It turns out that weight-loss drugs don\u2019t 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.<\/p>\n
Why the super-sized price hike? It\u2019s because US President Donald Trump believes other developed countries are paying too little for their drugs, and is pressing companies to equalise prices. <\/p>\n
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.<\/p>\n
The result, in Trump\u2019s eyes, is that Americans are paying through the nose to fund new drugs, and Europeans are \u201cfree riding\u201d on that research. Those are the words of Steve Moore, a former economic adviser to Trump who has provided advice on this policy. <\/p>\n
Trump has demanded that pharma companies sell their wares to Americans on \u201cmost favoured nation\u201d terms. This means US customers should pay no more than the cheapest price offered elsewhere.<\/p>\n
\u201cWhat Trump is suggesting is some kind of burden sharing with the rest of the world,\u201d said Moore. \u201cHow much should the UK be paying, or Germany? Because they\u2019re free riding on our R&D with their price controls. The Democrats here in the USA say, \u2018Well, let\u2019s just have price controls here.\u2019 But then nobody\u2019s going to pay for the R&D, if we don\u2019t pay for it and Europe doesn\u2019t pay for it. It\u2019s a dilemma that we\u2019re trying to deal with.\u201d<\/p>\n
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 \u2014 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.<\/p>\n
Even Moore admits that the outcome of the \u201cmost favoured nation\u201d push isn\u2019t clear, and that other steps may be needed to tackle the cost of American drugs. This could mean going after the \u201cmiddle men\u201d such as companies called pharmacy benefit managers, which help negotiate prices. \u201cWe have a very byzantine way of getting the drug from the manufacturer to the patient,\u201d Moore said. \u201cOne of the things that we\u2019re thinking about is how do you cut out some of these middle men.\u201d<\/p>\n
Separately, Trump has declared that the imports of pharmaceuticals will be hit with tariffs \u201cwithin weeks\u201d. Quite how this will reduce drug prices in the short to medium term is anyone\u2019s guess.<\/p>\n
Sir Pascal Soriot, chief executive of AstraZeneca, the most valuable company on the FTSE 100, has declared himself all in favour of Trump\u2019s demand to equalise the cost of R&D. Of course he is; it means he\u2019ll get paid more for his products.<\/p>\n
\u2022 AstraZeneca boss demands big rise in NHS drug spending<\/a><\/p>\n 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\u2019t spend enough on new medicines: 0.3 per cent of GDP, versus 0.8 per cent in the US, for example.<\/p>\n Drug developers complain that Nice\u2019s 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\u2019t even launched here, and our health is poorer as a result.<\/p>\n There is a corollary to this argument: everyone agrees that the UK is a world leader in medical research. But we aren\u2019t backing our researchers when they come up with the goods; we are not speeding their inventions on to the front line of our healthcare.<\/p>\n 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<\/a>.<\/p>\n 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 \u2014 though not, notably, the US, where pharmacies have much more say in pricing.<\/p>\n 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.<\/p>\n 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\u2019t we demand more in return?<\/p>\n 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.<\/p>\n