A System in Stalemate: Drugmakers Reject Government’s Pricing Ultimatum

The relationship between the UK government and the pharmaceutical industry is in a state of stalemate, after drugmakers flatly rejected an ultimatum from the health secretary over a new NHS drug pricing deal. This rejection has escalated the conflict, with companies now publicly pausing investments until a better offer is on the table.
The rejected deal failed to address the industry’s core concerns about making the UK market internationally competitive. Companies argue that the proposal did not go far enough in tackling low overall spending, outdated NICE assessment methods, or the excessively high revenue “clawback” rate.
The consequences of this stalemate are now being felt across the economy. MSD’s cancellation of its £1bn research hub is the most visible casualty, but the investment freezes by Eli Lilly and Sanofi show that the problem is systemic. A Sanofi executive has since called the UK a “terrible place” to do business.
The government is reportedly trying to reopen talks, but it will be negotiating from a weakened position. The industry has demonstrated its willingness to walk away from the UK market, putting the onus on ministers to come back with a “proper plan” that can break the deadlock and lure back investment.