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Member Research and Reports

Member Research and Reports

Michigan: Trump Administration’s Drug Pricing Policy Could Increase Drug Prices in the UK

A trade deal between the United Kingdom and the U.S. could risk increasing drug prices in the UK, which could diminish the affordability and accessibility of the UK’s National Health Service (NHS), according to a “Viewpoint article in The Lancet by lead author Dr. Holly Jarman, professor of health management and policy at the University of Michigan School of Public Health.

The article outlines how the U.S.’s targeting of so-called “foreign free-riding” in trade deals could lead to a poor deal on pharmaceuticals for the UK post-Brexit. Dr. Jarman and co-authors Dr. Martin McKee of the London School of Hygiene and Dr. Tamara K. Hervey of the University of Sheffield, raise concerns that the U.S. could pressure the UK to change the way it regulates pharmaceuticals in trade deals.

Currently, all of the UK’s international trade deals are negotiated through the European Union, but, the UK Government will need to negotiate new deals to replace existing agreements post-Brexit. The U.S. is one of the UK’s most important trading partners after the rest of the European Union, and a U.S.-UK bilateral trade deal is a key post-Brexit priority, with conversations already taking place to achieve this.

In May 2018, the U.S. Department of Health and Human Services introduced the American Patients First blueprint, outlining measures to reduce U.S. drug prices which include putting pressure on other countries to allow drug prices to rise in their jurisdictions. Unveiling the new policy, President Donald 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 U.S. pharmaceutical companies, Americans have to pay more to subsidize the enormous cost of research and development.”

The Trump administration blueprint criticizes single-payer healthcare systems which impose drug price controls, and accuses foreign governments of not paying their fair share of research and development costs to bring innovative drugs to market – proposing that other nations “free-ride” off of American investment in drug development.

However, the authors argue that this interpretation overlooks the high cost of drugs for patients, and that drugs should be priced in line with how much benefit they give. They raise concerns that, rather than tackling the inherent issues of funding drug development, American Patients First instead represents the interests of pharmaceutical companies and their stakeholders, aiming to maintain or increase revenues.

“American Patients First is an attempt by the Trump Administration to make the USA’s drug pricing problem everybody else’s problem,” says Dr. Jarman. “By shifting the economic, political, and social costs of policies made in the USA onto America’s trading partners, the Trump Administration is attempting to show voters that they are doing something about high drug prices while providing benefits to pharmaceutical companies and sympathetic campaign donors.”

Potential effects for the UK post-Brexit

With the American Patients First policy and a turn towards protectionist, pro-American trade deals, the authors believe that the U.S. will push to alter drug regulation in future trade negotiations with the UK.

This is also exacerbated by the Brexit process. The Trade Bill introduced this year – if passed into law – could further limit parliamentary and public scrutiny of U.S.-UK trade deals.

In addition, until recently the UK did not have a fully functioning trade ministry capable of complex negotiations with a highly experienced country like the USA. The authors say that the UK is unlikely to get a better deal with the U.S. than it has as part of the European Union, as the UK market is much smaller than the whole of the EU, meaning the UK has less bargaining power in negotiations.

Lastly, the authors raise concerns that pharmaceuticals will be one part of a wider trade agreement between the UK and USA, and could be an area that the UK compromises on to ensure better deals elsewhere.

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