Is the NHS up for sale?
22nd Nov 2019
During the Labour party 2019 manifesto launch Jeremy Corbyn said:
“Mr Johnson is preparing to sell out our National Health Service for a United States trade deal that will drive up the cost of medicines and lead to the runaway privatisation of our health service.
“500 million a week of NHS money, enough for 20,000 new nurses, could be handed to big drugs companies as part of a deal now being plotted in secret.”
Boris Johnson addressed these claims in Tuesday’s TV debate, saying:
“It is completely untrue. There are no circumstances whatever in which this government or any Conservative government will put the NHS on the table in any trade negotiation. Our NHS will never be for sale.”
We do not know what type of trade agreement, if any, will be struck between the UK and the US, and the Withdrawal Agreement negotiated by Prime Minister Boris Johnson with the EU does not foresee—nor does it prevent—any changes to the NHS, health service provision, or drug pricing.
At the moment it partly comes down to who you believe. US trade and government officials have said healthcare is on the table when it comes to a trade deal and greater access to the pharmaceutical market fits with their past negotiating objectives. On the other hand, the Prime Minister has said “there are no circumstances whatever in which this government or any Conservative government will put the NHS on the table in any trade negotiation. Our NHS will never be for sale.”
The Department for International Trade told Channel 4’s Dispatches that “The NHS is not, and never will be, for sale to the private sector, whether overseas or domestic…The sustainability of the NHS is an absolute priority for the government. 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.”
We can’t know for sure what any government will do. There are some real concerns here, but there are also some unrealistic predictions. We can examine some of Labour’s claims and what we know about the trade negotiations and how they might affect the NHS.
The cost of medicines
It is possible that drug prices for the NHS might increase following a post-Brexit trade deal between the UK and the USA, as this fits with US priorities from past negotiations. But it’s not possible to say what this will look like with any certainty.
The £500 million a week figure quoted by Labour is an extreme and unrealistic rough calculation based on how much more the NHS in England would pay for drugs if the amount it currently paid increased by 2.5 times to match what drugs cost in the USA. That’s about £27 billion more a year.
It has not been the case in countries which have agreed trade deals with the USA, such as Australia. Health experts at the Nuffield Trust have told us this is a “fairly extreme” scenario.
The only way a rise of £27 billion could happen would be if the UK government accepted a deal that would increase all public spending on health by around 19% of what it is at the moment.
As we’ve said before, a trade deal is unlikely to fundamentally redesign the way the NHS is funded and American companies can already bid for private contracts to provide clinical services in England (health services in Scotland and Wales are devolved and are not run on the basis of contracts.)
Some campaigners have raised concerns that under the investor protection provisions of a future UK-US agreement, US investors would be allowed to claim compensation if they lost access to the NHS market, preventing any future government from reducing the levels of private provision within the NHS. The doctors’ trade union the British Medical Association has called for the NHS to be carved out from the investor protection mechanisms of any future UK trade agreements.
It’s difficult to determine exactly how much the NHS in England spends on purchasing healthcare from private providers each year. Depending on exactly how you count it it could make up anywhere between 7% and 22% of all public spending on health in England. The 7% figure is likely to be an underestimate and the 22% includes things which not everyone might consider a ‘private service’ like GP services and pharmacies. Regardless of how you count it, this proportion of spending has remained relatively stable in recent years.
The negotiations so far
It is true that the United States is aiming to improve the access that its pharmaceutical companies have in the UK. In February, the USA published its negotiating objectives for any future trade deal with the UK. This included a desire for “procedural fairness for pharmaceuticals and medical devices”. The document said the USA would: “seek standards to ensure that government regulatory reimbursement regimes are transparent, provide procedural fairness, are nondiscriminatory, and provide full market access for U.S. products.”
The United States has argued that bargaining on drug prices by publicly-funded health systems such as the NHS means those other countries pay less for US pharmaceuticals, and says foreign consumers are “freeloading” at the expense of consumers in the US.
The United States is therefore likely to seek to include provisions on pharmaceutical pricing as part of a trade agreement with the UK (though according to Sam Lowe of the Centre for European Reform, the US did not push for similar provisions in recent trade negotiations with Australia and New Zealand).
In an interview with the BBC’s Andrew Marr in June, US Ambassador to the UK Woody Johnson said that “I think probably the entire economy, in a trade deal, all things that are traded would be on the table”; when asked if that included “healthcare”, he responded “I would think so”.
A recent Channel 4 Dispatches programme publicised the fact that six initial meetings have taken place between UK and US trade officials. Campaign group, Global Justice Now, has obtained the notes from the first two sets of meetings via a Freedom of Information request.
But these are heavily redacted and contain little more visible information than the date and time of the meetings, the names of some participants and the titles of various sessions.
However, according to Channel 4 the topic of drug pricing was discussed at these meetings. In an interview with the programme, Stephen Vaughn, previously general counsel for the Office of the US Trade Representative, said: “I would expect U.S. negotiators to see what we could do in terms of getting increased access to the British market. That's what we do… I think it's going to be likely to come up because the US mentioned pharmaceuticals in its negotiating objectives.”