It turns out that weight-loss drugs don’t shrink everything. Take the bestseller Mounjaro, produced by Eli Lilly. Its weekly injection can help patients shed the pounds, but the price is getting fatter. Last week, the US pharmaceutical giant announced that the cost of getting Mounjaro in the UK privately will rocket by up to 170 per cent.
Why the super-sized price hike? It’s because US President Donald Trump believes other developed countries are paying too little for their drugs, and is pressing companies to equalise prices.
Unlike in free-market America, many countries impose price controls on medicines. In the UK, the cost effectiveness of new drugs is judged by Nice, an independent body, and the price is negotiated by the NHS, which is known for driving a hard bargain. There are similar arrangements in other countries.
The result, in Trump’s eyes, is that Americans are paying through the nose to fund new drugs, and Europeans are “free riding” on that research. Those are the words of Steve Moore, a former economic adviser to Trump who has provided advice on this policy.
Trump has demanded that pharma companies sell their wares to Americans on “most favoured nation” terms. This means US customers should pay no more than the cheapest price offered elsewhere.
“What Trump is suggesting is some kind of burden sharing with the rest of the world,” said Moore. “How much should the UK be paying, or Germany? Because they’re free riding on our R&D with their price controls. The Democrats here in the USA say, ‘Well, let’s just have price controls here.’ But then nobody’s going to pay for the R&D, if we don’t pay for it and Europe doesn’t pay for it. It’s a dilemma that we’re trying to deal with.”
The hope is that drug makers will use higher prices elsewhere to cut charges in America, but one outcome is that companies may simply raise prices overseas — as with Eli Lilly. Or they may abandon marginally profitable markets, and keep prices the same in the US. The consequences could be far-reaching and the risk of a scenario where everyone loses out seems high.
Even Moore admits that the outcome of the “most favoured nation” push isn’t clear, and that other steps may be needed to tackle the cost of American drugs. This could mean going after the “middle men” such as companies called pharmacy benefit managers, which help negotiate prices. “We have a very byzantine way of getting the drug from the manufacturer to the patient,” Moore said. “One of the things that we’re thinking about is how do you cut out some of these middle men.”
Separately, Trump has declared that the imports of pharmaceuticals will be hit with tariffs “within weeks”. Quite how this will reduce drug prices in the short to medium term is anyone’s guess.
Sir Pascal Soriot, chief executive of AstraZeneca, the most valuable company on the FTSE 100, has declared himself all in favour of Trump’s demand to equalise the cost of R&D. Of course he is; it means he’ll get paid more for his products.
• AstraZeneca boss demands big rise in NHS drug spending
Yet the pharma industry has specific gripes about the British system that are worth considering. Chief among them is that we, as a nation, don’t spend enough on new medicines: 0.3 per cent of GDP, versus 0.8 per cent in the US, for example.
Drug developers complain that Nice’s methodology is skewed towards approving high-volume, low-cost medications, making it hard to get niche, expensive drugs for specific conditions into the UK. The upshot, they argue, is that some products aren’t even launched here, and our health is poorer as a result.
There is a corollary to this argument: everyone agrees that the UK is a world leader in medical research. But we aren’t backing our researchers when they come up with the goods; we are not speeding their inventions on to the front line of our healthcare.
Life science is a British success story and there is a danger that we will so antagonise some of our brightest stars that they give up and go elsewhere. AstraZeneca has reportedly made noises about moving its London listing.
There is a flipside to consider, however. The NHS may argue that the UK spends less on medicines than its peers precisely because it is so good at bargaining down prices; the Nice model is one others have followed — though not, notably, the US, where pharmacies have much more say in pricing.
Our regulations are highly regarded around the world, and many companies may choose to seek accreditation here because it opens doors elsewhere, giving the lie to the suggestion that they will take flight.
Nice would argue that about 80 per cent of medicines put before it are approved. And, if we are going to volunteer to pay more, shouldn’t we demand more in return?
In one area, however, there is a clear reason to heed industry concerns. NHS pricing is set in five-yearly blocks. The current agreement is called Vpag (the voluntary scheme for branded medicines, pricing, access and growth), launched in 2023. Under a complicated system, drug makers have to pay a rebate back to the government if sales of a drug go above certain levels.
• NHS drug rebate scheme ‘will hit research funding’
In fact, sales have broken forecasts and the rebates that companies are having to cough up are way above what was expected. Hit with this bill, the industry warns that it will have to cut back on research and jobs in the UK; survey data suggests a number of new drugs have already been pulled from launch here since 2023 — indicating that this is not an idle threat.
Vpag is being renegotiated, with indications that the government may give ground.
If the formula is flawed, it is right to rethink it. Without caving into the industry’s every demand, we should show our pharma champions a bit of love.
jon.yeomans@sundaytimes.co.uk
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