Diarmaid McDonald reports on the government’s deal with pharmaceutical companies that will cost patients’ lives and worsen health outcomes.

While the UK government celebrated a deal struck with the US government to avoid tariffs on pharmaceutical exports last week, the reaction from big pharma was gleeful, with industry lobbyists said to be “salivating” over the prospect of the agreement resulting in similar profit-boosting deals with countries across Europe.

The full details of the deal are still unclear – the text has not been made public – and the UK announcement gave far fewer details of what the government has signed up to than the US or even pharma statements. But we know it is going to lead to the NHS having to spend billions more on medicines every year, and that money is going to come from its existing budget.

The deal seems to have three main commitments. A 25% increase in the NICE threshold, meaning more new drugs will be approved at higher prices, delivering less health impact per pound spent. The rebate the industry has to pay to the government when overall NHS drug spending grows faster than the rate agreed in the industry-government VPAG (Voluntary Scheme for Branded Medicines Pricing, Access, and Growth) scheme will drop from over 20% to 15%. This change alone could cost the NHS over £1bn a year. And thirdly, the government has pledged the UK will double the amount we spend on patented medicines from 0.3% to 0.6% of GDP in the next ten years.

In exchange, the UK secured a pledge by the US not to impose tariffs on pharmaceutical products for three years – a permanent weakening of our price control mechanisms in exchange for a temporary waiver from tariffs that many suspected might never be implemented as they would contravene World Trade Organisation rules.

This deal should come with a huge health warning. We already spend too much on medicines – and they’re increasingly bad value for money. Prices of medicines have been growing rapidly and they will keep sky-rocketing. Diverting further funds from other parts of the NHS to further inflate their profits as the health service’s overall budget barely grows will worsen patient outcomes.

In fact, initial analysis by the health economist, Karl Claxton, estimates that if the widely reported potential £3bn annual cost of this deal is borne out, over 15,000 patients would pay for this deal with their lives every year as the move to boost industry profits strips money from other NHS care and drives up excess deaths. Doubling drug spending over ten years would see avoidable excess deaths in the hundreds of thousands. This is self-inflicted harm of pandemic proportions.

So why has the government signed a deal that so obviously threatens patients and the NHS?  The industry’s big play here was to try and extract more profits from the NHS and the UK taxpayer as pharma smelled weakness.

The NHS has long been able to secure relatively affordable prices for patented medicines because it is almost the only game in town if pharmaceutical companies want to sell in the UK market, and due to its effective price control mechanisms established to control spending on new medicines.

The pharmaceutical industry has complained about these price control mechanisms for decades.  But right now, the industry is in a uniquely fortunate position, as the UK government has pinned their political hopes on securing economic growth, making it highly vulnerable to pressure from industry announcements pledging to cancel their investments in the country. Similarly, the new NHS 10 Year Plan portrays the pharmaceutical and tech industries as the saviours of the health service, dangerously hitching the government’s wagon to their monopoly business models.

Meanwhile Donald Trump’s aggressive trade policies are being wielded in service of his widely discredited plan to bring down US drug prices. That plan is focused on forcing other countries to pay more for medicines in the mistaken belief that it will lead to big pharma voluntarily dropping prices in the US.

The amount a country pays for medicines has little bearing on pharmaceutical industry decision making on investment in research and manufacturing capacity. But pharmaceutical companies have sought to use the current political context, with high-level support from the White House,  to its advantage, in order to maximise its UK revenues and extract additional concessions from the UK government. It is cynical and unethical.

Experts suspect this sustained and seemingly coordinated campaign of threats – cancelling investment, moving their HQs out of the UK, questioning future drug supplies to the NHS – might amount to a breach of the UK’s competition laws, and we wrote with allies demanding authorities investigate. 

But with a one-dimensional understanding of economic and health policy, the UK had ruled out more creative and effective responses, meaning they left themselves little option but to roll over. So they travelled to the US to pitch their plan to please Trump. The US promptly checked with the pharma lobby to see if they were satisfied, and they in turn briefed the press. Domestic UK health policy is being decided in Washington DC by the US government and US corporations.

This deal was always about economic rather than health impact. But if the government thought the deal would see an immediate, positive response from industry they were quickly disabused of that notion. Before the deal was announced, the price the NHS pays for medicines was the key barrier to pharma investment in our economy; once it was announced, the goal posts miraculously moved. Increased drug spending was now “an important first step”. No investment announcements were made; new demands were laid out. 

We still await any evidence from the government that there will be any economic benefit resulting from the deal.

The UK was only the first step in the industry’s strategy. The focus of corporate lobbyists and industry execs immediately shifted to reload the tactics, this time targeting other European countries.

The pharmaceutical industry understood exactly what power they had and exactly what they wanted to achieve. The UK government, on the other hand, has no coherent strategy to deal with the outsized monopoly power wielded by the companies we have entrusted with the responsibility to deliver us the medicines we all rely on. As a result, an NHS under devastating financial pressure has been forced to spend money in a way that will cost patients’ lives and worsen health outcomes.

This is not just a dangerous policy development for the NHS. It’s a hugely dangerous precedent for the UK and its public services. There is no way the pharmaceutical industry won’t use this tactic again, considering how successful it has been. Other industrial sectors will have been watching and learning. 

This is not simply the consequence of a government in an impossible situation with no alternative courses of action. This is the consequence of a government which has no ideas on how to address the fundamental barriers undermining the NHS and patient health in this country, willing to sign bad deals with long term costs and no tangible benefits for a few vaguely positive headlines.

This week over 200 experts wrote to the government demanding transparency for this deal. We urgently need our parliamentarians to step up and deliver the detailed scrutiny this grave threat to patients and the NHS requires, and commit to reversing it when they get the chance. Furthermore, we urgently need them to investigate how one corporate sector was able to hold the UK hostage, and walk away with the ransom.

Diarmaid McDonald is Director of Just Treatment.  @justtreatment

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