Eli Lilly to Raise Overseas Drug Prices to Offset U.S. Price Cuts

The U.S. White House's actions to lower domestic drug prices are driving up the cost of medicines in Europe.

Eli Lilly (LLY.US) announced on Thursday that it will raise the official prices of its drugs in overseas markets. Eli Lilly stated, "In order to reduce drug prices in the United States, the prices paid by governments and healthcare systems in other developed markets, such as Europe, need to increase."

This statement comes as the White House is pressuring large pharmaceutical companies. According to a U.S. government report based on 2022 data, the official prices of branded drugs in the United States are 422% higher than in other wealthy countries. At the end of last month, President Trump sent a letter to Eli Lilly and Company CEO David Ricks and approximately a dozen CEOs of major pharmaceutical companies, demanding that they lower the prices of some drugs in the U.S. by the end of September, or the government will "use all means to protect American families."

Eli Lilly's move appears to be a response to the White House's request, but its actual significance is still difficult to assess. Typically, governments and insurance agencies do not pay the full list price for medications, so the specific impact of this price increase on the company’s revenue in Europe and other overseas markets remains unclear.

The Trump administration has been pushing for a "most-favored-nation price" policy, which ties the price of prescription drugs in the United States to the lowest prices in other wealthy countries. In a letter to pharmaceutical company CEOs at the end of July this year, Trump demanded that the prices of already marketed drugs in the U.S. be reduced to the "most-favored-nation" level, and that newly launched drugs also adhere to this low price for all other payers.

By raising drug prices in Europe, Eli Lilly may offset to some extent the profit impact from lowering prices in the U.S. More importantly, the increase in European prices could also raise the benchmark for the "most-favored-nation price" that the White House intends to adopt.

Specifically, Eli Lilly has increased the list price of the largest tablet size of Mounjaro (its blockbuster drug for treating type 2 diabetes and obesity) in the UK market by 170%. The drug is sold under the Zepbound and Mounjaro brands in the US, while it is marketed solely under the Mounjaro brand in the UK. Additionally, the list prices for lower-dose versions in the UK will also rise: the lowest dose will increase by 45%, while higher doses will see increases ranging from 96% to 138%. Eli Lilly stated that UK patients can still access the drug through the National Health Service.

Boosted by the news, Eli Lilly's stock price rose 3.62% on Thursday.