UK drug giants turn on Labour

Britain's three largest drugs companies last night warned Tony Blair, the Prime Minister, that their industry could be devastated if the government prevented doctors prescribing GlaxoWellcome's new flu treatment, Relenza, on the state health service.

AstraZeneca and SmithKline Beecham joined Glaxo in denouncing the government's new National Institute for Clinical Excellence (Nice) and its recommendation to ban Relenza on the NHS.

The pharmaceutical giants, with combined turnover of £27 billion sterling (€41.8 billion), said Nice amounted to a new competitive hurdle for British drugs companies operating a global market.

Their combined letter to Mr Blair amounts one of the strongest denunciations of government policy by any industrial group since Labour came to power. It raises the political stakes in what seemed like a one company battle by Glaxo. The letter - signed by Dr Tom McKillop, chief executive of AstraZeneca, as chairman of the British Pharma Group - said Nice's advice to Mr Frank Dobson, Health Secretary, "has potentially devastating consequences for the future of the British-based pharmaceutical industry".

The three companies reminded Mr Blair that they had expressed deep concern earlier this year, when Nice was being set up, about the damage it could do.

"We received repeated assurances from ministers and from Sir Michael Rawlins (chairman of Nice) that our concerns were well understood and that Nice would not operate as a fourth hurdle for new medicines," they said. "The landmark ruling on Relenza makes it crystal clear that our worst fears were fully justified."

By chance, Glaxo yesterday announced 3,400 job losses worldwide, including 1,700 in Britain, in a restructuring of manufacturing. The cuts are the result of a yearlong review and are not connected with the Relenza dispute - though they demonstrate the vulnerability of British pharmaceutical employment to competitive pressures.

Although international drug companies try to file for marketing approval as quickly as they can in as many countries as possible, they like to use their home market as a sales platform. Roche of Switzerland, for example, introduced its flu drug Tamiflu - Relenza's only competition - on the Swiss market last week.

In the letter, the British companies said one factor in their international success "has been our ability to launch new medicines in the UK as soon as they have satisfied the Medicines Control Agency's requirements to demonstrate quality, safety and efficacy".

"The emergence of Nice as a new obstacle to market entry serves to wipe out, at a stroke, a key element of the UK's competitive advantage in the global pharmaceutical industry."

The letter was endorsed by Mr Jan Leschly, SmithKline Beech am's chief executive, as well as Dr McKillop and Sir Richard Sykes, Glaxo's chairman. Any savings to the NHS would be "insignificant" compared to losses to the UK economy from the loss of the its high standing in the international pharmaceutical industry.