Pharma Trade Secrets: The truth about a trade deal with Trump

November 2019

The prices that our NHS will pay as a result of a US trade deal is under threat. Our chronically underfunded NHS is already struggling to afford spiraling medicine prices. Pharmaceutical companies are charging such high prices that the NHS is increasingly having to reject or ration new, effective medicines because they are unaffordable. And yet, the US pharmaceutical industry is lobbying hard to ensure a US-UK trade deal strengthens the rules that keep prices high as well as to attack the regulations that control prices. In spite of repeated government rhetoric that the ‘NHS is not on the table’ in a US trade deal, there is a real risk that the NHS could be forced to pay higher prices for medicines.

A US trade deal will cover more than just the buying and selling of goods between the two countries. It will also include the setting of rules on intellectual property rights as well as demands on market access. Both of which will have a direct impact on the prices that the NHS will have to pay for US drugs. The US pharmaceutical industry has made clear their demands from this trade deal. They want: 

To gain greater market access for high-priced US drugs. 

The US pharmaceutical lobby has longcomplained about UK processes to regulate drug prices as barriers for their high-priced drugs. This includes NICE (National Institute for Health and Care Excellence) which assesses new drugs based on their cost-effectiveness for the NHS. The US government has highlighted that ‘government regulatory reimbursement regimes’1 are in the firing line. In addition to NICE, price regulation schemes such as the Voluntary Scheme for Branded Medicines Pricing and Access which tries to keep the branded medicine bill affordable, is also under threat.

To strengthen intellectual property rights over new drugs.

This will extend the duration of monopoly protection over the most advanced drugs and delay the ability of the NHS to source cheaper alternatives. New drugs are patented for a minimum of 20 years which means that no other company can make or sell that drug during the protection period. This enables drug companies to charge whatever price they want and has serious implications on patient access. There are also further exclusivities that extend monopoly protections. Demands to strengthen these means high prices can be charged for longer, delaying access to cheaper alternatives. 

President Trump and his administration have made no secret that they blame high drug prices in the US on “freeloading” from other countries’ socialised health systems and want to use trade deals to rectify this.2 In a speech last year, President Trump said: “I have directed US trade representative Bob Lighthizer to make fixing this injustice a top priority with every trading partner. And we have great power over trading partners. You’re seeing that already. America will not be cheated any longer and especially will not be cheated by foreign countries.”3

However, high drug pricing cannot be addressed by pitting US patients against UK patients as patients across the world are facing high prices and access to medicines is key to ensuring the right to health for all people. The idea that if other countries pay higher drug prices, US patients can pay less, makes no sense. It will just mean higher profits for drug companies. High prices are an outcome of a global system of powerful intellectual property rights, locked-in through a trade regime that protects high drug prices over public health needs.

The NHS can negotiate lower prices than the US because of the NHS’ bargaining power as a single purchaser, compared to the market-based US system of supplying to multiple insurers. The other big difference is that all new drugs in the UK must undergo a clinical and economic effectiveness review before they can be made available to the NHS. The US industry lobby group, Pharmaceutical Research Manufacturers of America (PhRMA), has been vocal in criticising the UK for this, saying that countries like the UK fail to “appropriately recognize the value of innovation in their pricing and reimbursement policies, instead engaging in actions that distort markets and artificially depress prices below what a competitive market would provide.” In other words, PhRMA are complaining that the drug prices the NHS pay are too low. 

Topic: Type: