Questions abound about the resilience of the Massachusetts economy. Pioneer Institute has documented that high-net-worth individuals are fleeing the state for states with friendlier tax environments. There is also a question about whether small businesses in the state can sustain and thrive in a business environment increasingly characterized by high taxes and greater regulation.
One issue that has not received the attention it deserves, however, is the health of the life sciences industry in the wake of drug price controls established under the Inflation Reduction Act (IRA). Massachusetts hosts the most important cluster of biopharmaceutical research in the world.
One well-respected life sciences consulting firm, Vital Transformation (VT), has estimated that, because of the revenue losses from the IRA, nationwide, the U.S. life sciences industry will result in the loss of up to 135, 900 direct jobs and up to 676,000 indirect jobs. VT estimates that when revenue losses peak between 2026 and 2035, they will total $76 billion over a 10-year period, resulting in the loss of 10,180 direct jobs in Massachusetts and 47,658 indirect jobs.
Massachusetts is particularly vulnerable to job losses when biopharma revenues decline because our life sciences sector is research-based. When revenues decline, the easiest place for biopharma companies to make cuts is in early-stage and clinical research. The closure of manufacturing facilities requires substantial government filings; cancelling a clinical trial is easy in comparison.
VT estimates that ten biopharma firms will be particularly impacted by the loss of revenue under the IRA. Those ten firms invested over $21 billion in Massachusetts partnerships with startup companies and others. Massachusetts was second only to California in the amount invested in these partnerships. According to VT, the IRA will reduce the amount of available capital that these firms can invest by 30 percent by 2035.
A more recent analysis by Fierce Pharma estimates that in 2025 alone 17 large pharma companies reduced their head count by 22,000 US employees which not only means fewer employees, it also means fewer licensing deals, fewer investments, fewer venture partnerships. Many of those large pharma companies have a significant R&D presence in Massachusetts.
The clearest way to assess Massachusetts exposure is to examine the companies with the largest research footprints in Massachusetts to see how they are faring—and will fare under the IRA.
AstraZeneca (AZ). AZ’s global R&D headquarters is in Cambridge. The IRA reduced the price of AZ’s diabetes/heart failure drug, Farxiga, by 68 percent. Farxiga had Medicare sales of $4.3 billion in 2023. In the second round of price controls, AZ’s leukemia drug, Calquence (with Medicare sales of $1.7 billion) will have its price reduced by 40 percent.
Bristol Myers Squibb (BMS). BMS has a substantial research hub in Massachusetts. In the first round of price controls, BMS’s blockbuster, Eliquis, made the list of price-controlled drugs. Eliquis is one of the biggest selling drugs in Medicare with sales of $18 billion in 2023. Eliquis will take a 56 percent price reduction. In the second round of price controls, BMS’s cancer drug, Pomalyst, made the price control list and will have its price reduced by 60 percent on Medicare sales of $2.1 billion. In the third round of price controls, the government has put BMS’s autoimmune drug, Orencia, on the price control list while the government has not released the Medicare sales numbers for this drug, all sales of Orencia will total $3.41 billion globally in 2026 with most of those sales in North America.
Pfizer (PFE). PFE has a large R&D presence in Cambridge and will see significant impacts from the IRA. PFE co-markets the $18 billion BMS drug Eliquis. In the second round of price controls, the government put the Pfizer cancer drug Ibrance on the price control list. Ibrance will see a 50 percent cut in its Medicare price on sales of over $2 billion.
Johnson & Johnson (J&J—Janssen Pharmaceuticals). J&J has a growing research presence in Massachusetts and also will see significant impacts from the IRA. In the first round, J&J’s drug Stelara was put on the price control list and will see a 66 percent price reduction on sales of $2.9 billion. Stelara’s revenue declines are likely to be the result of biosimilar competition, not simply the price cut by the IRA. However, J&J’s blockbuster blood thinner, Xarelto, will see a price cut of 63 percent in Medicare, on sales of $6.3 billion. In the third round of price controls the government put J&J’s cancer drug Erleada on the price control list. Again, for this third round, the government did not release Medicare sales numbers for Erleada but in 2024, the drug had sales of $3 billion globally and was seeing sales growth of 8 percent a year.
Abbvie (AB). AB has a Cambridge-based R&D operation and, again, the company will see significant impact from the IRA. In the first round of price controls, AB’s blood cancer drug, Imbruvica, took a 38 percent price cut on sales of $2.3 billion. In the second round, two of AB’s drugs made the price control list. AB’s constipation drug, Linzess, took a 75 percent price cut on Medicare sales of $1.9 billion. Also, AB’s drug for bipolar disorder, Vraylar, took a 44 percent price cut on Medicare sales of $1.1 billion. In the third round, the government placed AB’s blockbuster Botox on the price control list. Botox has US sales of $5 billion. However, the drug is not covered by Medicare so it is not clear how significant the impact will be, but a price cut in Medicare could bleed into other payers.
Novartis (NV). The large Novartis R&D facility in Cambridge is one of the mainstays of Massachusetts R&D employment. The most significant impact of the IRA for Novartis came in the first round with a 53 percent price cut for the blockbuster heart failure drug Entresto, which had Medicare sales of $3.4 billion. Novartis was spared in the second and third round but the impact of the Entresto price cut will be significant.
Gilead Sciences (GI). GI has a significant research presence in Cambridge where they research oncology and HIV treatments. GI was spared in the first two rounds but in the third round, their blockbuster HIV treatment, Biktarvy, made the price control list. It is not clear what the 2025 Medicare sales number is for Biktarvy, but the drug generated over $14 billion in sales in that year.
Eli Lilly (EL). EL has announced plans to increase its research presence in Massachusetts. EL has a strong balance sheet due to its GLP-1 franchise. Nonetheless, it will see significant impacts from the IRA. In the third round, two EL drugs made the list: Trulicity and Verzenio. Trulicity is a true blockbuster with sales of nearly $8 billion last year as Type 2 diabetes has growing prevalence. Verzenio, a breast cancer drug, has seen significant growth, and analysts project sales could exceed $5 billion in the near term.
It should be noted that reductions in revenue due to the IRA will have significant impacts on Massachusetts even if those companies with reduced revenues do not have a significant presence in Massachusetts. The entire Boston region, including Kendell Square and the city of Boston comprise the R&D ecosystem for the state. A broad area will be impacted. Taken together, these firms anchor thousands of R&D, translational sciences, and startup positions inside the Route 128 corridor. Massachusetts is the “go to” ecosystem for biopharma R&D. Therefore, companies without a significant presence here can and do make significant investments here.
