Eighteen months into his Presidency, Donald Trump has finally found a saleable enemy for America’s high medical bills: ‘freeloading foreign governments.’
Healthcare costs often poll as one of the leading concerns of U.S. citizens, but Trump hasn’t been able to conjure a bogeyman who doesn’t infringe on the low-regulation, low-tax mantra of America First.
“In some cases, medicines that costs a few dollars in a foreign country costs hundreds of dollars in America for the same pill, with the same ingredients, in the same package, made in the same plant,” said Trump. “It’s unfair and it’s ridiculous, and it’s not going to happen any longer.”
Rather than consider implementing a single-payer system in America (an idea that was gaining ground under Bernie Sanders’ Medicare for All campaign) Trump has focused the blame on healthcare systems around the world, with the NHS also in the firing line.
American Patients First
The policy framework unveiled last Friday (titled American Patients First) includes a range of measures aimed at reducing patient costs while creating the competition-friendly environment that fosters innovation and will lead to new treatments and cures.
But featured within the 44-page plan is a section focused on ‘ensuring governments worldwide pay their fair share.’ The theory from the U.S. Department of Health and Human Services is that global health improvements over recent years have been predominantly funded by U.S.-led research and innovation, paid for by American patients.
It’s partly true. Despite making up just 34% of the OECD population, Americans are estimated to pay the lion’s share (70%) of global pharmaceutical profits through their healthcare costs.
Per person, Americans spend $1,200 per year on prescription medication compared with $457 in the UK. This is largely due to a single-payer system (such as the NHS) being able to negotiate bulk-discounts and special access schemes with companies.
But, says Trump, if it wasn’t for the U.S. fronting research costs then those products wouldn’t have been available in the first place. American Patients First argues that without the U.S. population paying more for medicines, breakthrough therapies from the past 20 years would have remained undiscovered and global healthcare would not be where it is today.
While on the face of it Trump has been smart, very smart, maybe even the smartest ever, in finding a villain against which high drug prices can be pinned, he also causes many questions to be raised; How will the U.S. enforce this policy? Will pharma feature more heavily in the UK’s post-Brexit free trade deal? Could this even have an impact on the negotiating dynamic during NICE appraisals and the PPRS?
As yet, the policy is light on implementation detail. In the report ‘enhanced trade policy or policies that tie public reimbursements in the United States to prices paid by foreign governments’ are stated as potential options. Both of which could have extreme and lasting consequences for global healthcare.
The New York Times suggests ‘diplomatic pressure through trade negotiations’ would be the Administration’s preferred option. In its annual report card published last month the U.S. trade representative criticised drug pricing and reimbursement in a number of OECD countries, including the UK, stating these nations did not ‘adequately value innovative medicines.’
This new rhetoric – a more muscular global medicines trading policy – will be uneasy reading for European nations, Canada, South Korea and a number of other governments who negotiate effective deals on branded medicines.
It is difficult today to imagine a scenario similar to the NATO 4% pledge on defence spending being applied to spending on prescription medicines, but if the U.S. is able to provide the right carrots and sticks within trade negotiations, this is the type of deal Trump is looking for: a global minimum price paid for blockbuster treatments that is agreeable to U.S. interests.
In theory (although by no means guaranteed) this would bring the price of medicines in America down.
Pharma firms based in the U.S. have reacted positively: BMS, MSD, J&J and Pfizer all rose between 1 and 2% on Friday while the NASDAQ biotech index rose more than 3%.
The Special Relationship
Theresa May once described the life sciences sector as being the ‘most strategically important’ industry for the UK.
That strategic importance just went up a notch. While the NHS negotiates some of the world’s lowest prices, the UK is also home to some of the largest life science and biotech companies, who also have a stake in foreign governments (and their own) funding blockbuster new therapies.
It has been increasingly challenging over recent years for innovative branded medicines to be reimbursed through NICE due to funding restrictions placed on the UK’s medicines bill.
When Trump visits in July, Mrs May would do well to convince the President that the UK is one of the innovators, not the ‘freeloaders,’ (as he put it.)
The UK government must consider the role of the life sciences sector, and of NHS funding, in any trade agreement signed following Brexit. Might U.S. negotiators insist on a spending uplift of U.S.-made branded medicines?
One can imagine this would not go down well with the public, or the media, given the backlash to TTIP and the idea of American firms let loose in the NHS.
But, given the importance of the U.S. as a post-Brexit trading partner, is this the kind of concession that would work for the UK, while also allowing Trump to showcase the success of his global drug pricing policy? Yet another scenario for UK trade negotiators to add to the list.
With the PPRS negotiations due to start imminently and growing frustration from industry regarding routes to patient access for new therapies, Trump’s intervention has interesting timing.
While it won’t have a direct impact on DHSC and NICE pricing policy anytime soon, it’s a reminder for everyone involved that medicines pricing has the potential to be an international and diplomatic issue, as well as one of knotty, complex domestic policy.
One thing is certain – health will be one of the dinner table topics of conversation when Trump visits the UK in just over a month’s time.