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Brexit: what it could mean for drug prices

BMJ 2019; 367 doi: https://doi.org/10.1136/bmj.l6352 (Published 05 November 2019) Cite this as: BMJ 2019;367:l6352

Opinion

Is the NHS “on the table” after Brexit? Looking beyond the soundbites

  1. Gareth Iacobucci
  1. The BMJ

Trading away the UK’s rights to drive down drug prices could cost the NHS half a billion pounds a week, reports Gareth Iacobucci

If the UK loses its ability to negotiate drug prices or to import generic drugs under a trade agreement with the US after Brexit, the NHS’s drug bill could soar from £18bn to £45bn a year, a specially commissioned analysis predicts.

The calculations come from Andrew Hill, an expert on drug pricing, and his team in the pharmacology department at Liverpool University, who were asked by Channel 4’s Dispatches television programme to estimate the effects on NHS drug prices of a new US-UK trade agreement.1 The programme referred to 11 meetings that a Whitehall source said took place between trade officials from both sides of the Atlantic and between British civil servants and the US drug industry.

The prime minister has repeatedly insisted that the NHS will be off the table in any future trade deal. After the latest revelations, the health secretary for England, Matt Hancock, said that drug pricing would form no part of any future trade discussions with the US and that UK officials would not be allowed to mention it in meetings.

But many UK observers remain unconvinced and are concerned that lobbying by US companies for drugs to be included in any trade deal with the UK chimes with Donald Trump’s agenda to clamp down on what he calls foreign “freeloaders” who he thinks get their drugs too cheaply.2

The US, which has higher drug prices than anywhere else in the world, is currently negotiating trade deals with Mexico and Canada that could delay competition from generic manufacturers and keep drug prices high.

No benefits to patients

Mark Dayan, policy analyst at the health think tank the Nuffield Trust and an expert on Brexit, pointed out in June that the US drug industry’s intentions were made clear in a submission to trade negotiators.3 This criticised “long-standing market access barriers [in the UK] such as rigid health technology assessments, government price controls, insufficient health care budgets, and increasingly punitive and proactive national procurement initiatives.”

Dayan told The BMJ that any move to dilute NICE’s health technology assessments, which rate drugs’ cost effectiveness before they can enter the UK market, would be bad for UK patients and taxpayers. “If the change that you have is to simply weaken the government’s power to control prices, then all you’re doing is paying more money without any more good to patients,” he says.

The NHS also uses its centralised purchasing power to strike favourable deals on the costs of many drugs, including most recently Vertex’s cystic fibrosis drug Orkambi.4

Because its regulations allow competition, the UK is also able to switch some patients to generic forms of drugs or biosimilars to save money. But in the US regulatory environment there is no competition to patented drugs such as Humira (adalimumab) for rheumatoid arthritis. As a result, a packet of the drug priced at £1409 for the NHS costs £8115 in the US.

Under Hill’s modelling study, dispensing with the price controls and bargaining streams that infuriate Trump would see the NHS drug bill in the UK rise by £27bn a year. “What we were trying to highlight with our report was just how much money is involved here,” Hill told The BMJ. “When people make those judgments [about the terms of trade deals] they need to make them with the right figures in front of them.”

Including medicines in a trade deal would mean enabling drugs to be prescribed to patients without a NICE health technology appraisal, says Hill. And if the deal included investor state dispute settlements, which allow companies to sue governments for alleged discriminatory practices, a US company could sue the UK government for damages if it believed that its profits were being unlawfully impeded.

“There are precedents of US companies suing foreign governments in a similar ways—for example, the tobacco industry suing over plain packaging for cigarettes,” Hill says. “So the NHS could feel threatened by potential legal action if it doesn’t agree to higher prices.”

The possibility of biosimilars and generics arriving later in the UK is another potential cost inflator, Hill adds.

National bargaining

Dayan believes that, rather than European countries paying too little for drugs, the US’s decision to ban national bargaining (which the NHS benefits from) as a result of pharmaceutical lobbying is the main reason for high drug prices in the US. “It is strange that [the US] is not using its national buying power to bid down medicines,” he says. “In most countries that is a pretty normal thing to do.”

The intense lobbying by the drug industry in the US—to the tune of more than half a billion dollars last year—is one of the main reasons why this is the case, says Dayan. “Politically there’s been a strong balance of power that has enabled the industry to get its way within the US,” he says. “And of course [health] is a private sector industry over there in a way that it isn’t in the UK.”

Hill points out that any US-UK trade deal involving medicines could affect the prices the UK pays for drugs from all over the world. “If you look at the top 20 drugs in terms of cost to the UK [in his team’s analysis], most of them are from the US. But one thing to remember is that as part of these trade agreements we might have to make a blanket ruling that we accept competitive pricing and free market access for all drugs, not just American drugs,” he warns.

“Huge prize”

Hill also believes that the US drug industry will see the UK as “a huge prize” in any trade deal, given that other European countries use UK published prices as a reference for setting their own maximum prices.

In a statement a UK government spokesperson said that the sustainability of the NHS “is an absolute priority for the government,” adding, “We could not agree to any proposals on medicines pricing or access that would put NHS finances at risk or reduce clinician and patient choice.”

But as Stephen Vaughn, previously general counsel for the Office of the US Trade Representative, said in an interview with Dispatches, while the UK would be free to hold such a position, “that will obviously affect the overall negotiations.”

Dayan says it’s possible the UK could resist lobbying pressure from the US and reach a deal with more subtle and less prescriptive wording, as seen in the one that the US negotiated with South Korea in 2012. “That sets out principles based on which medicines should be funded or not funded, and part of that is about ‘recognizing the value’ of patented pharmaceutical products,” he says. “The language is quite vague, so they [the US] haven’t really managed to get through a process that I think would fundamentally change things.

“But the direction of travel is certainly around preventing medicines from being ‘bid down.’”

With so much uncertainty, Hill wants more transparency from governments. “We either need a written declaration from the UK and US Board of Trade [saying] that, 100%, medicines are not on the table. Or we need the trading documents [and] the trade deals to become transparent. At the moment we’re just working in the dark,” he says.

Tahir Amin is co-founder of I-Mak, an organisation that aims to bring down the price of drugs by challenging key patents and enabling competition from generic drugs. He says that politicians in the US are also concerned that any future trade deals could affect their own ability to negotiate drug prices. “With drug pricing being the hot topic in the US and both the Democrats and the Republicans wanting to be seen to address it, albeit in different ways, the forthcoming election in the US will also be key to what happens with any possible UK-US trade deal.”

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