You may have seen that Merck has announced that it will cancel a proposed $1.3 billion research center in London and terminate its pharmaceutical R&D projects in the U.K.

Why? Merck decided to pull out of Britain because of “the overall undervaluation of innovative medicines and vaccines by successive U.K. governments.” Read: DRUG PRICE CONTROLS. This isn’t the result of any sudden overnight change of heart by Merck.

According to David Ricks, CEO of Eli Lilly: “The U.K. has been on a long, slow glide path from a leader in biopharmaceuticals to really a laggard, and that’s happened over the last 20 years through a number of policy mistakes.”

Many of the European nations have suffered the same fate of being shut out in the manufacturing of new drugs.

Sally Pipes of the Pacific Research Institute has done a terrific analysis: “the U.S. has swooped in to dominate the field.” She cites a Nature Reviews study that finds roughly 55% of the $276 billion of global pharmaceutical research and development investment in 2021 was by companies headquartered in the United States, compared with just 29% to Europe:

The lesson: drug price controls kill innovation not diseases.

Yet, the United States seems to be following the price control playbook that has resulted in the demise of Europe’s pharmaceutical industry.