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Sustaining pharmaceutical innovation after the Inflation Reduction Act: trends in R&D spending, equity investment,
1Center for Integration of Science and Industry, Bentley University, Waltham, MA, USA.
Abstract:
There is concern that the drug pricing provisions of the US Inflation Reduction Act (IRA) could disincentivize investment in pharmaceutical innovation. This work shows that research and development (R&D) spending by pharmaceutical manufacturers, investment in biotechnology, merger and acquisition (M&A) of clinical-stage firms, and drug licensing all increased in the six quarters following passage of the IRA compared to the preceding six quarters and stabilized above pre-pandemic levels after the market disruptions of the pandemic era. These results are indicative of a robust industry that continues to invest in innovation despite the prospects of decreasing future drug prices due to the IRA.
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