WuXi AppTec Added to DOW's 1260H List: The BIOSECURE Act Clock Is Running

The U.S. Department of War (DOW) on June 8, 2026, published its annual list of "Chinese military companies" in the Federal Register as required by Section 1260H of the Fiscal Year 2021 (FY 2021) National Defense Authorization Act (NDAA). The list includes 188 companies that the DOW has determined meet the statutory requirements to be included in the list, pursuant to DOW authorities provided by the FY 2021 NDAA. Notably, the list released on June 8 includes WuXi AppTec Co. Ltd., a contract development and manufacturing organization that partners with many U.S. biotechnology and pharmaceutical companies.

According to the Federal Register notice, the DOW argues that WuXi AppTec's inclusion on the list is due to indirect ownership of the company by China's State-Owned Assets Supervision and Administration Commission and because it is indirectly affiliated with the State Administration of Science, Technology and Industry for National Defense and the People's Liberation Army. The company has issued a public statement denying these facts and appears to be pursuing reconsideration under the BIOSECURE Act's statutory appeal process.

WuXi AppTec's 1260H listing may initiate a regulatory sequence authorized by the BIOSECURE Act that could have significant ramifications for U.S. biotechnology companies with WuXi AppTec relationships in the near term, as well as their broader relationships with foreign-based companies from or based in China. Companies with existing WuXi AppTec relationships (or relationships with other Chinese biotechnology companies) tied to federal contracts, grants or loans should begin reviewing this newly issued list and their contract agreements and begin developing contingency plans now.

Background on the BIOSECURE Act

The BIOSECURE Act – signed into law on December 18, 2025, as part of the FY 2026 NDAA – prohibits federal agencies from contracting with or providing federal funding to companies that use "biotechnology company of concern" (BCC) equipment or services. The Act arose following congressional concerns that foreign adversaries such as China could gain access to sensitive human and genomic data and leverage that information to advance their leadership in the biotechnology industry and within biotechnology supply chains.

The BIOSECURE Act went through several iterations prior to its passage; Congress considered the legislation through various committees of jurisdiction. Ultimately, Congress removed a list of named companies from the text of the legislation in favor of establishing two regulatory mechanisms through which a BCC could be designated: 1) the 1260H mechanism through the DOW and 2) a separate list of BCCs published by the Office of Management and Budget (OMB).

Critical provisions of the BIOSECURE Act are outlined below:

• What the Act Prohibits. Under Sections 851(a) and (b), executive agencies may not procure biotechnology equipment or services from a BCC, contract with entities that use BCC-sourced biotechnology equipment or services in federal contract performance, or obligate grants or loan funds for those purposes. The prohibition extends to any tier of the supply chain where the contractor knows BCC technology is present.
• The "Knows" Standard. The prohibition applies where a contractor "knows" its performance will require BCC-sourced equipment or services – an actual knowledge standard. This is narrower than earlier drafts that would have captured contractors with mere "reason to believe" BCC technology was present. The standard protects contractors with complex supply chains but also creates a strong incentive for documented supplier verification. Deliberate ignorance is not a safe harbor.
• What Counts as Biotechnology Equipment or Services. Section 851(k)(2) defines the term broadly: genetic sequencers and related instruments; associated software, firmware and digital components; data storage and transmission services related to biological materials; disease detection and genealogical services; consulting and advisory services tied to covered instruments; and any additional category OMB designates in the national security interest.
• The Five-Year Grandfather Period. Section 851(c)(3)(A) protects existing contracts – including previously negotiated options – entered into before the applicable effective date. The five-year clock runs from the required Federal Acquisition Regulation (FAR) revision to reflect the naming of BCCs – not from the 1260H listing date of such companies. Given the time frames for the issuance of guidance that in turn triggers other effective dates for implementation and enforcement, the grandfather period could potentially extend until June 16, 2033. Unexercised options deserve a close look: The statute's explicit coverage of "previously negotiated contract options" creates an opportunity to extend protected performance by exercising options before the FAR effective date.
• Waivers. Section 851(d) provides a limited waiver mechanism requiring OMB Director approval and congressional notification, capped at 365 days with one possible 180-day extension. These provisions are not suited for long-term planning.

Because many biotech and pharmaceutical companies have direct or indirect relationships with WuXi AppTec, the implications are significant. However, the Act's prohibitions on federal procurement apply to FAR-covered contracts, grants and loans. Medicare and Medicaid participation agreements and reimbursement arrangements are not FAR-covered instruments, and the Act explicitly preserves reimbursement eligibility for Medicare Part B and Medicaid. A company that manufactures products through a partnership with WuXi AppTec is not, on that basis alone, subject to the Act's prohibitions if it receives Medicare or Medicaid reimbursement. Section 851(l) further ensures that BIOSECURE Act compliance obligations do not inadvertently terminate a manufacturer's Medicaid drug rebate program eligibility.

The Act does, however, have implications for pharmaceutical companies that provide products to the U.S. Department of Veterans Affairs (VA). Manufacturers are required to make covered drugs available for procurement through the VA Federal Supply Schedule (FSS), and a VA FSS agreement is required for a company to be reimbursed by Medicare Part B and Medicaid. Accordingly, manufacturers contracting with a BCC to fulfill obligations under an FSS contract would be impacted. Ultimately, manufacturers utilizing WuXi AppTec or other BCCs may find it difficult or impossible to isolate their arrangements to the manufacture of products sold only to the VA versus Medicare Part B or Medicaid.

What Happened and What Comes Next

The 1260H listing is the first step in the BIOSECURE Act's implementation chain but will certainly not be the last, and the process will play out over the next several years. The expected sequence of events, based on the publishing of the 1260H list and timelines from the BIOSECURE Act, is outlined below:

WuXi AppTec's listing satisfies the first prerequisite for BCC status under Section 851(f)(2)(A), meeting the requirements under the 1260H listing mechanism. OMB, however, must complete its own process before the Act's prohibitions attach. OMB must publish a formal BCC list by December 2026 and issue implementing guidance within 180 days of that publication, then the FAR Council has one year to revise the FAR. Prohibitions for 1260H-listed entities take effect 60 days after the FAR is updated. If the government uses all available time, prohibitions would not take effect until approximately mid to late 2028, with the five-year grandfather period extending to approximately 2033.

These are statutory outer limits, and OMB may seek to move faster through its regulatory processes. In addition, there is a process by which a named company can request reconsideration from the DOW. Some of the new companies listed as of June 8, 2026, are expected to pursue this option in addition to subsequent legal action. Companies that were included on the 1260H list prior to the BIOSECURE Act being signed into law do not have the same ability to seek safe harbor, as restrictions on those entities will begin to apply within 60 days after the FAR is updated to include the regulation – pushing the timeline for restrictions on these entities further out. For companies added to the 1260H list after the BIOSECURE Act was enacted, restrictions would take effect 90 days after the FAR is updated.

In addition, entities designated by OMB through its regulatory process may be able to challenge the designation or argue they no longer meet the definition of a BCC. Companies have 90 days after being notified that designation is imminent to challenge the determination. OMB will have the ability to make the final determination in coordination with other federal agencies. WuXi AppTec has now taken its concerns with being included on the list to the courts, filing a lawsuit against the DOW on June 11, 2026, in federal court referring to its inclusion on the list as "arbitrary, capricious" and motivated by political pressure.

Companies should assume that federal agencies will seek to implement these changes quickly, given pressing bipartisan interest in protecting the U.S. biotechnology industry from foreign adversaries and seeking to lead the worldwide biotechnology industry.

Holland & Knight is monitoring OMB's forthcoming BCC list publication, the FAR rulemaking process and WuXi AppTec's reconsideration proceedings. Please contact the authors to discuss how these developments affect your contracts, grants and supplier relationships.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.