Will Washington Hand the Future of Biotech to Beijing?

Originally published on Substack. 

​Yesterday I had the honor of presenting at the U.S. Capitol alongside Grover Norquist with Tax Reform for the release of my new paper, “Will Washington Hand the Future of Biotech to Beijing?”

I’m grateful for the opportunity to share this research with Members of Congress, staff, and leaders who care about the future of American innovation.

​The issue at stake couldn’t be more serious. Biotechnology is not just another industry. It’s about whether the next generation of cures for cancer, Alzheimer’s, or rare diseases are discovered here—or in Beijing or likely not at all. It’s about whether American patients get access to those treatments first—or whether they’re forced to wait behind lines set by governments.

America Leads When Government Steps Back

America didn’t become the global biotech leader through central planning. We got here because government—imperfectly, and only occasionally—pulled back to let markets breathe (though not enough).
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• Bayh-Dole Act (1980): Before this, tens of thousands of taxpayer-funded inventions sat unused. Not a single drug discovered with federal dollars ever reached patients. Bayh-Dole didn’t create innovation—it simply allowed universities and companies to commercialize discoveries that government had been locking away.
• Hatch-Waxman Act (1984): Reduced government barriers that kept generics off the market while still giving innovators temporary exclusivity.
• Orphan Drug Act (1983): Tried to encourage investment in rare diseases by offering exclusivity and tax credits. It helped bring new therapies, but it also created distortions and opportunities for companies to game the system. That’s the risk whenever government tinkers with incentives.
• Best Pharmaceuticals for Children Act (2002): Addressed the fact that government’s own framework discouraged pediatric trials. By allowing six extra months of market exclusivity, it gave firms a reason to study how drugs work in kids—research that should never have been discouraged in the first place.
• Medicare Part D (2003): Showed that private competition beats government formularies. Costs came in 40% below projections because the market—not bureaucrats—belie helped set prices (not enough).

These were not examples of government fixing markets. They were examples of government loosening its grip just enough for markets to work. And even then, Washington never really let go. The state is still deeply embedded in biotech—funding, regulating, approving, and increasingly, dictating prices.

Washington’s Wrong Turn

Instead of stepping back further, Washington is going the other direction.

Biden’s Inflation Reduction Act gave bureaucrats sweeping power to dictate drug prices. And this May, President Trump signed a Most Favored Nation executive order tying U.S. prescription drug prices to foreign government caps.

The problem of foreign freeloading is real. Countries like Canada and Germany deliberately underpay by imposing price controls, knowing U.S. patients will shoulder the cost. The Council of Economic Advisers estimates Americans fund nearly 70% of global patented drug profits despite being only one-third of global GDP.

But importing their broken systems here won’t solve it. Research published at National Bureau of Economic Research found that slashing U.S. drug prices by 40–50% would cut early-stage R&D by 30–60%. That doesn’t make medicines cheaper. It makes them disappear.

The MFN order may not cause cuts that steep, but it sends a signal to investors: Washington is willing to cap returns. That chills investment—and cures vanish.

Meanwhile, Washington already directs about 60% of all U.S. healthcare spending. That isn’t a free market. It’s government control. And when government dominates, price signals vanish, competition collapses, and costs rise. That’s not a failure of markets. That’s a failure of government.

Meanwhile, China Surges Ahead

While we smother our innovators, China is racing forward with its Made in China 2025 strategy.

• Biotech market size: $74 billion in 2023, projected to reach $263 billion by 2030.
• Clinical trials: U.S. share fell from 39% in 2009 to 35% in 2024. China’s rose from 1% to 30%, and it’s on track to surpass us by 2027.
• STEM talent: China produced 338,000 advanced STEM degrees in 2020 vs. 221,000 in the U.S. That gap is widening.
• Global deals: In May, Novartis signed a $5.2 billion deal with China’s Argo Biopharma. That’s major investment flowing eastward.

China doesn’t need to out-innovate us. It just needs to let Washington keep kneecapping our own innovators.

Incentives Drive Innovation

Drug development costs more than $2 billion per therapy and takes a decade or more. Most attempts fail. The only reason investors take that risk is the possibility of earning a return and reinvesting in the next breakthrough. Take away that incentive, and the pipeline dries up.

Europe proves the point. Patients there wait years longer for new therapies, and many drugs never arrive at all. That’s the cost of government-imposed price controls.

The lesson is clear: government intervention suffocates incentives. Freedom unleashes them.

A Better Path Forward

Here’s how Congress can protect America’s biotech leadership:

1. Reject price-setting. Repeal IRA mandates and block MFN.
2. Protect property rights. Keep Bayh-Dole intact. Don’t politicize “march-in rights.”
3. Streamline FDA approvals. Recognize peer-nation approvals. Cut needless delays.
4. Empower patients. Expand No-Limit HSAs and encourage Direct Primary Care.
5. Restrain government spending. A sustainable budget removes the excuse for more control.
6. Confront foreign freeloading directly. Use trade and IP enforcement to push allies to pay their share instead of importing their bad policies.

Closing Thoughts

This debate isn’t about whether markets work—they do. It’s about whether government will keep distorting them.

The Constitution itself recognized the power of protecting inventors’ rights. America’s prosperity didn’t come from government programs. It came from the freedom to innovate, compete, and serve people. The more Washington steps back, the more patients win.

If Washington doubles down on control, China will gladly take our place. But if we trust freedom, America will remain the global leader in cures and innovation.

I’m grateful to Grover Norquist and Americans for Tax Reform for hosting this event at the Capitol, and to everyone committed to restoring freedom in healthcare. The path forward is clear: end government failures, protect property rights, empower patients, and let people prosper.

Read Report: https://atr.org/race-for-innovation/