Will most favored nation reduce drug prices in the US…or raise prices in Europe? – Healthcare Economist

The answer seems to be the latter. The Times (UK) reports.

Eli Lilly, the US-based manufacturer of Mounjaro, said it was hiking the UK list price for the medication from September 1 to bring it in line with other nations…
Eli Lilly is increasing the amount it charges pharmacies. The rate for a middle-sized 5mg dose will nearly double, from £92 to £180. The maximum dose, 15mg, will increase from £122 to £330.

Will all Britons be impacted? It seems that the answer is ‘no’. The NHS secured a deal with Lily to make Mounjaro more available, so it seems that prices will only be impacted for the UK’s privately insured. How is Eli Lilly justifying the increased price?

Eli Lilly said: “Following a review, Lilly will increase the UK list price for Mounjaro from September 1 to address pricing inconsistencies compared to other developed countries, including in Europe. In parallel, we have reached an agreement with the NHS to ensure continued supply and patient access. While Lilly does not determine the prices that private healthcare providers set, we are working with them to maintain patient access.”

Lilly said it had initially launched Mounjaro in the UK at a price “significantly below the European average to prevent delays in NHS availability” but that this must now change “to ensure fair global contributions to the cost of innovation”.

This outcome may be surprising to many, but economists have long understood that external reference pricing not only lower prices in high price/high income countries, but it also increases prices and/or delays drug launches in lower price/lower income countries (Maini and Pammolli 2023; Holtorf et al. 2019; Incze et al. 2022; Kanavos et al. 2017).