The Biosecure Act: Navigating Changes in the Biopharma Supply Chain

In a recent article that appeared in the San Diego Union Tribune, Matt McLoughlin, Senior VP Compliance and Category Management at Scientist.com, shared his insights on what the new Biosecure Act could mean for the future of biopharma supply chains. In this blog post, we share a general overview of this new act featuring additional commentary from McLoughlin as well as key takeaways.

What is the Biosecure Act?

The Biosecure Act, part of the FY26 National Defense Authorization Act, is a new federal law designed to protect U.S. national security and sensitive genomic data by decoupling the American biotechnology sector from “companies of concern” tied to foreign adversaries.

At its core, the Act prevents federal agencies from contracting with, or providing grants/loans to, any entity that uses biotechnology equipment or services from designated “biotechnology companies of concern” (BCCs). While initial drafts of the bill targeted specific organizations — such as WuXi AppTec, BGI, and MGI — the final version omits these names in favor of a formal process for the Office of Management and Budget (OMB) to designate and update the list as necessary.

Key Components to Know:

• The Prohibitions: Federal agencies are barred from procuring biotech equipment or services from BCCs. More importantly for the private sector, the government cannot contract with any company that uses such equipment or services in the performance of that federal contract.
• Broad Scope: The definition of “biotechnology equipment or services” is expansive, covering everything from genetic sequencers and data analysis software to consulting and disease detection services.
• Grandfathering Period: Recognizing the complexity of global supply chains, the law now includes a “grandfather” clause. Existing contracts generally have a five-year window (until approximately 2030 – 2032, depending on the specific designation) to phase out these relationships without losing federal eligibility.
  • “This was critical to minimize the disruption to drug development. It is not a simple process to move production from one site to another. The process is very tightly controlled from a regulatory perspective and as such it would take 3-5 years to do this correctly – the 5 year grandfather provision enables this transfer to be done in a safe manner,” adds Matt Mcloughlin.
• Industry Impact: For life sciences and pharma companies, this necessitates a rigorous audit of Contract Research Organizations (CROs) and Contract Development and Manufacturing Organizations (CDMOs) to ensure long-term compliance and mitigate the risk of losing access to the U.S. federal market.
  • “I think most companies will be in better shape now than if this had happened pre-Covid. Due to the pandemic, biopharma recognized the risk of centralizing all their development and manufacturing into China and began to bring in more local and regional options into their supply chain to divest the risk.”

How the Different Phases of the Drug Discovery Pipeline Will be Affected

Discovery/Pre-clinical – This should be the easiest area to transition. While there are the highest number of projects in this phase, there are a lot of suppliers across the globe who can provide similar services, and moving projects or creating new relationships should be easier.

Clinical Development – This phase is going to be impacted. Some of the companies already mentioned provide patient stratification or biomarker analysis in trials or are involved in clinical supply for Phase I/II GMP manufacturing. Moving here will have a potential negative impact on the projects, potentially causing delays, increasing costs or increasing risk – if not done correctly and a drug fails, this could have a direct negative impact on patients.

Clinical Manufacturing – This is likely the most impacted area. China has established itself as critical for Commercial APIs, biologics drug substance or “end-to-end” manufacturing, so moving a commercial biologic to a new CDMO is a challenging and time consuming process (site selection, tech transfer, validation runs, regulatory filings). Similar to clinical development, done incorrectly (and pharma companies do not normally do this during projects) it will increase potential delays, costs and risk.

Next Steps

At this point in time it is crucial that companies begin, if they haven’t already, to discuss their transition plans. This process could be simpler or more complex depending on where they interact in the drug discovery pipeline. That’s why the grandfather provision is crucial for some of these companies because it’ll allow existing projects to be moved over time.

“For me if I were a biopharma I would have conducted, or start conducting, an analysis of my supply chain to identify projects that are directly impacted and then also identified which of my suppliers may also be using the BCC companies to deliver services as these will also be impacted. Once identified then start the process of identifying alternative providers – this is where procurement and platforms like ours can be critical to managing through this” - Matt McLoughlin

To hear more insights from Matt, check out the full article on the San Diego Union Tribune.