Following high-profile moves by Eli Lilly and other major drug companies to pause investment in the UK last year, the Indianapolis-based drug giant is clarifying its wishes and sharing updates on negotiations there.
Patrick Jonsson, Lilly’s head of international operations, told the Financial Times that the company is asking the country’s leaders to increase NHS drug prices and phase out a multibillion-pound rebate scheme in return for Lilly to continue investing in the UK.
Lilly’s investment in the UK has stalled since last autumn. David Rix, chief executive of Eli Lilly, told the FT in September that the UK was “probably the worst country in Europe” in terms of drug prices and that it was “not an attractive environment for investment”.
The company now appears to be making progress towards changing the status quo in the UK, with Mr Johnson telling the paper he feels “optimistic” that a deal with British ministers can be reached by this summer.
Current discussions also are considering an “innovative” pricing plan that would tie payments for obesity drugs such as Lilly’s Zepbound to whether patients can return to work as a result of treatment, the report said.
As part of negotiations with the pharmaceutical industry, UK authorities last year confirmed plans to raise NICE’s cost-effectiveness standards for medicines, which will come into force in April. This threshold is used to assess whether a medicine provides value for money for the NHS by balancing cost and the quality-adjusted life years (QALYs) the treatment provides.
Previously, thresholds were set in the cost-effectiveness range of £20,000 to £30,000 per QALY gained. The new threshold increases the range from £25,000 to £35,000/QALY.
Still, Mr Lilley is not convinced this is enough, and Mr Johnson is looking forward to further steps to meet the extra £1.5bn of NHS drug spending promised by UK authorities in December.
“What we really need to see is these targets translated into really well-defined action plans with interventions and timelines,” he told the FT.
As Mr Johnson says, UK drug prices have been “too low for too long and even with the current benchmarks, we are not back to where we started more than 20 years ago”.
The executive also expects to see changes in 2026 to the already heavily reduced rebate system. The program requires pharmaceutical companies to pay government rebates at the rate of 14.5% of their sales to the NHS, a significant reduction from the previous 22.9%. Still, Johnson says the payments “should actually drop to zero” over time.
The lower rebates and adjustments to NICE standards come as a result of the landmark UK-US trade deal, which granted tariff exceptions for medicines from the UK in exchange for price reviews. The agreement follows a series of suspensions of investments in the UK by Lilly and its peers.
In September, Lilly chose not to finalize its investment in the proposed Lilly Gateway Labs site yet as it was “awaiting further clarity regarding the UK life sciences environment,” a spokesperson told Fiers in an emailed statement at the time. Gateway Labs was originally announced in 2024 as part of a £279m investment in the UK life sciences sector.
Meanwhile, Sanofi froze its R&D investment in the UK during the same period, and Merck withdrew its research operations from the UK while scrapping plans for a £1bn R&D hub in London.
Even after December’s trade deal, AstraZeneca showed no signs of restarting investment in its suspended £200m research facility, confirming in January that the expansion remained on hold.
