Inflation Reduction Act leads to R&D crunch amid spending cuts

The introduction of the Inflation Reduction Act in the US is expected to reduce revenue for pharmaceutical companies by as much as 50% in some drug categories, potentially leading to more conservative investment strategies. The Act’s provision allowing Medicare to negotiate prices for certain high-cost drugs could reduce future revenue, discouraging companies from investing in high-risk drug development projects. Broader economic factors such as rising interest rates and inflation are also reshaping R&D priorities in the sector.