(Photo by Toon Lambrechts on Unsplash)

FOR YEARS, critics of the Inflation Reduction Act’s drug price controls warned that winter was coming for biopharma. Massachusetts’s 2025 numbers suggest the reckoning has arrived: The state’s biotech industry lost jobs for the first time in two decades, with R&D employment down 3.9 percent.

The warning was based partly on what had already happened in Europe. For decades, European governments have used sweeping price controls on medicines to contain health care costs. The result has been a weakening of the financial incentives that sustain drug development. China has now surpassed Europe in the number of innovative medicines produced, and one industry estimate says 40 percent of the world’s oncology research is occurring in China.

The United States is now conducting its own version of that experiment. And Massachusetts may be giving us an early warning of the consequences.

MassBio, the Massachusetts biotechnology trade association, reported that the state’s biopharma industry lost a substantial number of jobs in 2025 — the first such decline in two decades. Most strikingly, research and development employment fell by 2,563 jobs, or 3.9 percent.

That matters because Massachusetts is disproportionately an R&D center. And when expected revenues from future medicines fall, research is among the easiest expenditures to cut. A company can cancel a clinical trial or shelve a prospective drug more readily than it can close a manufacturing facility, with all the environmental, labor, and other obligations that entails.

The Inflation Reduction Act is hardly the only force affecting biotech employment. Interest rates, capital markets, and the post-pandemic correction have all battered the industry. But it would be equally mistaken to pretend that Washington’s decision to remove billions of dollars in expected pharmaceutical revenue has nothing to do with investment decisions.

Indeed, the consulting firm Vital Transformation estimated that the IRA could ultimately cost the biopharma industry 66,800 to 135,900 direct jobs and another 342,000 to 676,000 indirect jobs. Its analysis explicitly warned of a “nuclear winter” for biotech investment.

Meanwhile, the competitive threat is accelerating.

In 2019, Chinese biotech companies generated $1 billion from licensing deals. Last year, the figure reached $79 billion. Massachusetts remains far ahead, with more than $250 billion in biotech licensing revenue, but China’s trajectory should command attention. MassBio apparently agrees: Its latest industry snapshot now includes a “China Watch.”

MassBio points to rising venture funding in 2026 as evidence that the sector may recover. One important consideration: Even though top-line dollars are up, the average seed round has more than halved since 2022 ($11.1 million then, $4.65 million in the first half of 2026). That’s the venture equivalent of cutting R&D. With that, the magnitude of the IRA’s eventual effect on employment is legitimately debatable. But whether federal price controls represent a major headwind for the industry should not be.

Massachusetts political leaders overwhelmingly supported those controls. We hope the industry here — and especially MassBio, whose latest industry report features so many Massachusetts politicians — begins telling them that their policy choices are weakening the very industry they are celebrating.

That is precisely the debate Massachusetts should be having.

Europe offers the warning. Faced with rising health care costs, governments suppressed drug prices. Investment and innovation migrated elsewhere. China has been one of the principal beneficiaries.

America is now reducing the returns available from developing successful medicines at the same moment China is aggressively building a competing biotechnology industry. If the United States continues down Europe’s path, it should not be surprised if investment eventually follows Europe’s path as well.

For Massachusetts, the stakes are unusually high. Biopharma is not simply another industry here. The Commonwealth has built one of the world’s great concentrations of scientific talent, research institutions, venture capital, and drug development around it. Policies that reduce investment in new medicines therefore threaten not only future treatments but one of the foundations of the Massachusetts economy.

Price controls do not eliminate costs. They change incentives. Reduce the expected return from developing medicines, and over time companies will develop fewer medicines, invest less in research, and put fewer people to work doing it.

Winter was coming. Now it’s here.

William Smith is senior fellow and director of the Life Sciences Initiative at Pioneer Institute.