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1At the very heart of the pro-Brexit narrative, supported by Eurosceptic politicians such as Boris Johnson, Michael Gove and David Davis, and Conservative think tanks including the Institute of Economic Affairs and the Adam Smith Institute, is the belief that breaking European ties will enable Britain to reunite with the Anglosphere and notably its treasured ally, the United States. While concern from many quarters and sectors has been expressed regarding the future closer collaboration with the US, public health care is a particularly sensitive area in trade deals.
2The central focus of this paper is thus to examine the likely consequences of a post-Brexit trade deal between the US and the UK and to consider to what extent it could undermine the UK’s ability to provide a free universal public health service. While the election of Joe Biden has meant that the negotiation timetable has been pushed back somewhat, the toll that the Covid-19 pandemic has taken on public health systems across the globe means that this is still a very timely debate.
3The article starts by explaining the major motivations behind the UK government’s zeal in pursuing negotiations for a comprehensive trade deal with the United States. It then examines the potential for disruption of the provision of public health services due to the increasing merging of public and private health care provision in Britain. Finally, it looks more specifically at the provisions to be included in the UK/US Free Trade Agreement (FTA) and the impact on the NHS. This paper thus draws on theoretical and empirical insights from health policy research, international political science, government documents and speeches in order to analyse the potential effects of further trade openness post-Brexit. Such evidence can then be used to hypothesise about the potential risks for Britain’s NHS.
- 1 Winston Churchill, “The sinews of peace (Iron Curtain speech)”, Westminster College, Fulton, MO, 5 (...)
- 2 Michael Kenny & Nick Pearce, Shadows of Empire: The Anglosphere in British Politics, Cambridge: Pol (...)
- 3 Cited in op. cit.
- 4 Margaret Thatcher, “The language of liberty: The inauguration of the Thatcher lecture series”, Engl (...)
- 5 See Michael Kenny & Nick Pearce, op. cit.; Oliver Daddow, “GlobalBritain: The discursive construct (...)
- 6 UK Independence Party. Believe in Britain. UKIP Manifesto 2015, May 2015. <https://d3n8a8pro7vhmx.c (...)
- 7 David Davis, “Britain would be better off outside the EU – and here’s why,” ConservativeHome, 4 Feb (...)
4Winston Churchill has been credited with coining the expression “special relationship” for the first time in Fulton, Missouri, in 1946.1 While this speech is better known for its reference to the Iron Curtain and the beginning of the Cold War, the Sinews of Peace or Iron Curtain speech also makes reference to uniting the English-speaking Commonwealth and the United States through a ‘special relationship’. The idea of uniting the nations of the English-speaking world, was popularised in the late 19th century when politicians were searching for a way of maintaining Britain’s influence in the world through a closer alliance, especially with the United States but also the former dominions of the British Empire namely Canada, Australia, New Zealand and South Africa.2 Winston Churchill revived the idea of a unification of what has more recently been called the Anglosphere in his four-volume publication entitled “A History of the English-Speaking Peoples”, published over a period of two years from 1956 to 1958 and which celebrates the contributions of English-speaking statesmen to the construction of the rule of law, democracy and free enterprise.3 It devotes a significant part of the last volume to the USA. The celebration of the English-speaking world was referred to at various moments in time after the publication of Churchill’s four volumes. For example, in 1999, former Prime Minister Margaret Thatcher celebrated the achievements of the Anglosphere during a speech to the English-speaking Union.4 Yet the greatest manifestation of Anglosphere pride (or Empire 2.0. as some critics have dubbed it5) in recent times has been in the period leading up to the referendum on Britain’s exit from the European Union. The UK Independence Party for example supported the idea of reuniting with the Anglosphere in their 2015 Election Campaign: “Beyond the EU and even the Commonwealth are a network of nations that share not merely our language but our common law, democratic traditions and global trading interests. From India to the United States, New Zealand to the Caribbean, UKIP would want to foster closer ties with the Anglosphere.”6 David Davis, who was later appointed Secretary of State for Exiting the European Union under Theresa May’s government, announced in the run up to the referendum in 2016: “This is an opportunity to renew our strong relationships with Commonwealth and Anglosphere countries”.7
5The ongoing negotiations to create a comprehensive trade deal with Europe and beyond have also given rise to new impetus given to the Anglosphere and support for Britain to renew ties with their “kith and kin”. In a speech during a trip to Australia in July 2017, Boris Johnson praised Churchill and his ability to depict the “special genius of the English-speaking peoples”.8 While trade relations with the aforementioned countries of the Anglosphere is certainly of interest, this paper is particularly focused on the revival of the notion of the special economic relationship as regards the United States, and the impact on the health sector of strengthening economic ties with the latter.
6The re-election of the Conservative government with Boris Johnson as Prime Minister has revived notions of the special relationship. In his first speech following the departure of the United Kingdom from the European Union, Boris Johnson expressed his support for a strong trading relationship with the United States. In Greenwich on 3 February 2020, he underlined the importance of supporting and furthering free trade per se and then moved on to express his ambition of seeking closer ties with the USA:
We in the global community are in danger of forgetting the key insight of those great Scottish thinkers, the invisible hand of Adam Smith, and of course David Ricardo’s more subtle but indispensable principle of comparative advantage, which teaches that if countries learn to specialise and exchange then overall wealth will increase and productivity will increase, leading Cobden to conclude that free trade is God’s diplomacy – the only certain way of uniting people in the bonds of peace since the more freely goods cross borders the less likely it is that troops will ever cross borders.
And since these notions were born here in this country, it has been free trade that has done more than any other single economic idea to raise billions out of poverty and incredibly fast. […]
We are ready for the great multi-dimensional game of chess in which we engage in more than one negotiation at once and we are limbering up to use nerves and muscles and instincts that this country has not had to use for half a century. […]
- 9 Boris Johnson, “PM speech in Greenwich”, Prime Minister’s Office, 3 February 2020. <https://www.gov (...)
I must say to the America bashers in this country, if there are any, that in doing free trade deals we will be governed by science and not by mumbo-jumbo because the potential is enormous.9
- 10 Department for International Trade, “UK trade in numbers”, February 2020, <https://assets.publishin (...)
- 11 Department for International Trade, UK-US Trade Deal, London: HMSO, 2 March 2020.
- 12 Ernst and Young, UK and US Trade, Prospects for a New Trade Deal, London: Ernst and Young, 2019.
7As a consequence, the negotiation of a free trade deal has become a priority and negotiations have taken place in parallel with EU negotiations. The United States is the United Kingdom’s leading partner country in terms of international trade (15% of all British trade)10. The government argues that an FTA with the US would be beneficial for all sectors of the economy from agriculture to professional services. Indeed, in a special report presenting the UK’s negotiating position in a UK-US FTA published in March 2020, the Department of Trade predicted an increase in jobs, higher wages, more choice and lower prices for the UK. It estimated that a UK-US FTA could increase trade between both countries by £15.3 billion in the long run and increase workers’ wages by £1.8 billion.11 UK exports towards the US of motor vehicles, aerospace equipment, chemicals, medicinal and pharmaceutical products are already strong and it can be expected that a trade deal would aim at further reducing barriers to trade in those sectors. Yet, it is specifically in food, beverages and tobacco where there are still relatively high barriers which could benefit from specific provisions in a FTA to lower said barriers. Significant non-tariff barriers also exist in services and the agreement could seek to lower these since both the US and the UK enjoy large surpluses in services trade12.
8Critics have been quick to point out that these gains are fairly modest for the overall economy, that is 0.16% of GDP.13 Yet the Department of Trade argues that some of the perceived gains cannot be estimated. For example, it is difficult to evaluate gains originating from closer ties in digital trade and technology transfers. Still, the momentum behind the furthering of ties with the US through a comprehensive trade agreement and the urgency with which the Department of Trade is pushing ahead with negotiations would seem to be more the result of this ideological impetus behind the reunification with the Anglosphere than any real perceived benefits of such a deal. Indeed, the UK already enjoys a strong trade and investment relationship with the US thanks to other investment treaties and multilateral agreements such as the General Agreement on Trade in Services (GATS).
9Notwithstanding this move to furthering trade and investment with the US, Boris Johnson did however underline in his Greenwich speech that the NHS would not be part of the negotiations:
- 14 Boris Johnson, “PM speech in Greenwich”, op.cit.
And it goes without saying to all those conspiracy theorists who may still be in existence, all those believers in the Bermuda Triangle or who think that Elvis will be found on Mars, it goes without saying that of course the NHS is not on the table.14
10In the Department of Trade’s March 2020 document, it reiterated the government’s position in the forthcoming trade negotiations with the United States:
- 15 Department for International Trade, UK-US Trade Deal, op.cit.
The Government has been clear that when we are negotiating trade agreements, the National Health Service (NHS) will not be on the table. The price the NHS pays for drugs will not be on the table. The services the NHS provides will not be on the table. The NHS is not, and never will be, for sale to the private sector, whether overseas or domestic.15
11However, NGOs, civil society organisations (CSOs) and public health organisations (Doctors Without Borders, the Health Alliance, Trade Justice Movement…) remain concerned about the potential risk for the future trade deal of disrupting the provision of a public health care system. Health is considered to be a public good and should therefore not be traded according to the latter. Thus, after underlining the role of public health in trade negotiations, the following sections will discuss to what extent public health services will actually be protected as the UK seeks to further economic ties with the US.
- 16 Frances Perraudin, “Jeremy Corbyn reveals dossier ‘proving NHS up for sale’”, The Guardian, 27 Nove (...)
12Despite the reassurance from the current Prime Minister and leading negotiators in post-Brexit trade deals, there is still fear in many quarters that the development of a new trading relationship with the US could disrupt the provision of public health care delivery. In the lead up to the election campaign, the leader of the opposition Jeremy Corbyn claimed that the NHS was indeed “up for sale” after 451 pages of documents covering 6 rounds of negotiations were unveiled.16 These documents mentioned the NHS and pharmaceuticals, but there was no firm or clear agreement stated on the part of the British negotiators on how a trade deal would protect the NHS or protect consumers from a significant rise in medicines in the event of a free trade deal. Most trade deals include what is termed “carve outs” for public health services which are intended to protect public health systems such as the NHS, a universal health system free at the point of use, from any future trade deals. This is particularly necessary when negotiating with countries like the USA where private health care providers are central to the provision of public health care.
- 17 Thomas Heidrun Maier de Kruijff, David Kainrath &Tannheimer, “What is the problem with TTIP? How pu (...)
13Britain and other European interest groups, including NGOs and public health groups, have been particularly active campaigners ever since negotiations of early trade agreements, such as the General Agreement on Trade in Services (GATS). The main concern raised during the anti-GATS campaign was the potential of services negotiations to deregulate essential public services, such as health, by opening them up to private competition. From 2002 to 2003 the Trade Directorate (DG trade) at the WTO reacted by excluding public services from negotiations. DG Trade press releases from 2003 onwards clearly underlined that “public services” “are fully safeguarded/defended” and that no commitments would be made in the area of health.17 A moratorium on health services was also extended to the EU’s internal market. From the outset of the Services Directorate within the EU, it was also clear that public health care would be excluded from the negotiations. Exclusion of public health services has also been at the heart of more recent trade and investment deals. The Comprehensive Economic and Trade Agreement (CETA) signed between Canada and the EU also includes a public sector “carve out”, which exempts “services supplied in the exercise of governmental authority” from the application of the chapter on trade in public services (Chapter 19), and certain parts of the investment chapter (Chapter 8). However, despite such “carve outs”, regulatory loopholes and the increasing blurring of public and private do still raise significant issues for the NHS. The NHS would therefore still be vulnerable in a US-UK trade deal. Indeed, one of the key issues is the irreversible nature of the privatisation of public services.
- 18 Werner Raza, “Politics of scale and strategic selectivity in the liberalisation of public services (...)
- 19 Maarten Keune, Janine Leschke & Andrew Watt (eds), Privatisation and Liberalisation of Public Servi (...)
- 20 World Trade Organization (WTO), Understanding the WTO, Geneva: WTO, 2014 <http://www.wto.org/engli (...)
14In recent times, international trade and investment has been a channel through which the role of the market has been extended in public services, increasing commodification in the latter.18 The European Union has played a significant role in this drive towards liberalisation of public services with the creation of an internal market and sectoral directives with the aim of freeing up trade and enhancing competition within the European Union.19 This has led to a blurring of notions of public and private and has raised questions as to what extent the state has a role in providing public services. Governance of public services may thus be left to other stakeholders on a national or increasingly on an international scale. This process has also been supported by international agreements. The most significant bilateral agreements have been the General Agreement on Trade in Services (GATS), Trade Related Aspects of Intellectual Property Rights (TRIPS), Technical Barriers to Trade (TBT), the Agreement on Agriculture, and a dispute settlement system.20 In Britain, there has been a significant will on the part of the British government from the 1980s onwards to promote global capital mobility and to open up the economy to global market forces, even in areas such as public services where conventional market systems are often considered to be unsuitable. The result has been a significant increase in the privatisation of key government sectors and the marketisation and commodification of other areas such as health, education and housing.
- 21 Christopher Hood was the first to define the nature and practice of NPM. In his article “A Public (...)
15The vast project of liberalisation in the 1980s led to a greater public-private mix in the National Health Service (NHS) and notably the introduction of quasi market mechanisms. The creation of an internal market in 1990 within the National Health Service in Britain, established by the National Health Service and Community Care Act 1990, furthered this tendency. Hospitals thus became financially independent corporations and were responsible for making income to survive. While the creation of an internal market allowed the entry of a certain number of private providers, there were caps on services contracted out to the private sector. However, involvement of the private sector was increased from 1997 onwards under the New Labour government. Compulsory Competitive Tendering was replaced by Public Private Partnerships (PPPs) to outsource services to the private sector. The Prime Minister’s Delivery Unit was specifically set up to manage and enforce performance management, performance indicators and Public Service Agreements in keeping with New Public Management21 techniques. The Health and Social Act of 2012 also significantly extended the scope for involvement of the private sector. This act lifted the cap that had existed until then on the amount that NHS hospital trusts and other providers could commission out to the private sector. It made it almost compulsory, under the aegis of competitive tendering, to contract out public health services to the private sector, which ranges from the provision of ancillary services (laundry, cleaning services) to the construction of building and the provision of elective surgery. It also removed the cap on the amount of private activity NHS consultants could engage in. Thus, the existing agreement of the GATS leaves enough scope for nations with a high penetration of the market in public health services, such as the UK, to extend trade and development in health services.
- 22 The King’s Fund, “Is the NHS being privatised?”, 17 October 2019, London: The King’s Fund. <https:/ (...)
16The move towards inclusiveness of private health services in international trade can be seen as furthering the exchange of private health services at the expense of public provision. Wealthier patients in the UK are already choosing to opt out of the public health care system and seek private health care, which is increasingly leading to a two-tier health system. Since its enactment, this law has been heavily criticised, particularly section 75 which obliges commissioners to make calls for tenders for all services. Private contractors are thus more likely than public contractors to win these tenders. It is in this way that this regulation acts fuels privatisation of the NHS, giving private companies the opportunity to provide NHS services where they are likely to make the most profit. Companies such as Care UK or Virgin Care tend to bid for the most profitable services - diagnostics, elective surgery and simple treatments, for example – which means that the responsibility for emergency medical care, elderly care, mental health services and anything else that is not necessarily profitable is left with the public market. According to the UK Department of Health and Social Care 2019 annual report, a record number of contracts were awarded to the private sector, totaling £9.2 billion for the period 2018/922. Virgin Care has contracts worth hundreds of millions of pounds, running more than 230 NHS and social care services. Other private companies that have shown an active interest to take on NHS services are Bio Product Laboratories (BPL), Care UK, Circle, General Healthcare Group (GHG), HCA International (Hospital Corporation of America), Ramsay, Spire Healthcare, The Practice PLC and United Health (Optum).
- 23 Leo Ewbank., David Omojomolo, Kane Sullivan, & Helen McKenna. “The rising cost of medicines to the (...)
17In March 2018, a survey of the state of privatisation of healthcare in Britain was carried out by the Centre for Health and the Public Interest (Walpole, 2018). It reported that the total income that the NHS had generated from private patients had risen by 16% over the four years following the enactment of the Health and Social Care Act of 2012. The main concern about privatisation reported in the survey was that 1% of NHS’s 131,000 beds were occupied or put aside for private patients. This may appear rather insignificant, however the number of NHS beds is constantly falling and total occupancy rates at dangerous levels (95% or more in winter months), representing a significant loss for the treatment of NHS-funded patients23.
- 24 Lee Fang, “Privatisation at the NHS? American business interests seek growing share of UK’s health (...)
- 25 Ibid.
18Competitive US health firms already present in the UK could very well benefit from furthering trade and investment through a trade deal with the United States. This would provide further scope to enhance trade in private health services. For example, Universal Health Services, a Pennyslvania health care company has acquired a number of privately-run psychiatric hospitals in the NHS system and has underlined the potential of the private health care market in the UK. The executive vice-president and chief financial officer of the company, Steve Filton, was quoted during the Global Healthcare Conference, held in 2018, as saying that with pushes within the NHS to “outsource more and more of those patients to the private sector,” Universal Health Services stands ”to capture a lot of that,”.24 US-based hospital chain Tenet Healthcare also views the UK as “an increasingly attractive market” with the move towards privatisation. United Health Service, Tenet Healthcare and HCA Healthcare are just some of the many private health care providers already operating in the UK25. Apart from the potential to enhance private health care provision at the expense of the public health care system, there are a number of other threats to consider in future trade negotiations with the US. These are evident if potential provisions to be included in the FTA between the United Kingdom and the United States are taken into consideration.
19One of the key issues raised in the negotiation of comprehensive trade deals is the irreversible nature of the privatisation of public services due to inclusion of negative listing, ratchet clauses and investor state dispute (ISDS) provisions in comprehensive trade deals. Most US FTAs to date have included an investment chapter, which is based on the US model for bilateral investment treaties (BIT). Within the chapter, negative listing, ratchet clauses and ISDS provisions often coexist, which is a major concern for a future UK-US deal.
- 26 Thomas Heidrun Maier de Kruijff, David Kainrath &Tannheimer, op.cit.
- 27 See Asha Kaushal, “How the past matters for the present backlash against the foreign investment reg (...)
- 28 European Public Health Alliance, “How CETA could undermine public health”, Brussels: EPHA, 2016.
- 29 Ibid. An arbitral tribunal resolves disputes between states and companies in an international aren (...)
20First, a negative listing implies that the provisions of the trade agreements apply to all areas, unless they are explicitly exempted in the agreement. A negative listing means only exceptions will be listed with no further exceptions after the deal is signed, which could have a significant impact if public services are not included. A ratchet clause means that if a country decides to liberalise the market for a public service then that level of market liberalisation must be maintained and cannot be reversed, i.e. services cannot be brought back into the domain of the state. Maier de Kruijff et al.26 underline the essential threat to democratic governance that this implies. A government that is democratically elected in a country may cease to make decisions as to the extent to which a public service is provided to its citizens. Finally, investor protection has also been an issue raised by academics27 and civil society. Investor State Dispute Settlement (ISDS) provisions can enable companies investing in a specific country to bypass national jurisdiction and challenge a national government via undemocratic international tribunals. The underlying aim of including ISDS is to provide a neutral international arbitration procedure to resolve conflicts. However, this may also be a way in which investors can sue governments or gain the upper hand and constrain governments’ ability to regulate, especially in sensitive areas such as health services. Under NAFTA, Canada was sued 35 times for example and often in cases regarding public health. For example, Ethyl Corp challenged a Canadian ban on the gasoline additive because of its negative effects as a neurotoxin in 1997.28 Canada was then obliged to repeal the ban and paid 13 million dollars in damages. In the Eli Lilly case in 2013, Canada’s attempt to invalidate a US patent was challenged before an arbitral tribunal.29 There is no evidence to date that suggests the UK is intending to request the exclusion of such provisions in the future trade deal with the US.
- 30 UNCTAD, “The role of competition in the pharmaceutical sector and its benefits for consumers”, Unit (...)
- 31 Dean Baker, “Financing drug research: what are the issues?” [online], Center for Economic and Polic (...)
21The World Trade Organisation (WTO) has been instrumental in furthering Intellectual Property Rights (IPR) in the global arena through the negotiation of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement as part of the General Agreement on Tariffs and Trade (GATT) between 1984 and 1994, which provided for a 20-year patent protection period. However, amendments were made to TRIPS to provide for “flexibilities” which allowed countries to provide cheaper generic versions despite patent protection. Furthermore, the Doha declaration of 2001 maintained that TRIPS “should not prevent Members from taking measures to protect public health”. However, in many of the FTAs which the US has ratified in recent years, TRIPS-Plus clauses have been included (see Appendix). TRIPS-plus clauses actually compromise the aforementioned safeguards and flexibilities of TRIPS and look to extend the period of patent protection beyond the 20-year period. The adoption of such provisions results in stronger patent protection and leads to static welfare losses because of monopolistic powers (whereby one or very few suppliers are present in the market enjoying a monopoly and gaining supernormal profits), which can result in higher prices for consumers and unaffordable drugs. This is particularly a problem in the pharmaceutical industry where IPR protection has increased monopoly and reduced consumer welfare. The essential requirement to obtain drugs means that there is low elasticity of demand which can drive up the cost of drugs protected by IPR.30 In the case of the pharmaceutical industry, medicine provided by suppliers is subject to huge inflationary pressure, but it is very important that consumers have access to medicine at an affordable price for health reasons, particularly in markets where there is less control over prices because of highly privatised health care systems. However, even in the UK, which has a health system free at the point of use, prices need to be kept down to ensure sustainability of the health system where ever-growing demand and innovation inevitably leads to increased financial pressures on the system. Indeed, patented drugs have been estimated to be 400% more expensive than generic equivalents.31
- 32 Stephen, W. Schondelmeyer & Marian V. Wrobel, “Medicaid and Medicare Drug Pricing: Strategy to Dete (...)
22Wide-spread use of patents and some abusive patent practices thus thwart innovative paths and prevent cheaper generic versions coming onto the market and bringing down the cost of essential medicines. There are therefore deep concerns about recent trends to extend patent terms beyond the 20-year TRIPS period, which is likely in the current UK-US trade deal. Stephen Schondelmeyer, a professor at the University of Minnesota, estimated that TRIPS-plus provisions in trade deals could cost over $ 6 billion more in pharmaceutical expenditure for the consumer in the long term.32
- 33 Department for International Trade, UK-US trade deal, op.cit.
- 34 Ibid.
- 35 Giuseppe Carone, Christoph Schwierz & Ana Xavie, “Cost-containment policies in public pharmaceutica (...)
- 36 Department of Health, Association of the British Pharmaceutical Industry, “Pharmaceutical price reg (...)
- 37 Organisation for Economic Co-operation and Development (OECD), “Health, pharmaceutical market, phar (...)
23The March 2020 policy document presenting the UK’s position in forthcoming FTA negotiations does state that one of the government’s negotiating objectives is to “Restate the UK’s continued commitment to the Doha Declaration on Public Health and on the TRIPS Agreement, and agreed flexibilities that support access to medicines”.33 However, no mention is made of the intention to exclude TRIPS-plus provisions or how to mitigate the potential impact of such clauses on prices negotiated in the NHS. In the overall objectives stated in the Department of Trade March 2020 document, the government does state that it intends to exclude price negotiations for drugs: “The price the NHS pays for drugs will not be on the table.”34. Yet, it does not explain how the current pricing system will be maintained in the event of inclusion of TRIPS-plus clauses in a UK-US trade deal. The pricing system in England is complex and quite exceptional in advanced health systems because it uses a number of different instruments to influence prices of different categories of medicine.35 The Pharmaceutical Price Regulations Scheme is a voluntary agreement between the Department of Health and Social Care and the Association of British Pharmaceutical Industry (of which 94% of British pharmaceutical companies are a member) in order to control expenditure on branded medication. Companies must provide cost-neutral access to drugs which means that any product introduced must be offset by another process to reduce costs.36 If sales exceed the agreed level of growth, the industry has to make payments to the Department of Health and Social Care. Constraints on medicines and these pricing mechanisms mean that UK spending on medicines was in the lower half of 15 EU countries in 2015.37
- 38 Thomas Faunce, “How the US trade deal undermined Australia’s PBS”, The Conversation, 23 October 201 (...)
24When reflecting on the potential for TRIPS-plus provisions to disrupt pricing of pharmaceuticals, it is worth mentioning the example of Australia, which negotiated an FTA with the US in 2004. Similar to the UK, Australia has had a Pharmaceutical Benefits Scheme (PBS) in place since the 1940s to lower the cost of pharmaceuticals to citizens. It uses a system of reference pricing so that drugs with identical or similar clinical outcomes must have similar prices to be sold on the market. It thus limits the freedom of drug manufacturers to charge whatever the market will allow. Australia insisted that the PBS be mentioned in the Annex of the Australia/US FTA (AUSFTA) to ensure that they could continue upholding a system which aims at preventing price increases and providing affordable medication to its population. Indeed, Annex 2C of AUSFTA underlines that both the “operation of competitive markets” (in the US) and “objectively demonstrated therapeutic significance” (in Australia) should govern pharmaceutical innovation and pricing systems. However, the AUSFTA may well have disrupted PBS. Indeed, in 2007, three years after the AUSFTA had been signed, the Australian parliament passed an amendment bill (National Health Amendment (Pharmaceutical Benefits Act)) which divided the PBS into two separate formularies: F1 which were mostly single-brand medicines and F2 multiple brand, mainly generic medicines. While domestic legislation is essentially responsible for weakening the role of referencing pricing in the PBS, the opening up of the pharmaceuticals has made Australia more vulnerable since the ratification of the FTA.38 It remains debatable to what extent AUSFTA has led to price hikes and some have argued that the PBS has still prevented price increases. Yet, other estimates anticipate future price hikes. The UK should thus bear in mind the particular case of Australia in any future negotiations with the US. The government needs to clarify how excluding price of drugs from negotiations, as mentioned in the UK Department of trade document, could be achieved if TRIPS-plus provisions are indeed included in the free trade agreement.
- 39 Lancet (The), “UK-US post-Brexit trade deal risks increased drug prices, and may threaten the NHS” (...)
25According to The Lancet, the key challenge will therefore be to stand ground against US pressure to change the way it regulates pharmaceuticals in trade deals. The US Government does not negotiate drug prices so this is the essential issue and the Affordable Care Act of 2010 actually prevents the US administration from basing drug approval decisions on cost-effectiveness. There is evidence to suggest that the US might well put pressure on the UK in a trade deal following the publication of a recent Patients First blueprint published in May 2018 by the Trump administration. President Trump stated that “as we demand fairness for American patients at home, we will also demand fairness overseas. When foreign governments extort unreasonably low prices from US pharmaceutical companies, Americans have to pay more to subsidise the enormous cost of research and development”.39 This blueprint criticises the imposition of drug price controls under single-payer health care system. It claims that foreign governments do not pay their fair share of R&D costs and free ride on American investment in the pharmaceutical sector. Of course, this can also be seen as a way of supporting “Big Pharma” monopolies at the expense of citizens’ access to essential medication. Given that strong IP protection has been consistently supported by subsequent US governments ever since the signing of the TRIPS agreement in the early 1990s, it is unlikely that President Biden will call into question the essential components of Trump’s policy on IP. Consequently, this could well lead to welfare losses for the British population, especially following a US-UK FTA.
- 40 See Jean-Baptiste Velut, Louise Dalingwater, Vanessa Boullet & Valérie Peyronel (eds), Understandin (...)
26The UK government is currently seeking to strengthen its ties with the United States through the negotiation of a comprehensive Free Trade Agreement (FTA). The economic benefits have been estimated to be rather low (or at best hard to measure), especially given the significant trade and investment which already takes place between the two countries. This leads one to conclude that there are significant underlying political objectives behind the move towards economic consolidation and the push towards a UK-US FTA. This also echoes much of the research on motivations behind new generation trade negotiations and observations that trade deals are sometimes not really about economics at all but rather political and social issues.40 Indeed, the political rhetoric on strengthening relations with the Anglosphere would seem to be at the very heart of the initiative to strike such a trade deal with the US. While the economic benefits are not so clear, the risks to disruption caused to the provision of public health care in Britain are very real. Such risks need to be taken seriously, especially at a time when the Covid-19 pandemic has put significant pressure on the public health system. Indeed, the NHS has had to respond to the urgent needs of severe cases of infections by the virus and at the same time scale back non Covid-19 health care. But the NHS confederation rightly points out that health is not high up on the trade agenda among many trade negotiators. There are three essential reasons for this. First, trade specialists find key health domains difficult subjects to explore because public health systems are still very much provided on national rules and regulations. Health specialists on the other hand are mainly interested in questions on a national level but are not necessarily concerned with trade agreements. Finally, since “carve outs” for public services exist in most trade deals, they are simply not part of the negotiation agenda. Yet the increasing move towards private provision of essential health care within the NHS and the potential for disruption to public health care delivery engendered by provisions such as ISDS, ratchet clauses, negative listing and TRIPS-plus suggests that public healthcare delivery should be at the top of the negotiation agenda in the coming months.
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Bibliographie
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Notes
Winston Churchill, “The sinews of peace (Iron Curtain speech)”, Westminster College, Fulton, MO, 5 March.
Michael Kenny & Nick Pearce, Shadows of Empire: The Anglosphere in British Politics, Cambridge: Polity Press, 2018.
Cited in op. cit.
Margaret Thatcher, “The language of liberty: The inauguration of the Thatcher lecture series”, English-Speaking Union, New York, 7 December 1999.
See Michael Kenny & Nick Pearce, op. cit.; Oliver Daddow, “GlobalBritain: The discursive construction of Britain’s post-Brexit world role”, Global Affairs, 5:1, April 2019. <https://0-www-tandfonline-com.catalogue.libraries.london.ac.uk/doi/abs/10.1080/23340460.2019.1599297>, accessed on 29 October 2020.
UK Independence Party. Believe in Britain. UKIP Manifesto 2015, May 2015. <https://d3n8a8pro7vhmx.cloudfront.net/ukipdev/pages/1103/attachments/original/1429295050/UKIPManifesto2015.pdf>, accessed on 9 January 2021.
David Davis, “Britain would be better off outside the EU – and here’s why,” ConservativeHome, 4 February 2016. <www.conservativehome.com/platform/2016/02/david-davis-britain-would-be-better-off-out-of-the-eu-and-hereswhy.html>, accessed on 8 January 2020.
Boris Johnson, “The 2017 Lowy lecture”, The Lowy Institute, 27 July 2017. <https://soundcloud.com/lowyinstitute/the-2017-lowy-lecture-uk-foreign-secretary-boris-johnson>, accessed on 7 January 2021.
Boris Johnson, “PM speech in Greenwich”, Prime Minister’s Office, 3 February 2020. <https://www.gov.uk/government/speeches/pm-speech-in-greenwich-3-february-2020>, accessed on 6 January 2020.
Department for International Trade, “UK trade in numbers”, February 2020, <https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/868378/200227_UK_trade_in_Numbers_full_web_version_final.pdf>, accessed on 28 February 2021.
Department for International Trade, UK-US Trade Deal, London: HMSO, 2 March 2020.
Ernst and Young, UK and US Trade, Prospects for a New Trade Deal, London: Ernst and Young, 2019.
Ibid.
Boris Johnson, “PM speech in Greenwich”, op.cit.
Department for International Trade, UK-US Trade Deal, op.cit.
Frances Perraudin, “Jeremy Corbyn reveals dossier ‘proving NHS up for sale’”, The Guardian, 27 November 2019. <https://www.theguardian.com/society/2019/nov/27/jeremy-corbyn-reveals-dossier-proving-nhs-up-for-sale>, accessed on 4 February 2021.
Thomas Heidrun Maier de Kruijff, David Kainrath &Tannheimer, “What is the problem with TTIP? How public services are affected by TTIP and what can be done about it”, February 2016, FEPS Policy Brief.
Werner Raza, “Politics of scale and strategic selectivity in the liberalisation of public services – the role of trade in services”, New Political Economy, 21:2, 204-219.
Maarten Keune, Janine Leschke & Andrew Watt (eds), Privatisation and Liberalisation of Public Services in Europe, Brussels: Etui, 2008.
World Trade Organization (WTO), Understanding the WTO, Geneva: WTO, 2014 <http://www.wto.org/english/thewto_e/whatis_e/tif_e/understanding_e.pdf>; Sharon Friel, Libb Hattersley & Ruth Townsend, Trade policy and Public Health Annual Review of Public Health, 36: 325-344 (Volume publication date March 2015) First published Online as a Review in Advance on December 10, 2014. [Online]. Retrieved from: <https://0-doi-org.catalogue.libraries.london.ac.uk/10.1146/annurev-publhealth-031914-122739>, accessed on 6 January 2021.
Christopher Hood was the first to define the nature and practice of NPM. In his article “A Public Management for all Seasons” and with specific reference to the British public sector, he listed the seven main tenets of NPM: hands on professional management in the public sector, explicit standards and measures of performance, greater emphasis on output control, shift to disaggregation of units in the public sector, shift to greater competition in the public sector, stress on private sector styles of management practice and stress on greater discipline and parsimony in resource use. Christopher Hood, “A public management for all seasons”, Public Administration, 69:2, 3-19.
The King’s Fund, “Is the NHS being privatised?”, 17 October 2019, London: The King’s Fund. <https://www.kingsfund.org.uk/publications/articles/big-election-questions-nhs-privatised>, accessed on 4 February 2021.
Leo Ewbank., David Omojomolo, Kane Sullivan, & Helen McKenna. “The rising cost of medicines to the NHS. What’s the story?” London: The King’s Fund, April 2018. <https://www.kingsfund.org.uk/sites/default/files/2018-04/Rising-cost-of-medicines.pdf>, accessed on 20 April 2021.
Lee Fang, “Privatisation at the NHS? American business interests seek growing share of UK’s health system.” The Intercept, 10 décembre 2019. <https://theintercept.com/2019/12/10/nhs-privatization-uk-health-care/>, accessed on 8 January 2021.
Ibid.
Thomas Heidrun Maier de Kruijff, David Kainrath &Tannheimer, op.cit.
See Asha Kaushal, “How the past matters for the present backlash against the foreign investment regime.” Harvard International Law Journal (HILJ), 50, 2009, 491-555; Jeswald W. Salacuse, “The emerging global regime for investment”, Harvard International Law Journal (HILJ), 2:51, Summer 2010, 42-57; Suzanne A. Spears, “The quest for policy space in a new generation of international investment agreements” Journal of International Economic Law, 13(4), December 2010, 1037-1075.
European Public Health Alliance, “How CETA could undermine public health”, Brussels: EPHA, 2016.
Ibid. An arbitral tribunal resolves disputes between states and companies in an international arena.
UNCTAD, “The role of competition in the pharmaceutical sector and its benefits for consumers”, United Nations Conference on Trade and Development, Geneva, 6–10 July 2015. UN, Geneva, 8–15.
Dean Baker, “Financing drug research: what are the issues?” [online], Center for Economic and Policy Research, Washington DC, 2004. <http://www.cepr.net/publications/drug_patent_alternatives_2004_09.htm>, accessed on 7 February 2021.
Stephen, W. Schondelmeyer & Marian V. Wrobel, “Medicaid and Medicare Drug Pricing: Strategy to Determine Market Prices”, Cambridge, MA: Abt Associates, Inc., 30 August 2014. <www.abtassociates.com/reports/20040830_500_00_0049.pdf>, accessed on 7 January 2021.
Department for International Trade, UK-US trade deal, op.cit.
Ibid.
Giuseppe Carone, Christoph Schwierz & Ana Xavie, “Cost-containment policies in public pharmaceutical spending in the EU”, Economic Papers 461, Brussels: European Commission, 2012. <http://ec.europa.eu/economy_finance/publications/economic_paper/2012/ecp461_en.htm>, accessed on 8 February 2020.
Department of Health, Association of the British Pharmaceutical Industry, “Pharmaceutical price regulation scheme”, 2014 London, Department of Health. <www.gov.ukgovernment/publications/pharmaceutical-price-regulation-scheme-2014>, accessed on 6 February 2021.
Organisation for Economic Co-operation and Development (OECD), “Health, pharmaceutical market, pharmaceutical sales”, 2017, Organisation for Economic Co-operation and Development website, available at: <http://stats.oecd.org>, accessed on 8 February 2020.
Thomas Faunce, “How the US trade deal undermined Australia’s PBS”, The Conversation, 23 October 2014. <https://theconversation.com/how-the-us-trade-deal-undermined-australias-pbs-32573>, accessed on 5 January 2021.
Lancet (The), “UK-US post-Brexit trade deal risks increased drug prices, and may threaten the NHS”, The Lancet, 12 July 2018.
See Jean-Baptiste Velut, Louise Dalingwater, Vanessa Boullet & Valérie Peyronel (eds), Understanding Mega-Free Trade Agreements: The Political and Economic Governance of New Cross-Regionalism, London: Routledge, 2017 for a more complete picture of the political economy of trade agreements.
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