BREAKINGVIEWS-Eli Lilly takes slim bet with bloated UK pricing

By Aimee Donnellan

DUBLIN, Aug 15 (Reuters Breakingviews) - Eli Lilly LLY.N is embarking on a delicate pricing experiment in the UK. On Thursday, the $647 billion maker of obesity and diabetes treatment said it was hiking the price of its star weight loss jabs by 170%. CEO David Ricks’ move looks like a response to Donald Trump’s gripes over cheap foreign drugs. It also, however, suggests it won’t be easy for pharma groups to level global costs.

Under Eli Lilly’s new pricing system the highest dose of diabetes drug Mounjaro, which is often used as a weight loss treatment, will rise from over 122 pounds to 333 pounds from the start of September. The hike is far from ideal for a country battling an obesity epidemic. In February of this year the UK government revealed that nearly two-thirds of the adult population of England are living with obesity or are overweight.

Still, Ricks may be more worried about what Donald Trump thinks. The U.S. president in July wrote to 17 pharma CEOs including Ricks, demanding they reduce stateside drug prices to be in line with international peers. Trump warned that he would deploy every tool in the country’s arsenal to protect Americans from “continued abusive drug pricing practices”. One potential way for pharma companies to deflect Trump’s attack is to raise prices internationally, and possibly even use the extra profit to cut U.S. costs.

Yet raising drug prices is a risky move, as it may anger governments and make them more likely to pursue cheaper alternatives. That is particularly the case in the obesity market, where Eli Lilly is competing with arch-rival Novo Nordisk NOVOb.CO. The Danish group’s Ozempic will now be up to two-thirds cheaper than Mounjaro.

That may be why Ricks is not putting too much at risk. The UK is a small market, which typically makes up about 5% of pharma companies' global revenues, an analyst told Breakingviews. And obesity drug prices in Britain are low even by European standards, Eli Lilly says, making it easier to justify raising them. Lastly, Ricks is for now only applying the hike to private buyers of the drug, not the state-backed National Health Service. The UK price hit may help Ricks stay in Trump’s good graces. But the tentative nature of the experiment suggests he is in no hurry to replicate it more widely.

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CONTEXT NEWS

Eli Lilly will raise the UK list price of its weight-loss treatment Mounjaro by up to 170%, it said on August 14.

The new price, which also applies to Eli Lilly's type 2 diabetes medicine that has the same name, is effective from September. The price for a month's supply of the highest dose of the medicine will increase from 122 pounds to 330 pounds, Eli Lilly said.

The higher price will affect those who pay for Mounjaro privately but will not affect those prescribed the medicine through the British public healthcare system, which has a separate deal, an Eli Lilly spokesperson said.