From drug pricing to tax reform: 2026’s key life sciences accounting updates

Talking points

• A wave of regulatory, legislative, and standard-setting activity—from new tariffs and drug-pricing initiatives to sweeping tax reform—continues to reshape financial reporting across the life sciences industry.
• The 2026 Life Sciences Industry Accounting Guide (the “Guide”) from Deloitte offers updated guidance, new sections, and fresh examples addressing these developments.
• This year’s Guide answers the accounting questions that many life sciences accounting professionals are asking right now.

The life sciences industry runs on innovation, and it isn’t just the science that keeps advancing. The regulatory environment, macroeconomic backdrop, and accounting standards are all evolving quickly.

For teams navigating that landscape, Deloitte recently released the 2026 Life Sciences Industry Accounting Guide, with interpretive guidance, illustrative examples, and the latest standard-setting, legislative, and rulemaking developments.

Read on for some of the key updates you should know.

Revenue recognition

Revenue arrangements continue to raise complex questions for life sciences entities, often requiring the application of significant judgment. This year’s Guide adds content reflecting both market developments and Securities and Exchange Commission (SEC) scrutiny.

• Most-Favored-Nation (MFN) drug pricing: A new section addresses recent activity advancing MFN initiatives intended to align certain US drug prices with the lowest prices in other developed nations—a topic dominating headlines as major manufacturers sign voluntary agreements.
• Inflation Reduction Act (IRA) drug pricing: The discussion of the IRA’s drug-pricing provisions has been expanded to address potential financial statement impacts.
• New developments and practice complications: Updates include a new section on contingent promises, decision trees for the series provision and consideration payable to a customer (with a Changing Lanes discussion of ASU 2025-04), and recent examples of SEC comments on collaborative arrangements.

Research and development (R&D)

As R&D grows more complex and innovation continues to be fueled by mergers and acquisitions, the related accounting requires careful consideration. The Guide offers updated content and clarifications around this issue.

• Derivatives scope refinement (ASU 2025-07): A new section discusses the final standard refining the scope of the derivatives guidance in ASC 815 and clarifying share-based payments from a customer under ASC 606.
• Costs and SEC themes: A clarification covers nonrefundable advance payments for future clinical trial management services, along with a recent example of an SEC comment on R&D and cost classification.

Income taxes and tax legislation

This year’s Guide restructures its tax content around a new section consolidating provisions relevant to life sciences entities, anchored by the One Big Beautiful Bill Act signed into law on July 4, 2025.

• Key 2025 Act provisions: One section connects the changes to global intangible low-taxed income, the foreign-derived intangible income deduction, base erosion and anti-abuse tax, capital expensing, research and experimental expenses, net operating losses, and business interest expense.
• Tariffs and income tax accounting: A new section addresses how tariff-driven profitability, liquidity, and impairment concerns may influence income tax accounting under ASC 740 in affected jurisdictions.

Initial public offerings (IPOs)

IPOs remain a defining feature of the industry: Approximately 43% of all IPOs from 2020 through November 2025 were in the life sciences sector.¹ The Guide offers timely insights for current and potential transactions.

• SEC process and structure: A new discussion covers the SEC’s March 2025 expansion of the nonpublic review process for draft registration statements; reorganized guidance on special purpose acquisition company and shell-company mergers, including new-standard adoption; and internal control over financial reporting after close.
• Reverse mergers: A new section addresses reverse mergers in which the target is the accounting acquirer under ASC 805-40.

Emerging issues

The updated Guide also examines hot topics shaped by new standards and by significant developments affecting the industry.

• Tariffs and the US Supreme Court’s International Emergency Economic Powers Act (IEEPA) ruling: New sections address the US government’s expansion of tariffs and the Supreme Court’s February 20, 2026, ruling that the IEEPA doesn’t authorize the president to impose them. The Guide covers many accounting considerations surrounding the ruling, including the accounting for the potential recovery of tariffs that were paid before the ruling.
• BIOSECURE Act considerations: A new section addresses the BIOSECURE Act, which restricts federal agencies and recipients of federal funding from procuring specified biotechnology equipment, software, or services from designated “biotechnology companies of concern,” alongside the resulting disclosure and impairment considerations.
• Generative AI and software costs (ASU 2025-06): Expanded content addresses developing Generative AI applications and the accounting for software costs under newly amended ASC 350-40, with new examples on capitalization and the removal of references to development stages.
• New standards: Updates cover identifying the accounting acquirer when the legal acquiree is a variable interest entity (ASU 2025-03), government grants (ASU 2025-10), induced conversions of convertible debt (ASU 2024-04), and hedge accounting improvements (ASU 2025-09).
• Disaggregation of income statement expenses (DISE): A significantly expanded section reviews ASU 2024-03: scope, relevant expense captions, required natural expense categories (including purchases of inventory), selling expenses, and effective date and transition. This section aims to tackle the questions top of mind to life sciences entities as they understand and adopt DISE requirements.

What role can Deloitte play?

Deloitte knows that accounting in life sciences continues to evolve. As new challenges arise and business priorities shift, our 2026 Life Sciences Industry Accounting Guide provides guidance that finance organizations can use to help address many of the financial reporting issues they face. Download the full 2026 Guide or explore individual sections—and don’t hesitate to reach out to us with any thoughts or questions regarding life sciences accounting services.

Endnotes

1. Deloitte analysis of IPOmarket data.

The services described herein are illustrative in nature and are intended to demonstrate our experience and capabilities in these areas; however, due to independence restrictions that may apply to audit clients (including affiliates) of Deloitte & Touche LLP, we may be unable to provide certain services based on individual facts and circumstances.

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