorities constrain dealings with PRC biotechnology firms and the cross-border movement of sensitive biological data.

Targeted Restrictions: Entity List and CMIC List.

The US government employs several targeted, list-based restrictions on dealings with specifically named parties. These include the Entity List and the Non-SDN Chinese Military-Industrial Complex Companies (“NS-CMIC”) List: the former restricts certain transfers of goods and technology, and the latter restricts certain financial investments.

The Entity List is maintained by the Bureau of Industry and Security (“BIS”) at the Department of Commerce, and imposes a license requirement on the export, reexport, or in-country transfer of all items subject to the Export Administration Regulations (“EAR”) to Entity List entities. Some Chinese biotechnology companies and research institutions have been listed. For example, in December 2021, BIS added the Chinese Academy of Military Medical Sciences (“AMMS”) and 11 of its research institutes to the Entity List based on information that they “use biotechnology processes to support Chinese military end uses and end users, to include purported brain-control weaponry.” The Entity List’s extraterritorial reach has been a challenge for foreign companies doing business with China due, in part, to the breadth of items subject to its jurisdiction.

The NS-CMIC List is maintained by the Department of the Treasury’s Office of Foreign Assets Control (“OFAC”). US persons are prohibited from purchasing or selling the publicly traded securities of Chinese companies designated as NS-CMIC entities, and these restrictions apply to several Chinese biotechnology companies designated as NS-CMIC entities. These designations have included, per OFAC, “PRC entities that contribute to Beijing’s efforts to develop and deploy biotechnology and other technologies for military applications and human rights abuses.”

Data Transfer Restrictions

The Department of Justice’s Bulk Sensitive Data Rule implements Executive Order 14117, “Preventing Access to Americans’ Bulk Sensitive Personal Data and United States Government-Related Data by Countries of Concern.” The rule came into effect on April 8, 2025. The rule prohibits covered data transactions with countries of concern—China, Cuba, Iran, North Korea, Russia, and Venezuela—involving bulk human `omic data or biospecimens, with a threshold as low as 100 US persons for `omic data and restricts transactions involving bulk personal health data affecting more than 10,000 US persons. Notably, these prohibitions apply regardless of whether the data has been anonymized, pseudonymized, de-identified, or encrypted, reflecting a judgment that modern re-identification techniques can defeat such measures. The rule distinguishes between outright “prohibited” transactions and “restricted” transactions that may proceed only if specified cybersecurity and compliance safeguards are met, and it obligates covered businesses to implement diligence and recordkeeping programs.

The Protecting Americans’ Data from Foreign Adversaries Act (“PADFAA”), enacted in 2024 and implemented by the Federal Trade Commission, prohibits data brokers from selling, licensing, renting, trading, transferring, or otherwise making available the personally identifiable sensitive data—including health, biometric, or genetic data—of US individuals to foreign adversary countries or entities they control. While applicable to a narrower scope of transactions than the DOJ rule, PADFAA contains no bulk threshold, so even smaller transfers may fall within its reach.

2026 NDAA Biotechnology Provisions

The BIOSECURE Act was enacted as Section 851 of the FY 2026 National Defense Authorization Act (“NDAA”). The Act prohibits the federal government from (1) procuring or obtaining any biotechnology equipment or service from a biotechnology company of concern (“BCC”), or (2) entering into, extending, or renewing a contract with any entity that uses biotechnology equipment or services from a BCC in the performance of a federal contract. Notably, a BCC can be any company that is included on the Department of War’s List of PRC Military Companies Operating in the United States (the “1260H List”) that is determined to be involved in manufacturing, distribution, provision, or procurement of biotechnology equipment or services. The most recent version of the 1260H List includes several PRC biotechnology companies, one of which is challenging its designation in federal court. US biotechnology companies with related federal contracts, grants or loans will now be required to purge their supply chains of equipment from these PRC biotechnology firms to stay compliant with the BIOSECURE Act. Although not expressly addressed in the 1260H notice, companies may be able to request reconsideration of a “Chinese military company” designation. Because of BIOSECURE, companies on the 1260H List may face an additional layer of restriction beyond DOW contracting prohibitions.

Beyond the BIOSECURE Act, the 2026 NDAA contains numerous additional biotechnology-related provisions designed to enhance the US biotechnology industry’s resilience:

• Section 241 authorizes research funds to carry out the design and construction of bio-industrial manufacturing facilities;
• Section 242 establishes a Biotechnology Management Office, led by a senior Department of War official, to foster the development, acquisition, and sustainment of biotechnology capabilities for the Department; and
• Section 243 authorizes the Department to establish a program to incentivize private sector expansion of infrastructural capacity across the United States to manufacture bio-industrial products at commercial scale that are critical for defense and national security needs.  

Pause on Gain-of-Function Research

In May 2025, President Donald Trump issued Executive Order (EO) 14292, Improving the Safety and Security of Biological Research. The EO directs federal agencies to immediately end federal funding of gain-of-function research conducted by foreign entities in countries of concern (e.g., China). It also directs agencies to suspend federally funded gain-of-function research while a new oversight policy is developed. The EO is evidence of the Trump Administration’s growing distrust of advanced biotechnology collaborations between the US and PRC scientific communities.

Future Measures

In addition to the current biotechnology-related efforts, there are also numerous potential measures which may affect the biotechnology sector.

Expanding Outbound Investment Screening to Cover Biotech

The Department of the Treasury’s Outbound Investment Security Program, which implements Executive Order 14105 and took effect January 2, 2025, currently targets US investment in PRC or PRC-owned companies involved in three sectors: semiconductors and microelectronics, quantum information technologies, and artificial intelligence. Depending on the activity, covered transactions are either prohibited or subject to a notification requirement. The Comprehensive Outbound Investment National Security Act of 2025 codified and expanded the outbound investment screening framework and authorized Treasury to add and define additional sectors covered by the outbound investment screening program.

On June 2, 2026, Chairman Moolenaar and Rep. Debbie Dingell (D-MI) jointly introduced the Biotech Investment National Security Act (“BINSA”) that would achieve this end. Specifically, BINSA would add biotechnology, including pharmaceutical development, biologics manufacturing, and clinical research and development, to the prohibited sectors under the outbound investment screening program. It would also make certain US pharmaceutical licensing deals, joint ventures, equity investments, and technology or intellectual property licensing arrangements with Chinese entities subject to Treasury review. In short, the bill aims to limit the offshoring to China of the biotech industry. The most likely vehicle for BINSA to become law would be the FY27 NDAA, expected in late 2026.

Illegal Lab in California and Resulting Legislation

The illegal laboratory discovered in California, and the ensuing House CCP Committee report, prompted the Preventing Illegal Laboratories and Protecting Public Health Act of 2025. According to the bill’s six bipartisan cosponsors, current federal law regulates only a limited list of “select agents” which leaves many dangerous pathogens outside of federal tracking requirements. Their bill is intended to close this gap by requiring distributors to maintain federally reviewable records of all transfers, creating a federal framework to evaluate high-containment labs nationwide, and strengthening coordination between federal, state, and local governments to protect public health and national security.

NSCEB Report’s Recommendations

The NSCEB Report, released in April 2025 after a multi-year study mandated by Congress, frames the stakes in urgent terms, warning that “[o]ur window to act is closing.” It calls for a two-track strategy: “make America innovate faster, and slow China down.” To that end, the Report lists several proposals that may indicate the direction of Congress in the coming years. Some of the proposals are already in various stages of implementation. A few notable recommendations include congressional mandates for:

• A National Biotechnology Coordination Office (“NBCO”) within the Executive Office of the President with a director, appointed by the President, who would coordinate interagency actions on biotechnology competition and regulation. This recommendation is included in the proposed bipartisan National Biotechnology Initiative Act.
• A Department of Commerce-housed Independence Investment Fund, led by a non-governmental manager, which would invest in technology startups that strengthen US national and economic security. The fund is to support high-priority areas of national security technology that are left unaddressed by current initiatives and would set aside around 30 percent of its capital for emerging biotechnology investments.
• Annual U.S. Securities and Exchange Commission (“SEC”) public company disclosure requirements for single points of supply chain vulnerability in foreign countries of concern (e.g., China), which would apply to publicly-traded biotech companies.
• A prohibition on using certain PRC biotechnology suppliers that are deemed to pose a national security threat for companies that work with US national security agencies and the Department of Health and Human Services. Congress has already implemented part of this recommendation: the BIOSECURE Act prohibits companies that work with the Department of War from using certain biotechnology suppliers. (The BIOSECURE Act also adopted the Report’s recommendation of using the 1260H List to identify biotechnology companies of concern.)
• Reforms to the Committee on Foreign Investment in the United States (“CFIUS”) to better and more nimbly screen the highest-impact, highest-risk types of investment in critical technology sectors in the United States, including, presumably (though not explicitly) in the biotechnology sector. Specifically, the report notes that Congress should expand the definitions of “critical technology,” investments into which require mandatory filing with CFIUS; reform CFIUS review to no longer be country-agnostic, creating expeditated review process for allied country investments; and expand CFIUS jurisdiction to cover non-controlling joint ventures and “greenfield investments,” where a company creates a completely new business operation in a foreign country via the establishment of new physical facilities. To the extent that these recommendations are implemented in a manner targeting biotechnology risks, CFIUS would immediately become a considerable hurdle for foreign investors in US biotechnology efforts, and the additional US government scrutiny would likely chill investment efforts from higher risk jurisdictions and entities. 
• Outbound investment rules to ensure that US capital does not support PRC development of certain biotechnologies that could pose a national security risk. So far, the US outbound investment review mechanism does not cover investments in the PRC biotech industry. If enacted, BINSA will likely close this gap and fulfill the Report’s recommendation.
• Consideration of country-wide export controls blocking the sale of specific, highly sophisticated US biotechnology items to China that would pose a substantial risk to national security if used for military end-uses.
• Oversight of existing policies and identification of new policies where warranted, to ensure that China cannot obtain bulk and sensitive biological data from the United States. On this point, the NSCEB Report recognizes PADFAA and DOJ’s Bulk Sensitive Data Rule, and calls for continued oversight of the two regimes to ensure that China cannot obtain bulk and sensitive biological data from the U.S.

Upcoming Restrictions on National Science Foundation Research Funding

On July 8, 2026, the National Science Foundation (“NSF”) announced a forthcoming policy which will prohibit the use of NSF funds on collaboration with entities on certain US restricted parties lists, including the 1260H List, Entity List, NS-CMIC List, and others. According to NSF, an outright restriction is being imposed because “research security risk mitigation for NSF-funded projects involving these restricted entities is not sufficient.” While it is not clear how much existing or future biotechnology-related funding will be affected by the new policy, it is another clear example of the US government linking science and national security.   

Key Takeaways

Ultimately, the aperture of US national security regulations and laws related to biotechnology are widening to encompass an ever-larger share of the life sciences, from pharmaceutical supply chains to genomic data to the equipment and services that companies rely on every day. Companies in these sectors should assess their exposure to designated PRC counterparties under the NS-CMIC, 1260H, and Entity Lists, evaluate their data-transfer practices against the DOJ Bulk Sensitive Data Rule and PADFAA, and—particularly for federal contractors—examine reliance on biotechnology companies of concern under the BIOSECURE Act. Looking ahead, investors and life sciences firms should monitor the proposed expansion of U.S. outbound investment review to cover biotechnology. BINSA demonstrates that Congress is increasingly focused on the national security implications of US pharmaceutical companies’ commercial activities in and related to China. Furthermore, companies should examine closely the policy recommendations contained in the NSCEB Report. Given the pace and breadth of these developments, early diligence and contingency planning will be essential to managing regulatory risk in this rapidly evolving area.

How We Can Help

Please reach out to the Mayer Brown team if you have questions about the current and future US regulatory environment and impacts to the biotechnology sector. With expertise in both law and advocacy, we can help clients navigate regulatory risks and engage proactively with the US government. In particular, Mayer Brown’s International Trade, National Security, and Public Policy teams and the authors of this Insight stand ready to support these efforts.