UK–US trade deal could threaten the NHS, researchers say

Friday, 13 July, 2018

UK–US trade deal could threaten the NHS, researchers say

A trade deal between the UK and USA could risk increasing drug prices in the UK, which could diminish the affordability and accessibility of England’s National Health Service (NHS).

That’s according to researchers from the University of Michigan, the London School of Hygiene & Tropical Medicine and the University of Sheffield, whose recent opinion piece in The Lancet outlines how the USA’s targeting of so-called ‘foreign free-riding’ in trade deals could lead to a poor deal on pharmaceuticals for the UK post-Brexit. The authors raise concerns that the USA could pressure the UK to change the way it regulates pharmaceuticals in trade deals.

All of the UK’s international trade deals are currently negotiated through the European Union, but the UK Government will need to negotiate new deals to replace existing agreements post-Brexit. The USA is one of the UK’s most important trading partners after the rest of the European Union, and a US-UK bilateral trade deal is a key post-Brexit priority.

But how would such a deal affect the people of Britain? American drug prices are some of the highest in the world, and the US Government does not negotiate drug prices. In addition, the Affordable Care Act prevents the US Food and Drug Administration and the Secretary of Health and Human Services from basing drug approval decisions on cost-effectiveness.

By contrast, similar drugs are often significantly cheaper in the UK, where the government negotiates prices with pharmaceutical companies via the Pharmaceutical Price Regulation Scheme and the NHS makes purchases based on clinical and cost-effectiveness assessments from the UK’s National Institute for Health and Care Excellence (NICE).

In May this year, the US Department of Health and Human Services introduced the American Patients First blueprint, outlining measures to reduce US drug prices which include putting pressure on other countries to allow drug prices to rise in their jurisdictions. Explaining the policy at the time, US President Donald Trump stated, “When foreign governments extort unreasonably low prices from US pharmaceutical companies, Americans have to pay more to subsidise the enormous cost of research and development.”

The blueprint criticises single-payer healthcare systems such as the NHS for imposing drug price controls and accuses foreign governments of not paying their fair share of research and development costs to bring innovative drugs to market — proposing that other nations ‘free-ride’ off of American investment in drug development.

However, the researchers argue that this interpretation overlooks the high cost of drugs for patients, and that drugs should be priced in line with how much benefit they give. They raise concerns that rather than tackling the inherent issues of funding drug development, American Patients First instead represents the interests of pharmaceutical companies and their stakeholders.

“American Patients First is an attempt by the Trump administration to make the USA’s drug pricing problem everybody else’s problem,” said Dr Holly Jarman from the University of Michigan. “By shifting the economic, political and social costs of policies made in the USA onto America’s trading partners, the Trump administration is attempting to show voters that they are doing something about high drug prices while providing benefits to pharmaceutical companies and sympathetic campaign donors.”

With the American Patients First policy and a turn towards protectionist, pro-American trade deals, the authors believe that the USA will push to alter drug regulation in future trade negotiations with the UK. This raises concerns because the ability to enter into trade deals is an executive power in the UK.

“While deals have to be ratified by Parliament, Parliament cannot amend the agreement that the government negotiates, or be directly involved as the negotiation takes place,” said Professor Tamara Hervey from the University of Sheffield. “In addition, health groups are rarely consulted on trade deals, and Parliament and other health-focused stakeholders have limited opportunities to hold the government to account in its trade negotiations.”

In addition, until recently the UK did not have a fully functioning trade ministry capable of complex negotiations with a highly experienced country like the USA. The authors say that the UK is unlikely to get a better deal with the USA than it has as part of the European Union, as the UK market is much smaller than the whole of the EU, meaning the UK has less bargaining power in negotiations.

Lastly, the authors raise concerns that pharmaceuticals will be one part of a wider trade agreement between the UK and USA, and could be an area that the UK compromises on to ensure better deals elsewhere.

“In view of President Trump’s recent trade policy actions, policymakers should take the administration’s argument over drug prices very seriously,” said Professor Martin McKee, based at the London School of Hygiene & Tropical Medicine and a member of the advisory board of Healthier In (an NGO which campaigned to remain in the EU).

“The UK health policy community should press the UK Government to make clear to the public and to the USA that they are not willing to bring the UK’s drug pricing and evaluation regime to the negotiating table in any future UK–US trade talks.”

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