The US ambassador to the UK has urged Rachel Reeves to offer a better deal on drug pricing to global pharmaceutical groups, piling pressure on the government in the same week that Merck scrapped a ￡1bn London development and AstraZeneca paused a Cambridge project.

At a private dinner at the ambassador’s residence in London on Sunday, Warren Stephens raised with the chancellor the US government’s concerns about the amount the UK pays for drugs as well as the value for money formula used for drug approvals, said multiple people briefed on the meeting.

One of the people said Stephens sought to convey to Reeves how strongly the US government feels about the need for the UK to improve the environment for pharmaceutical companies. Another described the discussion about drug pricing and approvals as “frosty”.