US policymakers need to be careful as biopharmaceutical companies pull back their investments in the UK. Eli Lily CEO Dave Ricks said in an interview with CNBC.
Lily recently suspended plans to create a biotech incubator called the UK Gateway Lab and joined other biopharma companies investing in the country amid concerns about UK drug pricing and other policies, and the country has managed the prices of branded drugs in several ways. This year’s rate was about 23% higher than expected, prompting a widespread boost from the industry.
“The UK has been on a long, slow, gliding path, from biopharmaceutical leaders to really slow lagards. That has happened through many policy mistakes over the past 20 years,” Rix said. “Most importantly, their market is really unattractive to us, making it less attractive every year.”
“So, in the context of global competition for resources, global competition for investment, they are being valued fairly poorly, despite a strong academic and scientific foundation,” he added in an interview with the roughly $5 billion drug manufacturing plant built by a $5 billion drug manufacturing plant in Virginia.
Lix said Lily had been discussing changes in intellectual property and regulatory with UK policymakers, but suspended those discussions while awaiting policy responses from the UK government. He said negotiations between the US and the UK over a trade contract could “slack things down,” but it would be “pretty difficult” to consider investing in it until things change.
“I think that’s a message to our country, or I think other capitals will go where it’s desirable, where there’s profits in investment. And now it’s not really the UK,” he said.
Over the years, the UK and other countries in Europe have prioritized the cost of medicine. US lawmakers recently gave Medicare the ability to negotiate drug prices for the first time. President Donald Trump wants to take further ideas that come to mind, such as linking US drug prices to payment fees in similar countries. Meanwhile, Trump has been focusing on drug tariffs in a move to overturn precedents that exempt decades of precedents from taxation.
Trump hopes that European countries will pay more for drugs and the US to pay less. Pharmaceutical companies like Lily say they agree with that goal, but it’s not clear how they will achieve it. Lix said European companies have “studied the techniques to keep prices low,” making it difficult to raise prices overseas.
“To be honest, that’s why we need the US government and the US trade relations ambassadors, the Commerce Department and everyone else to help us,” Rix said. “I think that’s a big problem if there’s no overseas market.”
“I think the administration is talking about their pricing policy goals: increase pricing in developed countries and lower that in the US,” he added. “And conceptually, we need to look at the facts about the changes in Europe on earth. So far, they haven’t, and the UK is a prime example.”
Lily recently raised prices for U.K. Munjaro in the private market. Rix said it will be “minor” for Lily’s business. Because these sales are not a major part of global revenue, he pointed it out as an example of where the UK is behind. The country only covers obesity drugs in limited circumstances. That means most people who take it to lose weight are paid out of their pocket.
“This is all part of the problem of whether expensive new drugs are not listed or wait three, four or even five years before the patents are almost expired. “In the US, we launch new products. They are available the next day. Not in Europe. That kind of pressure on businesses is one of the reasons why people can see low prices along with the government-led systems I’ve spoken about.”
