Yves here. With the election crowding out other US news, and the new lockdowns roiling the UK, important topics like Brexit have temporarily receded. But whether the UK gets a thin trade pact with the EU or winds up with no deal at all, it still needs to stitch up an agreement with the US, and pronto too. And the US still wants its claws in the NHS.
This post explains how the outcome of the Presidential election will have little impact on the content of a UK trade deal, although it does mention that a Biden Administration would be less likely to move quickly. And no matter who is in the White House, the Democrats in Congress will insist that the UK adhere to the Good Friday Agreement, a considerable complication that Johnson’s government has tried to pretend doesn’t exist.
By Ben Horton, who lives and works in Bristol, UK as a digital communications coordinator for a charity. He is also a patient leader for the Just Treatment campaign. Originally published at openDemocracy
The U.S. elections take place amidst record-breaking early turnout as well as grim reports of unprecedented levels of voter suppression. And the stakes could not be higher.
Regardless of what happens, the new (or incumbent) president will have an eye trained on Free Trade Agreements (FTAs). Trump has made clear his willingness to push US corporate agendas onto an isolated UK. Biden may be less interested than Trump in prioritising a UK deal (and providing political cover to the Brexit project). But the Democrat candidate’s track record on trade means that under a Biden presidency, too, there could be grave global trade-related consequences for the NHS and the patients who rely on it, in particular when it comes to access to drugs and treatments
So what is an FTA, and why are they important? An FTA dictates the terms of economic trade, either directly between two countries such as the US and the UK, or between larger blocs of countries. They cover policies like tariffs, taxes, and intellectual property – in essence, what we sell, what we buy, and how much we pay for it.
With Brexit looming, the UK desperately needs to strike trade deals in order to offset the economic shock of leaving the EU, so the British government is in a much weaker negotiating position than before. Knowing this, the US will exploit their advantage and seek to force concessions from the UK across the board, most crucially when it comes to the pricing of drugs and medicines purchased by the NHS to treat patients like you and I.
Drug pricing and the US-UK FTA was a big issue this time last year in the general election, with Labour highlighting that under a new agreement the NHS spending on US-made drugs and medicines could skyrocket. The Conservatives have persistently responded that the NHS is “not for sale” but that’s not what’s at stake in this instance. US pharmaceutical companies aren’t looking to buy the NHS, instead they are focused on extracting as much money from it as possible by gouging prices in a trade deal that favours them.
This isn’t speculation, either – it’s well-documented that drug prices have been discussed at length throughout the trade talks, with US negotiators expressing excitement around ‘liberalisation’, a euphemism for the relaxation of rules around issues such as agriculture (chlorinated chicken, anyone?) and indeed, how much they are able to charge the NHS for medicine.
With regards to drug pricing the outcome of Tuesday night’s election is almost immaterial. The Trump administration has stated repeatedly that increasing drugs prices overseas is a priority, with the POTUS himself blaming foreign “freeloading” foreign countries for high domestic drug prices (rather than, I don’t know, for-profit healthcare and the largest pharmaceutical lobby in the world!) Biden, meanwhile, has recent experience of going to bat for the US pharmaceutical industry – under the Biden-Obama administration the US sought to join the Trans-Pacific Partnership (TPP, now termed CPTPP after some amendments) which offers similar, and in some cases even worse leg-ups for pharmaceutical firms. The Trump administration exited the TPP but Biden may seek to return to it in its new iteration, which would force the UK to negotiate on its terms when it comes to trade.
Whatever happens, the coming months will be crucial when it comes to the future of the NHS. If pharmaceutical companies are given the green light to ramp up prices will mean that the NHS is unable to afford some drugs and treatments, and will be forced to either ration them to patients or deny them treatment outright. A trade deal that creates a windfall for US pharma companies could very likely increase suffering and death from treatable conditions here in the UK.
Patients and the NHS come before corporate profit. An eye-watering amount of money and political will is being exerted to re-orient the UK towards a for-profit healthcare system, but we are fighting back, and together, we can win.
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I think they have far worse in store for the NHS than inflated pharmaceutical prices. The ‘service’ will be public, but rampant outsourcing will mean that most of the work will be done by a handful of connected insider contractors. We’ve seen what this means with Covid – vast amounts (literally, billions of pounds) thrown at contractors who then simply don’t do the work, or use underpaid and abused workers to do it.
An underreported aspect of Brexit is that it frees the UK from the very strict EU rules on public contracts. All outsourcing contracts of any significant scale within the EU are subject to (strongly enforced) regulations on transparency and openness. The UK is now free from these, so the government can simply hand those contracts to insiders. This will be like 18th Century royal monopoly concessions all over again, except at an even more gigantic scale. Some might even think this was the reason some elements in business were so enthusiastic about it.
David Cameron spelled it out,” the NHS will always be free at point of purchase”, he avoided the fact that what ends up at that point will have been so degraded by the many hands being washed in its delivery, it will have become a financial health service for its functionaries.
The public sector in england is now a gigantic slush fund, nothing more.
And if EU Directives and Commission oversight were really that great, we wouldn’t be in the mess we’re in:
https://baselgovernance.org/sites/default/files/2020-03/Mike%20Beke_Political%20influence%20in%20public%20procurement_2018_0.pdf
(pg. 67, but the whole report is worth reading because EU procurement policy actually embeds the advantages of the big players because, by introducing a Byzantine, complex and convoluted set of procurement rules, small suppliers and potential new entrants face an administrative hurdle and lack of economies of scale in form filling and box ticking; plus schmoozing the Commission is a temptation for corruption in itself).
If you read that report you link to, you would see that it highlights the importance of EU Regulations in takling public health procurement corruption and notes the problems with overcoming national ideological patterns in precurement policies (Section 4.4.3). In other words, the problems is corrupt national implementation, not the EU level Directives.
The quote you give relates to direct to bribery for the provision of services, this is not the matter I am referring to, which is the procurement of supply contracts at a national level.
Which is classic EU bait and switch.
The Member States’ governments, when faced with popular disquiet (about the usual suspects, Crapita, Serco, the Big Four consulting shops…) stitching up procurement and why outsourcing ends up with the same-old, same-old names responsible for the previous failures being awarded contracts blame EU policy and the Commission (“we have to open it up to competitive tender, if we don’t, we’ll get sued for a biased selection process“) and the big players get an inherent advantage because subjective criteria, like creating potential for less experienced service providers, can’t be strongly weighted — all weightings have to be the same and the tender can’t “make allowances” for less experienced tender submitters.
The Commission claims that, ahh, it would like to do a better job of regulation, but those pesky Member States won’t give it more powers, so, oh dear, what a pity, if the system produces sub-optimal outcomes, it’s not the Commission’s fault.
So neither national governments can be held accountable (because they blame the Commission) and the Commission evades responsibility (because it “lacks the powers”), changing existing Directives is like pulling teeth (and there’s no consensus from the Member States to do it).
The industrial scale players have therefore hit a sweet spot. Just enough inadequate regulation from the Commission to deter real competition and to protect their scale-effect positions, just enough interference in national governments’ abilities to run procurement based on direct accountability to their voters. A perfect arrangement. No wonder nothing ever happens and “nothing can be done”.
We live in time where real money earned and in hand doesn’t exist. Credit is injected into nearly every transaction. So knowing this, what I would expect is for the Federal Reserve to continue to make credit lines available to the UK specifically to pay for the ridiculous markups of all drugs. Of course the ususally to-big-to-fail-outfits need to be involved to collect their fees. NHS patients need not worry, the federal reserve will very low rates over a very long time. No added cost, the UK is the US. So Problem? What problem? Now China is getting into this game, it’s a mandate from heaven plus China gets to ‘annoy’ the US.
Thank you, Paul.
That is to be expected after the shopkeeper’s milk snatcher and draft dodger daughter sold off the family silver. There’s nothing left except the government teat to feed on.
One can see how déclassé the modern Conservative Party has become. The head of the covid vaccine programme, City and Wall Street venture capitalist (sic) Kate Bingham, recently shared with investors details of what firms the British government is conducting research with and what progress has been made, including contracts for production. The pharmaceuticals firms are all listed.
Nothing wrong with venture capital, Colonel, just with some of the venture capitalists. You should appreciate it’s a neoliberal monoculture, like the City but smaller. Some solidarity would be appreciated.
One day I will write a blog “Venture Marxist”…. :-)
Healthcare both in the UK and the US are complex and I seriously doubt whether trade negotiators or even big Pharma in the US really understand what the consequences might be. Personally, I suspect the trade deal is a non-starter if relaxation of drug price restrictions in the UK is on the cards even if it is funded through taxation with the blame on COVID.
The UK population will not accept non free healthcare and it is worth remembering that the senior echelons of the NHS are political animals who have the means to make things very difficult for government politicians. The political orientation of the NHS is to resist privatization and to keep developments and solutions internal with perhaps mixed results. Whilst healthcare is generally free in the UK there are some small charges particularly for prescriptions. These charges seem to have come about after a recognition that efficiency improvements don’t lead to reduced costs (as politicians expected) but increased demand. This means that there are already some mechanisms to claw-back costs from the public.
Drug prices are mostly set by the UK government with some complex consequences. The first consequence is that most drugs are rationed to prevent UK buyers selling into the US market. The second consequence is that global buyers find it difficult to leverage global buying power. The third consequence is that UK prices sometimes dip below profitability and cause availability issues.
Drug research which often drives high drug prices may have different funding mechanisms in the US and elsewhere. Funding in the US often looks more like a gambling casino with high interest rate costs, but on the other hand regulatory approval is easier for US developed drugs. There is a risk here that the pipeline of new drugs research moves to the UK from the US if regulatory approval is aligned.
Healthcare services and Specialized medical procedures are also likely to be on the table for discussion. Already in the UK some healthcare preventative care (Blood pressure testing for example) , some specialized medical care and even Accident and Emergency departments are out sourced to private companies. By using lower leverage than the NHS (High debt for new Hospitals) and by using higher staffing and staffing specialization private companies can in certain areas reduce costs and increase service. The NHS and government disagree on the extent of this but it might provide opportunities for health services providers in the US (There are a lot of US owned pharmacies, private hospitals and Specialized Treatment centers already active). It is worth remembering that the NHS leverage and low staffing levels make this possible and has caused disjointed less secure patient information. I think the complete mismanagement of funding and investment in the NHS has opened the door.
The healthcare parties who would benefit from a trade deal might not be the ones that seem obvious. The UK population trust and respect the NHS and will accept some fraying around the edges with privatization, but a political party which deliberately undermines the NHS will most likely regret it. A TPP (Trans Pacific Partnership) deal seems more likely bearing in mind a US trade deal is likely to cause problems for existing trade deals and it is only really Boris pushing and even Dominic Cummings sounds unconvinced with his strategy for a UK Technology giant player to rival the US.
I have to object to parts of this. First, the drug buying process isn’t secret or complex. Every country of any consequence bargains hard over drug prices. Even much smaller Australia is effective, in part because they determine (as in restrict) which meds will be used, and often reject the latest version of a drug, which is too often a trivial reformulation for the purpose of extending patent life and justifying a higher price. The US is very attentive to the needs of Big Pharma, and if there is any way for a trade deal to limit the bargaining over prices, say by requiring the UK not to restrict drug choice, I can see that being an ask.
Second, I’m not sympathetic to the crying over R&D. The US gives huge subsides to drug research via the NIH and other agencies. Even so, over 85% of the so called “new drug applications” are not for bona fide new drugs, but instead as mentioned above, are strictly for patent-gaming, such as a 24 hour timed release version v. the original 3x a day formulation. Second, drug companies spend more on marketing than they do on R&D. What other industry is so profitable that it can afford an in-person sales force to call on small businessmen (doctors)? And that’s before you get to the barrage of TV ads. They have ALSO spent more on dividends and buybacks than on R&D.
So don’t cry to met that they don’t have enough to spend on R&D. They have tons but choose not to deploy it there.
I would tend to agree that basic discovery is largely funded by the government and that it gets patent-gamed.Moving from discovery research to proof of concept and manufacturing development funding then you start to see the venture capitalists and hedge funds involved as well as the NIH.Venture capitalists outside the US have a lower appetite for risk so late stage funding tends to be taken up by Big Pharma funded by the financial industry.NIH Funded drugs are more likely to receive expedited FDA approval or first in class status.
Drug development seems to be parasites feeding on parasites so I would like to see it all change and drug prices lower.I am suggesting US Big Pharma have a rigged game and should be careful inviting others to the party especially ones who can operate in less friendly environments. The UK government does limit drug choice, and by doing so reduces its drug bill significantly, but it also controls the local health budgets which could be used to delegate drug choice limits to the local level.
So I would largely agree with you.
Thank you, Yves.
The former United Health lobbyists now advising Sir Keir Starmer must be licking their lips at the prospect. I wonder when a notice saying no canvassers, hawkers and socialists will be put on display by the door at Labour Party HQ?
Probably just ‘No Socialists’ would suffice. I imaging lobbyists could be bracketed as hawkers and canvassers