The industry’s trade group has launched its strongest attack to date on the government, accusing it of damaging the integrity of the UK’s business environment by renegotiating the drug pricing mechanism halfway through the current five-year period, The Daily Telegraph reports.

“The decision dented business confidence and the reaction from our global head offices moved the matter beyond the UK, as they began to question the integrity of the UK investment environment,” says Nigel Brooksby, outgoing head of the Association of British Pharmaceutical Industry and head of UK operations at Sanofi-Aventis.

The missive comes just a few days after the UK’s third largest drugmaker, Shire Pharmaceuticals, decided to move corporate headquarters to Ireland for tax reasons. Others, including AstraZeneca, are eyeing a similar move. ABPI members are said to be furious about potential changes to the pricing and are considering moving R&D investment out of the UK in protest. According to the ABPI, a quarter of all corporate research and development spending in the UK is made by pharma.

Late last year, the UK Department of Health decided it would cancel the Pharmaceutical Price Regulation System and cut the average price of patented meds by up to 10 per cent, on top of a 7 per cent cut in 2005.

The government’s decision to scrap the pharmaceutical price regulation scheme (PPRS) is thought to be driven by a desire to cut annual National Health Service drugs bill of about $20 billion by roughly 10 percent. It could also lead to a change in the way drugs are priced in the UK.

Under the current agreement, drug companies are given a free hand to price their drugs on launch, with the National Institute for Clinical Excellence then deciding if they offer value for money and should be prescribed by the NHS. Changes to the system could see pricing set by drug regulators, sometimes taking far cheaper generic drug prices as a reference.