U.S. Drugmakers Warn White House of Chaos as Trump Weighs Curbs on China

The Trump administration has been discussing severe restrictions on medicines from China that, if enacted, could upend the American pharmaceutical industry and availability of everything from generic drugs to cutting-edge treatments.

At the heart of the possible clampdown is a drafted executive order that threatens to cut off the pipeline of Chinese-invented experimental treatments. Major pharmaceutical companies have been buying the rights to drugs created in China for cancer, obesity, heart disease and Crohn’s disease.

The prospect of the order, a draft of which was obtained by The New York Times, has set off furious behind-the-scenes lobbying efforts by two diametrically opposed groups — each with billions of dollars at stake.

Prominent investors and corporate executives with close ties to the White House, including the tech billionaire Peter Thiel, the Google co-founder Sergey Brin, the Koch family and staff at the investment firm run by President Trump’s son-in-law Jared Kushner, have argued for a decisive crackdown against what they view as an existential threat by China to U.S. biotechnology, according to four people briefed on their lobbying who asked for anonymity to discuss private conversations.

These investors have money at risk because they hold hard-to-sell investments in fledgling American companies that have been struggling to keep up with China’s surging biotech sector.

On the other side are the world’s largest drugmakers, including Pfizer and AstraZeneca. In the last few years, they have been on a shopping spree in China for low-priced experimental drugs, spurning smaller American biotech companies that are developing similar medicines.

Democrats and Republicans have called America’s reliance on China for medicines a national security vulnerability. In 2020 and this year, Mr. Trump issued a series of executive orders calling for more U.S. drug manufacturing. And he has been threatening for months to impose tariffs on medicines imported from China and other countries as part of the administration’s broader protectionist push.

A White House spokesman, Kush Desai, said in a statement on Monday that the administration was not “actively considering” the draft executive order. “Safeguarding our national and economic security is a top priority for the administration,” Mr. Desai said.

But as recently as last week, administration officials were soliciting feedback from U.S. biotech investors, including exchanging versions of the draft executive order, according to three of the people involved in the discussions.

Aides to Stephen Miller, Mr. Trump’s deputy chief of staff, have been involved in a back-and-forth with the investors for several months, those people said.

The moves would mark Mr. Trump’s first targeting of the critical pipeline of experimental drugs from China, which drug companies are betting on for future profits in the U.S. market.

For American patients, the proposed crackdown could reduce or even eliminate the availability of promising treatments invented in China.

But China’s critics warn that action is needed, because American patients could also be denied new cures if China’s rise cripples the U.S. biotech industry. The fear is, because Chinese companies can move more quickly and cheaply, investors will sour on American start-ups, making it too hard for them to raise money and develop drugs.

People who want more drug manufacturing moved to the United States say it will help safeguard American patients against supply shortages, which have grown common, especially if a future pandemic prompts China to curtail exports.

A draft of the executive order sent to billionaire backers and big-name pharmaceutical companies says China “and other hostile actors have exploited gaps in our open scientific and regulatory systems.”

The draft order calls for boosting U.S. production of several types of medicines that are believed to have substantial production in China, including antibiotics and the pain reliever acetaminophen, or generic Tylenol, a dynamic that Commerce Secretary Howard Lutnick flagged during a CNBC interview on Friday.

The order proposes that once American production of these drugs ramps up, the government should give preference to those products in its purchasing. The order also proposes offering tax credits to companies that move their manufacturing to the United States.

China manufactures a significant share — exactly how much is poorly understood — of drug ingredients for Americans. The country is also the most important supplier of raw materials to the world’s other major producers of medicines, like India and Europe.

One policy in the draft would impose much heavier scrutiny on deals in which American pharmaceutical companies buy rights to experimental drugs from Chinese drugmakers. It would require such transactions to undergo “mandatory review” by a powerful U.S. national security committee known as the Committee on Foreign Investment in the United States. Until now, such deals have generally gone through unimpeded.

Another policy proposed in the draft would discourage drugmakers from relying on clinical trial data from patients in China, by subjecting those results to more rigorous review by the Food and Drug Administration and imposing higher regulatory fees. The F.D.A. already generally requires drugmakers to generate late-stage clinical trial data primarily in U.S. patients, though companies frequently submit results from early-stage safety studies in China.

The Trump administration is also considering moves beyond an executive order, such as speeding up the F.D.A. review process to allow drugmakers to start safety studies sooner, according to people familiar with the discussions.

Several prominent investors said they were worried about a pattern in which Chinese drug developers copy early-stage American biotech discoveries described in U.S. patent filings, then race to start and enroll their own human safety studies before their U.S. counterparts can legally act.

The Trump boosters Mr. Thiel and Joe Lonsdale have lobbied administration officials, including Health Secretary Robert F. Kennedy Jr., to relax the F.D.A.’s processes, said two people briefed on the conversation but not authorized to speak publicly. Mr. Lonsdale, a conservative venture capitalist, has publicly said China is “crushing” the U.S. biotech industry.

China now runs more industry-funded clinical trials of new drugs than the United States. The U.S. biotech sector is mired in a prolonged slump, with the market for U.S. initial public offerings from drug developers all but frozen this year.

All of that is fueling the fear that Shanghai is on the verge of supplanting the longstanding centers of the biotech universe, Cambridge, Mass., and the San Francisco Bay Area, where the costs of drug development are higher.

“Right now, the United States has the lead in biotechnology, but we’re losing that lead, and we need to act now,” said John Crowley, president of the Biotechnology Innovation Organization, a trade group that represents biotech companies and most pharma giants.

Historically, many U.S. biotech start-ups have generated revenue by selling the rights to promising experimental drugs to the largest pharma companies.

But in the past few years, major drugmakers hunting for potential medicines have increasingly turned to Chinese biotech companies instead. In the first half of this year, 38 percent of such major deals involved a drug from China, up from next to nothing last decade, according to DealForma, which tracks drug industry transactions.

American pharmaceutical giants like Merck, Regeneron and AbbVie, as well as multinational drugmakers like AstraZeneca, Roche and Sanofi, have recently scooped up experimental drugs from China. “The large companies are really benefiting,” said Brad Loncar, a former biotech investor who now runs BiotechTV, a media company. “They’re getting great deals, and they’re not going to want that to end.”

This summer, Dr. Bourla told Dr. Mehmet Oz, the Medicare and Medicaid administrator who has been central to the Trump administration’s internal debate over the issue, that the deal-making in China benefited not just his company but U.S. patients, according to a person to whom Dr. Oz relayed the discussion. Pfizer declined to comment.

In one interview this spring, Dr. Bourla warned against policies that would impede China, saying, “You don’t want them to stop in treating cancer.”

In March, Dr. Bourla traveled to Beijing, where he was part of a group of American executives who met with China’s second-highest official, Premier Li Qiang.

Two months later, Pfizer bought the rights to an experimental cancer drug from a Chinese drugmaker, 3SBio, in a deal worth up to $6 billion, the largest transaction of its kind. In his conversations with lawmakers and Trump officials, Dr. Bourla characterized the deal as an example of taking something valuable from China, he told financial analysts last month.

“There is only so much you can do to slow down China,” he said.