New China Investment Restrictions Could Limit Access to Lifesaving Medicines

The Treasury Department's proposed restrictions on U.S. investment in Chinese biotechnology companies could have unintended consequences for American patients seeking access to new medicines. While the government has a legitimate interest in preventing American investments from strengthening China's military capabilities, overly broad restrictions could interfere with pharmaceutical research and development that has little connection to national security.

The Comprehensive Outbound Investment National Security (COINS) Act, enacted in December 2025, is designed to prevent American capital from supporting technologies that could advance China's military, intelligence, and surveillance capabilities. Treasury is now considering regulations that would extend investment restrictions to biotechnology, potentially affecting how American companies finance and participate in the development of new treatments.

Biotechnology Restrictions Raise Concerns for Patients

The COINS Act establishes restrictions on investments involving sensitive technologies, including advanced semiconductors, artificial intelligence, and quantum computing. Treasury's proposed regulations would extend those restrictions to certain biotechnology activities, including pharmaceutical compounds, vaccines, and gene therapies.

Some biotechnology investments present legitimate national security concerns, particularly when research could support military applications. However, much of the pharmaceutical industry's work involves developing treatments for patients rather than technologies with military or intelligence applications.

American pharmaceutical companies frequently partner with international biotechnology firms to identify promising drug candidates, conduct research, and advance treatments through development. Although traditional drug licensing agreements generally fall outside the proposed restrictions, certain equity investments and joint ventures could face additional limitations.

These arrangements help finance research that can eventually produce new treatment options. Restricting them without a clear national security justification could make it more difficult for promising medicines to reach American patients.

Foreign Competitors Could Gain Access to Drug Discoveries

China has become an increasingly important participant in global pharmaceutical research, with American companies pursuing partnerships that provide access to new drug candidates and emerging technologies.

According to Reuters, Chinese biotechnology licensing deals reached approximately $115 billion globally in 2025, while nearly half of U.S. foreign drug-licensing deals involved Chinese companies. The figures reflect the growing importance of international partnerships in pharmaceutical development.

Restricting American investment would not necessarily prevent Chinese biotechnology firms from continuing their research. European pharmaceutical companies and other foreign competitors could pursue opportunities that American businesses would be prohibited from financing.

For American patients, the concern extends beyond which companies secure those investments. If promising treatments are developed through foreign partnerships rather than American ones, patients in the United States could face additional obstacles or delays in accessing those medicines.

The government should carefully consider whether broader investment restrictions would improve national security or simply shift pharmaceutical development opportunities overseas.

Regulatory Uncertainty Could Slow Drug Development

Treasury's proposal raises broader questions about regulatory certainty and its effect on medical innovation.

Developing a new medicine often requires years of research, clinical testing, and substantial private investment. Companies and investors need predictable rules when deciding which treatments to finance and which international partnerships to pursue.

Uncertainty over whether a transaction will be permitted can increase compliance costs, discourage investment, and raise the cost of capital. In pharmaceutical development, these consequences can affect whether promising treatments receive the funding necessary to advance toward clinical trials and eventual approval.

The potential impact ultimately falls on patients. Investment decisions made early in the development process can determine which treatments move forward and how quickly they become available.

Treasury's public comment period, which runs through December 7, 2026, provides an opportunity to address these concerns before the regulations are finalized. Clear definitions and carefully targeted restrictions would help businesses distinguish legitimate pharmaceutical investments from transactions that present national security risks.

CFE Takeaway

The Center for a Free Economy supports protecting sensitive technologies from investments that could strengthen China's military or intelligence capabilities. However, Treasury should avoid extending those restrictions to ordinary pharmaceutical research without a clear national security justification.

Broad investment restrictions could redirect promising drug discoveries toward foreign competitors and create additional barriers to bringing new treatments to American patients. Regulatory uncertainty could further discourage the private investment needed to develop those medicines.

Treasury should establish clear, predictable rules that address genuine security threats while preserving opportunities for pharmaceutical innovation. Protecting national security and maintaining Americans' access to new medicines should remain central considerations as the department finalizes its regulations.