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Lilly chief issues warning on UK reforms

Published on 11/02/11 at 07:30am
Eli Lilly chief executive John Lechleiter

Lilly chief executive John Lechleiter has warned that two key UK initiatives could fall seriously short of encouraging investment in the country.

Giving the keynote speech at The Economist pharma conference in London, Lechleiter said the industry needed incentives to invest as it experienced a 'crisis' in R&D productivity.

While admitting that the industry had to make its R&D more efficient and productive, he also warned that healthcare reforms in the US and UK could undermine research.

“Encouraging medical innovation needs to be a key purpose of health care reforms in both the United States and the United Kingdom," Lechleiter said. "We must continually make the case for innovation through our words, but more importantly, through our actions and the value we bring to patients through innovative medicines."

The warning comes at a particularly difficult time for the UK, following Pfizer’s announcement that it is to close its research centre in Sandwich, Kent, with the loss of more than 2,000 jobs.

Mr Lechleiter’s visit also coincides with a consultation on government plans to introduce ‘value-based pricing’ on medicines in 2014.

Speaking to Pharmafocus, Mr Lechleiter said there was no guarantee that the value-based pricing system as currently proposed would help patients and encourage innovation.

“The devil is in the detail. There is much more subtlety and nuance to recognising the value of medicine,” he said.

Reports emerged late last year that Lilly’s UK leadership had warned government ministers that VBP could be a serious backward step compared to the current system. Lechleiter also indicated that the industry was unhappy with ready-made plans for VBP being foisted upon it by the government.

“What we have been arguing for as an industry is that we want this to be a true dialogue, not a fait accompli. Because, while the direction might be correct in principle, in practice we have to be sure that not only do we get fair pricing, but also that patients actually get access to these medicines.”

Another key initiative, first proposed by the previous government is the Patent Box, which would give tax breaks against intellectual property and research conducted in the UK.

Lechleiter said: “I think the concept is good, but it is too restrictive – it is really focused on enterprises that have their IP registered in the UK.”

Lilly has a UK research centre based in Windelsham, Surrey where 350 employees conduct research in the neuroscience field but, because Lilly is a US-registered company, it doesn’t stand to benefit under the current proposals.

Lechleiter said if the Patent Box, were given a more inclusive criteria and used alongside the existing R&D tax credits system it "could potentially” be a meaningful incentive.

The Patent Box consultation ends on 22 February, and the UK government is certain to face intense lobbying to extend incentives to help secure long-term investment.

Andrew McConaghie

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