From being one of the least regulated markets in Europe, the new agreement will move the UK to one of the most heavily regulated, Andrew Monro, a partner at consultancy KPMG in London, points out. He says big biotech and pharma companies particularly resent the fact that the government refuses to allow them to market their entire product portfolio in the UK—and now it wants explicit price control for the limited portfolio it does allow.

“Those restrictions feed through into companies' perceptions of how attractive the UK market really is,” says Monro. “Companies will come to the UK later and later in their launch programs.” He points out that the UK is a big employer of R&D scientists, with Pfizer (Sandwich), AstraZeneca (Charnwood), GlaxoSmithKline (Brentford) and Merck (Hoddesdon) all running substantial R&D facilities here. “If you restrict their profits you may force these companies to do research in other countries such as China, Japan and the US.”

The drug industry is wary of making explicit threats to this effect, but it is dropping heavy hints. As Nigel Brooksby, head of the UK operation of Sanofi-Aventis in Guildford, UK, puts it: “The PPRS [Pharmaceutical Price Regulation Scheme] has been responsible for a lot of investment in the UK, and some people in the industry are saying that they won't invest here until the current black clouds are lifted.”