Don’t give America’s biotech leadership to China

OPINION:

For decades, the United States has led the world in biotechnology, boasting the greatest number of patents, companies and Nobel Prize winners. A White House plan to impose drug price controls would almost certainly cede that lead to China.

As a biotech leader who served as a commissioned officer in the U.S. Army, I know just how closely our national security is tied to biomedical leadership. If the Trump administration wants to stay ahead of Beijing, then it needs to encourage biotech investment and incentivize life sciences research rather than pursue ill-advised drug pricing schemes.

The administration’s proposed most-favored-nation policy would peg U.S. drug prices to artificially low European prices. Reducing biotech firms’ revenue would inevitably reduce research-and-development spending, ultimately leading to fewer new therapies, fewer medical advances and fewer biotech jobs created here at home.

We already have seen the effects of price controls in European countries, which once led the world in pharmaceutical research and development. In the 1970s, Europe accounted for about 55% of new medicines, compared with the United States’ roughly 30%. After European countries established price controls, the U.S. surged ahead and the Europeans lagged.

This blow to America’s biotech industry would come at the worst possible time. Last year, a bipartisan commission warned that China could soon surpass the United States in biotech.

Over the past few decades, Beijing has poured resources into biotech with the explicit goal of dominating the industry globally. From 2003 to 2023, China increased its R&D spending as a share of gross domestic product from less than 1% to nearly 3%.

Throughout the 2010s, it streamlined regulatory requirements, developed plans to prioritize drug development and invested heavily in lab infrastructure.

The results have been staggering. In 2013, Chinese-developed drugs represented just 2% of the global pharmaceutical pipeline. Today, they account for nearly 30%. By contrast, the U.S. share has dropped from almost half the global pipeline to just 36%.

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From 2016 to 2021 alone, the market value of China’s biotech firms collectively grew a hundredfold.

China’s research institutions are rapidly climbing the global ranks, producing a flood of top-cited publications. By 2023, Chinese institutions accounted for roughly 1 in 5 biological manufacturing papers, exceeding the United States and any European country.

The financing picture is shifting as well. Chinese biotech startups now receive about 20% of global biotech venture capital funding, up from just 3.5% in 2010.

If these trends continue, then China could account for more than one-third of the FDA’s approvals by 2040, compared with 5% today.

China would undoubtedly use that leverage to extract policy and trade concessions. It could even use biotech breakthroughs to strengthen its military.

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Fortunately, the Trump administration can pursue its worthy goal of making medicines more affordable without crippling America’s biotech sector.

Rather than trying to make medicines cheaper by going after drug developers, the administration could target the pharmacy benefit managers and other supply chain intermediaries that siphon off tens of billions of dollars each year without investing a dime in discovering new medicines or treating patients.

Nonmanufacturing entities, especially pharmacy benefit managers, now capture more than 50 cents of every dollar spent on drugs, an enormous share unparalleled by any other Western country.

Congress and the administration already have begun moving in this direction. Earlier this year, President Trump signed bipartisan legislation to rein in abusive practices by pharmacy benefit managers and increase transparency in the drug supply chain. It is an important step, but more work remains.

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Trimming middlemen further down to size would free up an enormous amount of money that could be redirected to patients, all without hurting biotech firms’ incentives to pursue promising new lines of research.

The president also can help reduce drug prices by encouraging our allies to contribute more fairly to the costs of global drug development. Late last year, Mr. Trump persuaded Britain to pay 25% more for new medicines in exchange for pharmaceutical tariff relief.

During my 30 years in the biotech space, I have led early-stage companies developing treatments for critical diseases with limited options, guided clinical development programs, and helped entrepreneurs navigate complex regulatory and economic landscapes. I have seen firsthand how easily policy missteps can jeopardize the scientific progress on which we depend.

If the White House proceeds with its planned price controls, then it will all but guarantee China’s dominance and forfeit America’s global leadership in a sector critical to our health and security.

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• Brad Zakes is the senior vice president of emerging companies and economic affairs at the Biotechnology Innovation Organization.