Donald Trump is so chuffed that he has brokered a deal between Boris Johnson and Nigel Farage that he will expect a quid pro quo. And our Prime Minister will be so desperate for a US trade deal that the American president will have him over a barrel.
One of Trump’s top demands will be that the NHS pays more for American drugs. After all, he said last year that foreign countries are “freeloading” by paying “a tiny fraction of what the medicine costs in the USA”.
In the UK, the National Institute for Health and Care Excellence (NICE) plays a major role in negotiating medicine prices. If it recommends a drug, the NHS is legally obliged to fund its use. As the NHS is not funded by a limitless supply of money, NICE uses cost-effectiveness thresholds for recommending treatments – forcing American companies to charge reasonable prices if they want to sell to the NHS.
While this is good for patients, it angers the American pharmaceutical lobby. It wants “competitive market-derived pricing” and “full market access” from any UK trade deal. That goal has made it into the list of US negotiating objectives. What’s more, drug pricing has already been discussed in six meetings between UK and US trade officials, according to Channel 4’s Dispatches.
If the US gets its way, the NHS would be expected to fund medicines regardless of their cost-effectiveness. With costs rising and budgets limited, patients will suffer.
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The Americans have form in this area. When they negotiated the US-South Korea trade agreement, they included a section that restricted the use of national price controls. Instead, Korea’s health service would pay “competitive market-derived prices”, or at the least “appropriately recognise the value of the patented pharmaceutical product”.
The US has also pushed Canada and Mexico to give its pharma companies longer monopolies on new drugs. When it renegotiated NAFTA, it insisted on protecting new biologic drugs from generics for “at least ten years” – compared to five years in Mexico and eight in Canada.
Why do we think that a UK which has just lost full access to the EU market would be in a better place to stand up to bullying than Canada, South Korea or Mexico?
An extra £12bn a year?
To get an idea of how much this could cost, look at the 20 medicines the NHS spends the most on. Dr Andrew Hill (University of Liverpool) and his colleagues compared the prices paid in Britain with the lowest price offered for each drug in the US. If the NHS was forced to pay that, it would have to cough up almost £12 billion more every year – an extra £226 million every week.
Brexiters may argue that we wouldn’t immediately jump to American prices for those drugs, but that misses the point. Today, these drugs are cheap. Tomorrow, new drugs would be expensive, and not just those sold by Americans. Longer patent periods and market pricing would allow pharmaceutical companies from other countries to charge inflated prices as well.
If we want a US trade deal and a healthy NHS, the best solution is to negotiate from a position of strength. And the best way to do that is to stay in the EU, the largest trade bloc in the world.
