UK’s Low-Price Drug Policy Backfires, Scaring Away Investors

The UK’s long-standing policy of securing low prices for medicines from pharmaceutical companies appears to have backfired, creating a market so unattractive that it is now scaring away vital investment in research and development. What was intended as a cost-saving measure for the NHS is now threatening the future of the entire UK life sciences sector.
The policy’s consequences are now starkly visible. With prices and spending lagging far behind international competitors, the UK is seen as an unprofitable market. This has led directly to MSD canceling its £1bn research facility and Eli Lilly pausing a new lab, as the potential returns no longer justify the investment.
A senior executive from Sanofi captured the sentiment perfectly, calling the UK a “terrible place to sell medicines.” This is the direct result of a system where price thresholds have not been updated since 1999 and where a punitive “clawback” reclaims a large chunk of any revenue earned.
The government is now faced with the unintended consequences of its own policy. It must find a new balance that allows the NHS to secure value for money without making the UK a commercial dead end for innovation. The industry is demanding a new framework that rewards, rather than punishes, investment.