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Introduction: Eli Lilly calls UK ‘worst country in Europe’ for drug prices; cost of gold rises again
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The boss of Eli Lilly has called the UK “probably the worst country in Europe” for drug prices, echoing remarks from other pharmaceutical executives, after putting a planned London laboratory on hold.
Dave Ricks told the Financial Times in Houston, Texas, that the UK will miss out on new medicines if it doesn’t pay more for them. He called for a contentious rebate scheme to be ended.
The country pays less for drugs than other developed countries, he said
unless that changes, I don’t think they will see many. New medicines and I don’t think they will see much investment. That’s the UK’s choice, but we react to those choices.
Negotiations between the UK government and industry over the voluntary scheme for branded medicines pricing, access and growth, or VPAG, broke down without an agreement in late August. Under the scheme, companies pay back 23.5% of their UK revenues to the NHS, a rebate rate that is much higher than comparable rates in the rest of Europe.
Ricks said Lilly “would like to get rid of the clawback scheme called VPAG . . . which charges us for our own success”.
Fellow US drugmaker Merck, known as MSD in Europe, recently ditched a £1bn research centre in London that was under construction, and the UK’s biggest pharmaceutical firm AstraZeneca paused the £200m expansion of its research labs in Cambridge two days later. Ricks said:
They say, ‘well, why are you cancelling your investments?’ It is not an attractive environment.
Lilly itself has paused a planned London gateway lab, an incubator space for new drugs where biotechs can tap into Lilly’s expertise, part of a £279m investment package in the UK. It is understood that the company will not sign the lease for the building until the commercial environment improves. It has three gateway labs in the US and is building two in China.
In August, Lilly raised the UK price of its blockbuster weight loss injection Mounjaro by as much as 170% for people who buy it privately.
What we had seen is people taking trains from Paris to buy UK Mounjaro. That doesn’t make a tonne of sense for us.
Donald Trump has pushed drug companies to lower their prices in the US, where they have traditionally been much higher than in the rest of the world. Ricks’ remarks came as Lilly announced a new $6.5bn manufacturing facility in Houston.
Paul Naish, the UK head of market access for the French company Sanofi, told the Guardian recently that Britain was “at a critical point”.
We’ve still got the best universities, we’ve got some of the best scientists in the world, but it’s not a good place to do the development work for medicines. It’s an expensive place to operate, and it’s a terrible place to sell medicines.
In financial markets, the price of gold is rising again, with the precious metal seen as a safe-haven investment in times of turmoil.
Spot gold is trading just below yesterday’s new record high of $3,777.80 an ounce, at $3,772.3, up 0.2% on the day, amid geopolitical uncertainty and expectations of further interest rate cuts from the US Federal Reserve.
The Fed’s chair, Jerome Powell, yesterday pushed back hard against claims the central bank allows politics to drive decisions, in the midst of an extraordinary battle over its independence.
The Agenda
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9am BST: Germany Ifo business climate for September
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10am BST: UK Treasury gilt 2030 auction
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3pm BST: US New Home sales for August
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Updated at 08.55 CEST
