Warning of price threat to research

The industry is due to start detailed talks in September or October on the new system, known as ‘value-based pricing’.

Details so far are sketchy but manufacturers fear it could cut rewards for developing new medicines, thereby undermining research in a key European market that is home to major firms like GlaxoSmithKline and AstraZeneca.

Worries over Britain are a further headache for drugmakers already suffering as cash-strapped governments in the eurozone slash prices and revamp payment systems to discourage use of newer and more expensive drugs.

Stephen Whitehead, chief executive of the Association of the British Pharmaceutical Industry, said Britain’s pricing negotiations would decide the future of drug research in the country and companies would go abroad if incentives were cut.