China and U.S. Actions Threaten America’s Life Sciences Leadership, New Report Shows

August 12, 2019

WASHINGTON—U.S. biopharmaceutical leadership plays a key role in driving U.S. competitiveness and creating good jobs. However, a new report from the Information Technology and Innovation Foundation (ITIF), the world’s top-ranked think tank for science and technology policy, finds that China is working to challenge the United States for its competitive position, in part through discriminatory industrial policies including weak intellectual property (IP) protection and regulations biased toward domestic firms. At the same time, potential U.S. policies such as weakened IP protection or drug price controls would slow U.S. life sciences innovation, making it easier for Chinese firms to catch up.

“Biopharma is a U.S. manufacturing success story. It should therefore come as no surprise that the Chinese government has targeted the sector for global expansion,” said ITIF President Rob Atkinson, author of the report. “Unfair Chinese policies, if coupled with potential U.S. policy errors like drug price controls, will result in slower innovation and enable Chinese firms to catch up, hurting the U.S. economy and its workers, as well as global biopharmaceutical innovation.”

The report identifies policy changes needed in both China and the United States to boost biopharmaceutical innovation:

China:

  • Restructure its IP system to be neutral regarding drugs developed in China by Chinese firms and drugs developed by foreign firms;
  • Improve patent protection;
  • Join the WTO Pharmaceutical Agreement and reduce its drug tariffs to zero;
  • Abandon support for drug-related IP theft;
  • Hold all Chinese factories to global-standard drug quality.

United States:

  • Ensure trade negotiations with China include biopharma issues, such as weak IP rules, discriminatory access to the Chinese market, and data-transfer restrictions;
  • Consider blocking Chinese acquisitions of or investments in U.S. firms involved in the design or production of drugs;
  • Charge NIH with better policing abuse by Chinese nationals who inappropriately transfer knowledge generated by NIH grants to China and more closely oversee any research funding or cooperation with China;
  • Ensure the FDA has adequate funding to effectively inspect Chinese facilities producing drugs and pharmaceutical ingredients for U.S. consumption;
  • Continue increasing NIH funding;
  • Expand the R&D tax credit from 14 percent to at least 20 percent;
  • Continue support for the Bayh-Dole Act of 1980;
  • Continue to improve and streamline the drug approval process, keeping in place existing safety and efficacy standards;
  • Add funding under the Manufacturing USA program reauthorization for at least one center focused on biopharmaceutical manufacturing process technology to complement the existing BioFabUSA center;
  • Refrain from imposing arbitrary restrictions on certain kinds of research, such as stem cell; and
  • Ensure any efforts to ensure affordability of medicines do not inappropriately limit drug prices.

“The primary way the United States can compete with China and remain the world leader in life sciences is to continue rapidly developing new drugs,” said Atkinson. “Developing the latest and best drugs requires robust investments in research and development, which policies like drug price controls would weaken.”

Read the report.