So the debate about the NHS and free trade has deteriorated to “the NHS is not on the table” vs handing over 500 million a week. Here’s a primer on what pharma in FTAs is really about, what we should worry about and what we should not worry about (thread) @Channel4News
@Channel4News First of all: what is unlikely (and does not keep me up at night) is for the “privatisation of the NHS” to appear in any FTA. The UK would never agree to it and I do not see the US asking for it. But that doesn’t mean that there is nothing to worry about.
@Channel4News A frequently voiced US concern is that drug prices in the US are higher than elsewhere - particularly than in countries where medical services are public. The US argument is this: our patients finance innovation. You free-ride.
@Channel4News The US traditionally has followed two approaches to tackling this issue: strengthening the protection of intellectual property (in almost every FTA) and setting standards for how systems approach drug prices (less common).
@Channel4News What avenues are likely to be taken with regard to the UK? Precisely those. How do I know? The US has published its negotiation goals here: ustr.gov/sites/default/…
@Channel4News Now we’re on twitter. If you wanted to read 20 pages, this would not be where you go. So I can break it down for you. The US wants to talk drug pricing. Here’s the item. 
@Channel4News And the US wants to talk IP. Here’s that item. Sorry it is longer. What it says roughly is: “we want you to have our IP standards”. You could call it a level-playing field. That is how the US thinks about, too: We all give the same incentive. Nobody free-rides.
@Channel4News The US concerns have been much more long-standing and in fact you find these laid down in the authority Congress gives the President to negotiate FTAs, the so-called TPA, which obliges the President to pursue certain trade objectives congress.gov/114/plaws/publ…
@Channel4News Here’s the objective relating (also) to drug pricing
@Channel4News A word about reference pricing here, because this shows just why the debate is of particular interesting to US pharma: the UK very successfully evaluates drug efficiency, including prices in its evaluation. I am not an expert here. The watchword is NICE nice.org.uk
@Channel4News The evaluations clearly have a strong effect on how companies price drugs in the UK, lowering their pricers. And because of this successful system UK drug prices are often used as reference prices by other countries, getting pharma to lower prices there. link.springer.com/article/10.100…
@Channel4News On IP, too, the goals are standard: we want others to do Adopt our standards (in fact, a “similar” standard of protection often means just do the same thing. Because a similar standard to 10 year test-data exclusivity is... well... 10 year test-data exclusivity)
@Channel4News Now the question you might have is: great. What does that look like in an FTA? You’ve come to the right place, because boring you with treaty language, that’s how I roll.
@Channel4News Would the US ever REALLY negotiate treaty language getting into details of how the health sector does drug pricing? Yes. This is from Chapter 5 of the US-Korea FTA on pharmaceutical products and Medical Devices, Art. 5.2
@Channel4News Here’s the link to that chapter of the FTA. ustr.gov/sites/default/…
@Channel4News Now note: you might say “but free trade means market-derived prices are lower, doesn’t it? They are competitive?” Well. Know. Here’s how it works: innovative drugs are patent protected. Not one patent, often several of them. Patents mean you can exclude all others from making it.
@Channel4News Even where’s there’s no patent you might benefit from “test data exclusivity” meaning you alone can rely on the tests you conducted to get the drug admitted to the market meaning others either have to do the tests over again or you have a functional monopoly.
@Channel4News And even where that’s not the case some drugs are simply only manufactured by few companies. All of this means: you can set prices more freely, “competitive market pricing” means you get to extract monopoly rents. You can set the price higher.
@Channel4News NICE, the NHS and similar systems then get companies to lower the prices, provisions such as the one in US-Korea are designed to limit the amount by which prices are lowered. So: the FTA provision is designed to raise, not lower prices.
@Channel4News Now IP protection. This alone is complex enough to write a book about it. Coincidentally I have. amazon.co.uk/Human-Rights-W…
@Channel4News The detail of IP protection relating to pharma is, quite frankly, astonishing. The basic conflict here is: IP protection allows you to recoup the cost of innovation. At the same time, it provides market exclusivity and hence leads to monopoly pricing.
@Channel4News You can strengthen protection in a myriad of ways, you can weaken it through others. Drugs also need to go through market approval procedures - MHRA in the UK, FDA in the US, EMA in the EU. gov.uk/government/new…
@Channel4News That’s another lever you can play with: delaying approval of a competitor drug prevents market entry of competitors as effectively as patents do.
@Channel4News Why is it so hellishly detailed and complex? Because delaying market entry of a competitor for two weeks can mean millions in profits. So the fight is gargantuan. And regulation is highly detailed. Everywhere. And FTA incursion in that regulation similarly is.
@Channel4News In fact, even the WTO agreement on IP, TRIPS already shows signs of this and has been an epic battleground. FTAs just continue this. Some US examples. Art. 17.10(2)(c) US-Chile. ustr.gov/sites/default/…
@Channel4News The provision links marketing approval and patent status. Not every country does that. The US did. Chile now does. More power to a patent.
@Channel4News Another example. A great one, but again: boy, the detail. In India the discovery of a new use of a known substance is not automatically patentable. Sec. 3(d) of its Patent Act. ipindia.nic.in/writereaddata/…
@Channel4News Now that is of much interest to pharma. There’s a discussion whether this is OK under the WTO Agreement on IP. More relevant for our discussion: the US set to draft a proposal for the TPP banning similar provisions. law.columbia.edu/sites/default/…
@Channel4News Is this all relevant for the UK? The UK has high standards of IP protection. But they differ somewhat from US standards. So there’s room for changes from a US perspective.
@Channel4News By now, of course, I have probably lost every single reader of this thread. Or put them to sleep. So HEY: WAKE UP! What does that all mean? Stay away from the US. No. But clearly as in every FTA there are benefits, costs and risks. Government needs to be transparent about this.
@Channel4News Trade-offs need to be thought through, effects calculated. Some things might be worth committing to, others clearly not. The current debate is a black and white version of this debate. The reality is this. Shades of grey.
@Channel4News Interested in this debate? Follow @ellenthoen and @akapczynski. Both of them know more about this than almost anyone on earth. And I still fondly remember co-teaching with @akapczynski in Berkeley. Those were the days.
