By Muvija M

LONDON, Sept 24 (Reuters) - Eli Lilly LLY.N Chief Executive Dave Ricks said Britain was "probably the worst country in Europe" for drug prices in an interview with the Financial Times, intensifying pressure on the government to improve market conditions for drugmakers.

The remarks are part of a broader backlash from pharmaceutical giants, including Merck MRK.N and AstraZeneca AZN.L, who have paused or scaled back investments in Britain over the challenging environment.

Ricks said Britain would miss out on new drugs if it did not raise prices and scrap a rebate scheme which requires companies to contribute a portion of their UK drug revenue to the state-run NHS.

The VPAG rebate scheme - an agreement between the government, the NHS and the pharmaceutical industry - is aimed at improving patient outcomes, managing the NHS' medicine bill, and supporting the life sciences industry.

Media reports have said that talks with the government over the scheme have been deadlocked.

The health department did not immediately respond to a Reuters request for comment on the status of the negotiations.

UK CHARGES US FOR OUR OWN SUCCESS, SAYS LILLY CEO

Britain pays less for drugs than other developed countries, Ricks said, telling the FT: "Unless that changes, I don’t think they will see many new medicines and I don't think they will see much investment."

"That's the UK's choice, but we react to those choices," he said, adding that the company "would like to get rid of the clawback scheme called VPAG . . . which charges us for our own success."

In response, a government spokesperson said Britain was working closely with industry to deliver on its goal of making "the UK the destination of choice for life sciences companies to invest," adding it was open to future engagement.

In August, U.S.-based Lilly announced a temporary pause in UK shipments of its weight-loss drug Mounjaro, ahead of a new price hike of up to 170% for the treatment.

This month, Merck said it was scrapping research operations in London, citing a challenging business environment, while AstraZeneca paused a planned 200 million pound investment in its Cambridge research site.

(Reporting by Muvija M; Editing by Bernadette Baum)

((Muvija.M@thomsonreuters.com; within the UK: +44 7776813338, outside the UK: +91 80 61822698; Twitter: https://twitter.com/muvija_m;))