Effects of the IRA on the pharmaceutical industry

President Biden signed the Inflation Reduction Act (IRA, P.L. 117-169) into law on August 16, 2022, following its passage along party lines in the Senate and House. While the IRA was intended to reduce the deficit and provide funding for major investments in healthcare, domestic energy production, and manufacturing, and to mitigate climate change, there are several provisions with accounting and tax implications relevant to the pharmaceutical industry.

Mark Drozdowski, KPMG Partner and the national life sciences audit leader and Christine Kachinsky-Bye, KPMG Partner and the U.S. life sciences tax industry leader wrote this thought leadership to provide a practical guide to the financial accounting and tax issues a pharmaceutical company might face in its year-end and first-quarter 2023 financial reporting for drug pricing rebates, the newly enacted corporate alternative minimum tax, the excise tax on stock repurchases, and a variety of tax credits.