David Ricks, CEO of Eli Lilly, talks about investing in the UK and US

US policymakers should take note that biopharmaceutical companies are withdrawing their investments in the UK. Eli Lilly Chief Executive Officer Dave Ricks said in an interview with CNBC.

Lilly recently put on hold its plans to launch a biotech incubator called Gateway Labs in the United Kingdom, joining other biopharma companies that have put investments in the country on hold due to concerns about drug prices and other policies in the United Kingdom. This year’s rate of around 23% was higher than expected, prompting widespread opposition from the industry.

“The UK is on a long, slow journey from a biopharmaceuticals leader to a real laggard, and that has happened through a series of policy mistakes over the last 20 years,” Ricks said. “The most important thing is that their market is really unattractive to us, and it is becoming less attractive every year.”

“So in the context of a global competition for resources, a global competition for investment, they’re doing pretty poorly, and that’s despite a strong academic and scientific base there,” he added in an interview about a $5 billion pharmaceutical manufacturing plant Lilly is building in Virginia.

Ricks said Lilly had been talking to policymakers in the U.K. about intellectual property and regulatory changes, but had paused those discussions while it waited for a policy response from the U.K. government. He said it was possible that negotiations between the US and UK over a trade deal could “shake things up”, but until the situation changed it would be “pretty difficult” to think about investing there.

“I think that’s a message to our country or any country that capital is going where it’s needed, where there are benefits to invest. And at the moment that’s not really the UK,” he said.

The UK and other countries in Europe have placed great emphasis on controlling drug costs for years. U.S. lawmakers recently gave Medicare the ability to negotiate drug prices for the first time, and President Donald Trump wants to go further, floating ideas like tying drug prices in the U.S. to the price paid by similar countries. Meanwhile, Trump is seeking tariffs on pharmaceuticals, which would undo decades of precedent exempting drugs from duties.

Trump wants European countries to pay more for medicine and the US to pay less. Pharmaceutical companies like Lilly have said they agree with this goal, but it is not clear how they will achieve it. European companies have mastered “the art of keeping prices low,” which will make it difficult to raise prices abroad, Ricks said.

“I think it’s difficult to be honest and that’s why we need the U.S. government and the U.S. Ambassador for Trade Relations and the Department of Commerce and everyone else to help us,” Ricks said. “If we don’t have a market abroad, I think that’s a big problem.”

“I think the government has talked about the goal of its pricing policy being to raise prices in developed countries and lower prices in the United States,” he added. “And conceptually we’re for it, but we need to see the facts on the ground in Europe changing. So far that’s not the case and the UK is a prime example of that.”

Lilly recently increased the price of Mounjaro in the UK on the private market. Ricks said it would be “a small thing” for Lilly’s business as these sales do not represent a large proportion of global sales, but he pointed out that this was an example of where the UK has fallen behind. The country only covers the cost of the obesity drug in certain circumstances, meaning most people who take it for weight loss pay the cost out of pocket.

“This is all part of the problem of expensive new drugs not being listed or waiting three, four, sometimes five years, and then your patent is almost expired. So these are the things that we need our government to change,” Ricks said. “In the US, we’re launching a new product that’s available the next day. That’s not the case in Europe, and that pressure on companies is one of the reasons why people are seeing the lower prices along with the government-controlled systems that I’ve been talking about.”