Drug companies are fleeing the United Kingdom. This month, Merck announced that it would cancel a proposed $1.3 billion research center in London and terminate all of its research and development efforts in the country.
To justify its decision, the drugmaker cited “the overall undervaluation of innovative medicines and vaccines by successive UK governments.”
Those governments systematically undervalue medicines by slapping price controls on them. And those decisions have made the country inhospitable to medical progress.
Unfortunately, the price controls that are driving firms out of Britain are now landing on American shores. Unless our own government changes course, we’ll suffer the same fate as Britain.
Signs of drug companies losing patience with Britain’s price controls have been apparent for years. Last month, talks broke down between the UK government and major pharmaceutical firms over the next update to the country’s Voluntary Scheme for Branded Medicines Pricing, Access, and Growth — one of its chief price-control mechanisms.
That scheme caps the year-over-year growth in what the government pays for drugs. And it has forced drugmakers to forego anywhere from around a quarter to more than a third of their UK revenues in recent years.
By undervaluing the latest medical breakthroughs in this way, the British government has ensured that drug firms have fewer resources available for creating the next generation of medicines.
Is it any wonder that drug researchers no longer see the country as a welcome home for innovation? “The U.K. has been on a long, slow glide path from a leader in biopharmaceuticals to really a laggard, and that’s happened over the last 20 years through a number of policy mistakes,” said David Ricks, the CEO of Eli Lilly.
The United States has benefited from these Old World missteps. Roughly 55% of global pharmaceutical research and development investment in 2021 went to the United States, compared with just 29% to Europe.
Yet the United States seems to be following the policy playbook that has resulted in the demise of Europe’s pharmaceutical industry.
Take the drug price control scheme signed into law by former president Joe Biden as part of the 2022 Inflation Reduction Act.
That policy allows the federal government to name its own price for a growing list of medicines paid for through Medicare.
The first 10 drugs dispensed through the Part D prescription drug benefit will be hit with price caps in January 2026.
Fifteen more will be subject to price controls starting in 2027.
The next year, 15 dispensed in-clinic via Part B or via Part D can face price controls. In 2029 and thereafter, 20 drugs will have their prices forcibly capped.
As this price control program unfolds, the U.S. drug market will come to resemble the UK’s. Just 59% of medicines launched between 2012 and 2021 were available in the United Kingdom as of October 2022.
Eighty-five percent of those meds were available in the United States.
For its part, the Trump administration seems poised to accelerate the march toward price controls — most notably through a most-favored-nation (MFN) pricing scheme.
This proposal would force drug companies to sell their medicines to Americans at the lowest price available in any other nation.
The United Kingdom shows exactly what will happen under such price controls. Novel drugs won’t be available to patients, and drug research will head to more inviting climes — including China.
The economic implications of a pharmaceutical exodus from the United States would be disastrous. The pharmaceutical sector currently employs well over 1 million people directly and another 3.8 million indirectly. It has an economic output totaling $1.65 trillion.
If the United States is to keep its status as the global leading source of state-of-the-art medicines, it will need to stick to the market-oriented policies that earned us this status in the first place.
Following the United Kingdom toward ever-greater state control over drug pricing will squander our nation’s economic and scientific advantages — and leave patients with far fewer new cures.
Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is “The World’s Medicine Chest: How America Achieved Pharmaceutical Supremacy – and How to Keep It.” Follow her on X @sallypipes. Read Sally Pipes’ Reports — More Here.
© 2025 Newsmax. All rights reserved.
