President Trump is apparently to be told by Boris Johnson that the NHS is “off the table” in any negotiations with the UK Government over trade, but there are other ways in which a trade deal can be exploited by the USA, which will inevitably result in a higher drugs bill for the NHS.
In February 2019, the USA published its specific negotiating objectives for a post-Brexit trade deal with the UK. They include the following: “Seek provisions governing intellectual property rights that reflect a standard of protection similar to that found in U.S. law”. Intellectual property rights were then the subject of the US-UK trade discussions on 25th July 2019 (which are the subject of redacted documents produced after a freedom of information request to the DTI). In the context of medicines, the USA will therefore no doubt be asking the UK to implement a link (in law) between pharmaceutical patents and the drug regulatory approval process (“patent linkage”), such as the Americans have.
The US experience shows that patent linkage can seriously delay the time at which cheaper generic drugs enter the market, whilst any patent disputes are resolved. It is not supported in the European Union and we currently have no such system in the UK. Bear in mind that a generic drug may be priced at a small fraction of the price of the same drug before generic entry and one gets an approximate flavour of the millions currently saved by the NHS through its use of generic pharmaceuticals.
In any negotiation over trade, it seems naive to assume that America will readily drop this issue, bearing in mind its current protectionist outlook and the importance of its domestic pharmaceutical industry. The British Government is hardly likely to be in a position to hold out against US insistence on a ‘patent linkage’ provision, in the face of a much more powerful and economically stronger counterparty, for whom equivalent intellectual property protection with its trading partners is a ‘red line’.
A lot of time and effort has been expended on the “what if” debates concerning Brexit, but a significantly higher drugs bill for the NHS seems inevitable, if we are to pursue a US trade deal following an exit from the European Union.
* Duncan Curley is a member of the Liberal Democrats and a director of an IP law firm.
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7 Comments
A trade deal with the US doesn’t necessarily mean drugs will be more expensive. Canada has a trade deal but the price of their “meds” is substantially less than in the USA. At one time I was plagued with spam email telling me how I could save $hundreds by buying my “meds” in Canada via different companies.
It all depends what we agree to.
Incidentally why does it take so long to reach FTA’s? Canada already has a FTA with the EU. If the EU would like to email me a word file I’ll use the “Find and Replace” function to change all instances of ‘Canada’ to ‘The UK’. That should do for starters. It will only take a day or so!
Corbyn wants to manufacture generic drugs in the UK, not sure if he is planning on using medieval practices so he can employ lots of people or is going to wait for British manufacturers to make modern production equipment… either way, they will cost a lot more than stuff from India or China. In theory, the NHS can buy in such huge quantities it should be able to source very cheaply, the Conservatives more likely to deliver that than Labour (and if they don’t, time to investigate for backhanders).
Johnson told Corbyn last night that his claims about this concern were “pure invention”. That’s clearly a provable lie.
Cheaper medicines in Canada but the US people have to travel there to get them. Do us Brits go on a day trip to France say to get our drugs cheaper. Do our taxes go up to pay the extra drug costs? Do we have to raise prescription charges to astronomical levels A deal with the US would only be the start. My questions then come into play.
The Canada deal took 7 years. Yes we could ‘copy and paste’ ,dot the ‘i’, cross the ‘t’s but what arguements that brings up will also need to be dealt with. How long that would take is the uncertainty. There are already talk of shortages of drugs in the EU and World wide. It has been said that the UK govnt stopping production in the UK and kicking it abroad has disrupted the production and distribution chain causing these shortages.
Brexit has already caused disruption and that will not end tomorrow.
People are forgetting the UK (and the EU) has strong pharmaceutical R&D and manufacturing sectors (so no reason why generics cannot be manufactured in the UK), with companies HQ’d here. So the UK benefits from inward investment and tax revenues.
Canada sells itself on being a $27Bn market for pharmaceutical products…
So the style of (pharma) trade agreement the UK would want with the EU/US should be different to what Canada wanted from the EU/US.
The more worrying dimension is “Seek provisions governing intellectual property rights that reflect a standard of protection similar to that found in U.S. law”.
Any one who has had dealings with the US patent system knows that it is not really fit for purpose, other than create opportunities for lawyers.
Within the IT sector jokes are made about US patents that are effectively: “xyz on a computer”, followed a few years later by “xyz on a mobile device” (ie. a computer), followed in turn by “xyz on a wearable device” (ie. a computer) and to be followed by “xyz on a shared platform” (ie. cloud computer). With this style of IP protection, it is hardly surprising that China and others simply ignore US patents.
The UK is home is home to GlaxoSmithKline and AstraZeneca, two of the world’s biggest pharmaceutical companies. Foreign drug companies with a major presence and employing staff in the UK pharmaceutical industry include Pfizer, Novartis, Hoffmann–La Roche and Eisai. One in five of the world’s biggest-selling prescription drugs were developed in the UK.
This is an important industry to the UK, directly employing over 70,000 people and together with financial services is one of the few industries where the UK enjoys a strong comparative advantage and has the benefit of a trade surplus with the rest of the world.
Both Europe and the US are vital markets for UK pharma and these businesses will benefit from the negotiation of a free trade deal in the event of the UK losing preferential access to the EU single market following the election of a Conservative or Labour government.
The NHS is among the world’s biggest employers although still dwarfed by businesses like McDonald’s or Walmart’s. That size does give it purchasing clout when it comes to negotiating drug prices.
The article focuses on patent linkage and equivalent intellectual property protection with trading partners. This is, however, of equal importance to UK producers.
Patent protection is an important element in incentivizing the large investment in R&D that Pharma companies must maintain to remain relevant and competitive. A narrow focus on possible increases in patented drug costs in the NHS ignores the mutual benefits that arise from relative free trade in this industry.
The Obama administration negotiations around a EU/US trade deal (TTIP) were halted by Trump, but that’s not too say there won’t be future efforts to restart them by a new American administration. A trade deal between the EU and US is likely to be an area of controversy, but initiatives aimed at liberalizing one-third of global trade deserve a cautious welcome even if, as always, the devil is in the detail.
Just to add some further information.
Currently the EU import tariff for many pharmaceutical products (HTS 30 03 nnnn) from either the US or Canada is zero, likewise the duty placed on such exports from the EU by the US is also zero.
So in this instance there is no direct trade agreement benefit to be had from Brexit, in fact until such time as equivalent replacement trade agreements can be reached, Brexit will hinder trade…