U.S. policymakers should take note as biopharmaceutical companies pull back on investments in the U.K., Eli Lilly Chief Executive Officer Dave Ricks said in an interview with CNBC.
Lilly recently paused plans to create a biotech incubator called Gateway Labs in the U.K., joining other biopharma companies that have put investments in the country on hold amid concerns about drug pricing and other policies in the U.K. The country controls the price of branded medicines in a few ways, including by requiring companies to pay a rebate if the government spends more than expected on branded drugs. This year’s rate of about 23% was higher than anticipated, prompting widespread pushback from the industry.
“The U.K. has been on a long, slow glide path from a leader in biopharmaceuticals to really a laggard, and that’s happened over the last 20 years through a number of policy mistakes,” Ricks said. “The most important one is that their market is really unattractive for us, and it’s become more unattractive every year.”
“So in the context of a global competition for resources, global competition for investments, they rate pretty poorly, and that’s despite a strong academic, scientific base there,” he added during in an interview about a $5 billion pharmaceutical manufacturing plant Lilly is building in Virginia.
Ricks said Lilly had been in talks with U.K. policymakers on changes around intellectual property and regulation, but paused those discussions while it awaits a policy response from the British government. He said it’s possible negotiations between the U.S. and U.K. on a trade deal could “shake things loose,” but until the situation changes, it’s “pretty hard” to consider investing there.
“I think that is a message to our country, or any other, that capital goes to where it’s it’s wanted, where there’s benefits to invest. And right now, that’s that’s not really the U.K.,” he said.
The U.K. and other countries in Europe for years have prioritized controlling the cost of medicines. U.S. lawmakers recently gave Medicare the ability to negotiate drug prices for the first time, and President Donald Trump wants to go even further, floating ideas like linking the price of drugs in the U.S. to the rate similar countries pay. Meantime, Trump is eyeing tariffs on pharmaceuticals in a move that would upend decades of precedent exempting medicines from the levies.
Trump wants European countries to pay more for medicines and for the U.S. to pay less. Drug companies like Lilly have said they agree with that goal, but it’s not clear how they’re going to achieve it. European companies have “mastered the art of keeping prices low,” which will make it difficult to raise prices overseas, Ricks said.
“I think it’s difficult to be honest, and this is why we need the U.S. government and U.S. trade relation ambassador, as well as the Department of Commerce and everyone else to help us,” Ricks said. “If we don’t have a market overseas, I think that’s a major problem.”
“I think the administration has talked about the goals of their pricing policy is to increase the pricing in developed countries and lower it in the U.S.,” he added. “And conceptually, we’re for that, but we need to see the facts on the ground change in Europe. So far, they haven’t, and the U.K. is a prime example of that.”
Lilly recently raised the price of Mounjaro in the U.K. in the private market. Ricks said it will be “a minor thing” for Lilly’s business since those sales are not a big part of global revenue, but he pointed to it as an example of where the U.K. is falling behind. The country only covers the drug for obesity in limited circumstances, meaning most people who are taking it for weight loss are paying out of pocket.
“This is all part of the problem that expensive new medicines don’t get listed or they wait three, four, sometimes five years, and then your patent is nearly expired. So these are the kinds of things we need help from our government to change,” Ricks said. “In the U.S., we launch a new product, it’s available the next day. That’s not the case in Europe, and that kind of pressure on companies is one of the reasons why people can see the lower prices along with those government driven systems I spoke about.”
