Treasury May Carve Pharma Out of the U.S.–China Decoupling Push

Treasury is drafting rules that would let U.S. drugmakers keep striking licensing deals for Chinese drug candidates, even as the same administration tightens China ties for chips, electric vehicles, and critical minerals. The carve-out, reported by Reuters on Thursday, is part of a sector-by-sector approach to U.S.–China decoupling, the policy project of reducing economic ties between the two countries.

The mechanism is narrower than a blanket ban. A "licensing deal" here means a U.S. company paying a Chinese biotech to develop or market a compound it discovered; the same arrangement can also take the form of a joint venture or an equity investment. Per three people briefed on the Treasury process, the rules would let U.S. pharma make those deals as long as the underlying science is not related to pathogens or biotechnology that could be weaponized. The people asked for anonymity because the rules are pre-decisional, and one noted the final text could still change if President Trump weighs in.

The proposed floor is what bothers a bipartisan group in the House. On June 2, 2026, Reps. John Moolenaar (R-Mich., chair of the Select Committee on China) and Debbie Dingell (D-Mich.) introduced the Biotech Investment National Security Act, or BINSA, which would amend last year's Comprehensive Outbound Investment National Security Act to add biotechnology to the sectors that require government screening. The bill's trigger is specific: two pharmaceutical deals that may each be worth more than $10 billion, the kind of large cross-border licensing arrangements the Treasury draft would let flow more freely.

BINSA's reach is broader than the Treasury draft's. Under the House bill, licensing deals, joint ventures, and equity investments in Chinese pharma could face review by both Treasury and the Defense Department, and the scope would extend to drug development, biologics manufacturing, and clinical R&D. Ag biotech, industrial fermentation, and basic academic research would be excluded. GabiOnline covers the legislative mechanics; the bill is currently introduced, not yet advancing.

A wider front door to U.S. patients also sharpens the spotlight on the back end of the pipeline. A KFF Health News analysis cited in STAT+'s Pharmalittle column found hundreds of post-market studies, the trials drugmakers run after FDA approval to confirm safety and effectiveness, listed as delayed, in some cases by more than a decade, with some sponsors still working on the study plan. If the Treasury draft lands as described, more Chinese-discovered compounds can reach the U.S. market faster, and the post-market follow-up problem gets more, not less, visible.

The selective-decoupling logic is straightforward. The administration has decided that some industries are too entangled with China's military-civil fusion programs to leave alone, and that pharmaceuticals are not yet in that category, provided the science stays clear of weaponizable biology. BINSA's sponsors argue the line is drawn in the wrong place, that even non-weaponizable biotech can leak into military applications through civilian supply chains. Treasury's draft leaves that argument to Congress.

The rules are not final. The next concrete milestone is whether the Treasury text emerges in a form that survives a White House review, and whether BINSA's sponsors can attach the screening requirement to a must-pass vehicle before the year ends.