The U.S. government’s response to COVID-19 has indeed prompted the Committee on Foreign Investment in the United States (CFIUS) to broaden its interpretation of national security, particularly concerning the healthcare sector and associated supply chains.
Historically, CFIUS focused on safeguarding sensitive areas such as the defense industrial base and information technology sectors. While it has reviewed transactions involving healthcare companies, the primary concern was the protection of U.S. citizens’ sensitive personal data. However, the pandemic underscored vulnerabilities in medical supply chains and the critical nature of healthcare infrastructure, leading to an expanded scope of review.
In response to these challenges, CFIUS has intensified scrutiny of foreign investments in the healthcare sector, especially those that could impact the availability of essential medical supplies and technologies. This includes a heightened focus on transactions involving biotechnology, pharmaceuticals, and other areas vital to public health. The aim is to prevent potential disruptions in supply chains that are crucial for national security and public health preparedness.
This expanded focus is not limited to the duration of the pandemic. The increased attention to healthcare-related investments is expected to persist, reflecting a long-term shift in how national security is defined and protected in the context of foreign investments. Transaction parties should anticipate continued and possibly heightened political and regulatory scrutiny at the intersection of healthcare and national security.