3 thoughts on “Pass the popcorn

  1. I don’t buy this at all. In the US medical system, only 10 or 15% of the spending is pharmaceuticals, the rest is essentially labor. The NHS has to pay the labor part in the same way, but they pay local prices for it, as labor is non-tradable, and Brexit won’t change that. (Maybe the NHS has a huge number of vacancies, but that just means the NHS doesn’t pay its workers enough to get people to do the work. Well, nobody ever said skilled labor was cheap, and if you want to pay everybody’s medical care out of the government budget, it’s going to be a big line-item.) So the only change is that suddenly, the NHS might have to pay US prices for pharmaceuticals that are under patent.

    But the NHS is already in that situation — US companies are free to sell pharmaceuticals in the UK already; all they have to do is get the NHS to buy them. But the NHS is free to not-buy them if they think the price is too high (and I don’t expect a trade treaty to change that), and they have a system for doing so — it’s called NICE and it has the power to say “given how much good the drug/treatment gives, here’s how much the NHS is willing to pay for it” (https://www.nice.org.uk/process/pmg9/chapter/the-appraisal-of-the-evidence-and-structured-decision-making#decision-making) And given the economics of pharmaceuticals, the drug companies take half a loaf if they can’t get a whole one.

    What the writer seems to be envisioning is that US companies would get the right to set up for-profit medical facilities in the UK. Which, presumably, will charge a lot and so only be used by some well-off people. And somehow this will cause the (free) NHS to vanish. It’s that last step that isn’t clear. If free healthcare is available, people are going to use it.

  2. I’m a lot less skeptical for several reasons. First, there seems to be no claim from the Conservatives that the leaked documents are fake so I assume they’re genuine. I would not assume that after we spend 10% or 15% on pharmaceuticals, “the rest is essentially labor.” MRIs and other capital equipment (to say nothing of the mere buildings) cost a pretty penny. Right now, US law prohibits the US government from negotiating on drug prices while the NHS can use its large market share to negotiate lower prices (that’s why we pay more than any other advanced country). The US seems to want the NHS to stop negotiating with the drug companies and accept their prices along with other concessions. I don’t know what percentage of the NHS’s budget goes into drugs but I would imagine that doubling it would wreak havoc on the perennially cash-starved agency. According to this article, the UK has made no concessions to the US’s initial inquiries about the NHS but neither have they ruled the NHS off the table.

  3. Thinking again, there’s another aspect: If (or if the writer believes) that what maintains the NHS’s political support is relatively well-off people who perceive that there is no alternative source of medical care. Now, as far as I can tell, there is private (for cash) medical care in the UK, but it’s a small part of the market. But the writer may fear that US-based companies might create chains of private providers and siphon off the better-off people, or rather, give them the idea that they’d save money overall if they paid cash for their care and stopped paying taxes for the NHS.

    But I don’t find that very convincing either. If you could make such chains profitable, somebody probably would have done it already, using British investment, most likely. None of this is illegal now.

    I can see “The US seems to want the NHS to stop negotiating with the drug companies and accept their prices along with other concessions.”, but even if the NHS does that, they’re unlikely to be paying more than the 15% of overall spending the US does. It might cost some more taxes, but people will pay just barely enough to get the pony they want.

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