The House and Senate are moving forward with the Biotech Investment National Security Act of 2026 (BINSA), a bipartisan effort to add biotechnology to the list of sectors covered by the Committee on Foreign Investment in the United States (CFIUS). The bill would amend the COINS Act, expand reviewable transactions to include licensing agreements, and require the Treasury to issue implementing regulations within a year.

Why the change matters

Historically, CFIUS has focused on inbound capital flows—investments that bring foreign money into U.S. companies. Outbound transactions, especially licensing deals that move know‑how and royalties to foreign partners, have largely escaped scrutiny. Recent multi‑billion‑dollar licensing agreements between U.S. biotech firms and Chinese companies have highlighted a gap that lawmakers say could threaten national security.

Executive Order 14105 created the Outbound Investment Security Program (OISP) in early 2025 to block U.S. individuals from dealing with entities in China, Hong Kong, or Macau in semiconductor, quantum information technology, or artificial intelligence sectors. The COINS Act of December 2025 codified OISP’s framework, but it does not yet cover biotechnology. BINSA would fill that void.

What BINSA defines as covered biotechnology

Under the proposed language, “covered biotechnology” includes pharmaceutical and biological product development such as drug‑discovery platforms, clinical research and development, and biologics manufacturing. Agricultural biotech, industrial fermentation and academic research are expressly excluded.

The bill also tasks the Secretary of Defense with a 60‑day assessment of whether capital flowing into Chinese biotech firms could affect U.S. military readiness, underscoring the strategic importance of the sector.

Compliance checklist for companies

Even before Treasury issues final rules, firms can prepare by strengthening documentation in six key areas:

• Scope and decision record: Clearly outline the purpose of each deal, the parties involved, any rejected offers, and the decision path that led to the final structure.
• Parties and ownership: Conduct thorough ownership tracing for every counterparty, flagging direct or indirect state investment and links to sanctioned entities.
• Transaction mechanics: Document all financial flows, including upfront payments, milestones, royalties and extended terms.
• Technology and data map: Identify whether licensed assets involve drug‑discovery platforms, manufacturing processes, or other covered activities, and note the direction of technical information flow.
• Diligence evidence: Keep diligence files attributable and time‑stamped, ideally prepared well before any regulator requests them.
• Filing and monitoring: If a transaction becomes notifiable, submit it through the Treasury’s Outbound Notification System within the required window and be ready to provide supplemental information.

These steps mirror the FDA’s ALCOA+ data‑integrity framework, which requires records to be attributable, original, accurate, complete, consistent, enduring and readily available. While FDA oversight focuses on manufacturing and clinical data, the same discipline will serve companies well when preparing national‑security filings.

Industry reaction

The bill’s House sponsor, Rep. John Moolenaar, points to a $131 billion surge in U.S.–China biopharma licensing deals from 2020 to 2025, noting that many U.S. inbound licensing agreements now originate in China. He warns that unchecked transfer of know‑how and capital could erode U.S. strategic advantage.

The Michigan Biosciences Industry Association argues for a targeted approach, emphasizing that licensing a Chinese drug candidate typically shifts development rights and commercialization to the U.S. partner while payments flow abroad. The association cautions that overly broad restrictions could push transactions through European or Asian intermediaries, harming U.S. firms without eliminating the underlying activity.

What’s next

BINSA still faces an uncertain regulatory path. The Treasury has up to one year to draft rules, and the Department of Defense will issue its readiness assessment within 60 days of enactment. Companies should not wait for final guidance; adopting the outlined documentation practices now will reduce the risk of future delays or forced deal restructurings.

In short, the legislation signals a shift toward greater oversight of outbound biotech licensing. By proactively strengthening compliance processes, U.S. biotech firms can protect both national security interests and their own commercial pipelines.

Original reporting: KEYT (Ventura/Santa Barbara) — read the source article.