C4IP Calls for Reassessment of COINS Act's Impact on Biotechnology Investments

The Council for Innovation Promotion (C4IP) has raised alarms over a proposed rule from the U.S. Department of the Treasury that aims to extend the investment restrictions of the Comprehensive Outbound Investment National Security (COINS) Act to the biotechnology sector. This rule, part of the Fiscal Year 2026 National Defense Authorization Act, has drawn significant attention due to its potential impact on American companies involved in biotechnology and pharmaceuticals.

C4IP President and CEO Coke Morgan Stewart emphasized the need for the rule to clearly distinguish between transactions that genuinely threaten national security and those that could bring valuable intellectual property into the United States. The proposed rule, issued on October 22, 2026, would expand the existing Outbound Investment Security Program to include biotechnology, which encompasses a wide range of activities in pharmaceuticals and life sciences.

Countries identified as concerns under this rule include China, Cuba, Iran, North Korea, Russia, and Venezuela. The proposed regulations would classify various biotechnology activities as prohibited technologies, including the development and engineering of biological systems for producing pharmaceutical compounds, biofuels, and other materials. This broad classification could significantly affect life sciences companies and their ability to engage in international transactions.

The Treasury Department's Notice of Proposed Rulemaking (NPRM) acknowledges that the scope of these restrictions could have implications for public health and U.S. businesses. It raises questions about whether terms like "pharmaceutical compounds" should be limited to advanced technologies and whether the definitions of biological systems and equipment need further refinement.

Implications of Proposed Transaction Restrictions

Under the proposed regulations, U.S. persons would face restrictions on transactions involving covered foreign entities from designated countries, including equity acquisitions and joint ventures. While certain exceptions exist, such as for publicly traded securities and limited partner investments, the overall impact of these rules could hinder American companies' ability to acquire and commercialize biotechnology innovations developed abroad.

Approved for Dissemination

C4IP's statement highlights the importance of a balanced approach that supports national security while maintaining the United States' leadership in innovation. The organization is calling for a careful reassessment of the proposed rule to ensure that it does not stifle the growth and development of the biotechnology sector.

Comments on the NPRM are due by December 7, 2026, and stakeholders are encouraged to provide feedback on the potential implications of these regulations.