I’m sure we’ve all been witnessing the beginning of the end for pennies. There are already signs that say transactions will be rounded to the nearest five cents. What concerns me is what will happen to all those penny sayings, like “a penny saved is a penny earned” and even more important, will we finally get an answer to why we only have to pay a “penny for your thoughts” but our sage advice costs “two cents worth”. I do all this silliness to retain my superior standing in dad joke ratings and to hopefully get you to keep reading to find out what this crazy guy has to say, but more importantly to segue into the COINS Act and why it is a very serious move by our government that could have some long-range consequences.
The COINS act, (Comprehensive Outbound Investment National Security Act), was enacted as part of the Fiscal Year 2026 National Defense Authorization Act (NDAA). It was defense focused legislation that limited the investment limitations to:
· Semiconductors and microelectronics
· Quantum information technologies
· Artificial intelligence system
One of the most important changes the act did politically was to move these investment rules from being solely an executive-branch initiative to a congressionally authorized statutory regime, an Act that is funded by Congress. This whole process was important to keep defense secrets away from countries that are not necessarily our friends. This Act does that and it’s great! It’s our government performing one of its basic tasks, keeping us safe from our adversaries. The problem here is what they want to do next.
While the legislation focused mainly on semiconductors and other technologies, Congress gave the Department of the Treasury a wide berth to implement the rules, including a stricter interpretation of the act itself. As such, Treasury has issued a proposed rule that now would place restrictions on U.S. investments overseas, including biomanufacturing. These restrictions will impact the development and availability of new and promising treatments. While China has gained ground in recent years, the U.S. is still the global leader in biomanufacturing. By cutting off this investment, we risk hurting our own stature in the world of biotech manufacturing.
The biopharmaceutical business is about assembling the best scientists, giving them the resources and freedom to be creative and innovative and then having the infrastructure to support the testing and the final production. The U.S. has proven for decades to be the best at doing this. Lately, it has become evident that China has become very good at early-stage drug development and cost-effective clinical trials. It is a worry that they will continue to make advances and threaten our leadership in this area. The government’s solution is to reduce outside investment to thwart their advancement. The way they are doing this is to use the COINS Act to regulate this type of investment. They want to expand the areas of regulation far beyond its original intent. Suddenly go from defense related chips and software to limiting investment in bioscience. I understand that it’s scary to think that one of our most powerful adversaries may take the lead in new medicine discovery but limiting an avenue that drug manufacturers have found to speed up innovation is not the answer. What is needed is to do everything we can to eliminate the barriers to innovation and let the biopharma companies do what they have proven they can do better than anyone else, find life changing medicines.
The good news is that this expansion of the COINS Act is not a done deal. This is a proposed expansion of the Act. We have until December 7th to comment on this change. Seniors Speak Out has already released a statement on this proposed rule change and we will be commenting further on this expansion of the COINS Act. I will say that it’s almost certain that this change will be challenged in court. While the guidance in the Act directed that how implementation must be done it said nothing about expanding its reach into non-defense related areas. I wonder how veterans’ groups perceive this trip outside the guardrails of defense focused controls. You will certainly hear more about this issue.
Best, Thair