Sustaining pharmaceutical innovation after the Inflation Reduction Act: trends in R&D spending, equity investment, and business development

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.