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Labour leader Jeremy Corbyn has claimed a Conservative trade deal with the US after Brexit could cost the NHS up to £500m a week, by driving up the price of medicines.
Mr Corbyn said this money “could be taken out of the NHS and handed to big drugs companies”, in a speech setting out his own party’s Brexit position.
US trade negotiators have set out their objectives for any trade deal with the UK, including “full market access” for US pharmaceuticals – although the government says the NHS “will not be on the table”.
Where does the £500m figure come from?
We asked Labour, who directed us to an interview with World Health Organization adviser Dr Andrew Hill on a recent Channel 4 Dispatches programme.
Dr Hill, from the University of Liverpool, told the BBC that the £500m a week figure, which comes from a report he co-wrote with academics at Harvard University, was designed to illustrate how much more the US currently pays for drugs than the UK.
“It’s a guide to how much money could be involved but it’s difficult to predict how much money would be involved,” he said.
The report itself says it was not trying to estimate how much the NHS would actually spend as a result of a trade deal with the US.
But, to give an idea of the “worst case scenario”, Dr Hill said, they had compared how much was spent on medicines per person in the US and the UK. The report said this was a way to “crudely estimate” how much it would cost the NHS if it spent exactly the same as the US on drugs per head of population:
- The NHS in England spent an estimated £18bn on medicines in 2017-18
- The US spent 2.5 times as much per head, according to the Organisation for Economic Co-operation and Development (OECD)
- Multiplying £18bn by 2.5 gives an annual cost of £45bn
- That’s an extra £27bn a year or about £519m a week
In practice it’s highly unlikely that NHS spending on medicines per person would end up being the same as the US’s.
The Labour leader was asked about the £500m figure at his speech on Tuesday and said: “I believe it to be an accurate and credible figure… and I’m very happy for anybody else to analyse it and tell me if I’ve understated the case.”
Labour have also used the figure on Facebook, on a mocked-up bus (with a nod to the Vote Leave bus Boris Johnson campaigned in front of in 2016 – we’ve checked its £350m claim before).
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The Labour Party used the figure in a post on its official Facebook page
What is the current situation?
At the moment, according to the Office for National Statistics, 9% of all medicines imported by the NHS come from the US. In contrast, 79% of medicine imports are from the European Union.
Because of the NHS’s size and purchasing power, it has a lot of clout when it comes to negotiating prices.
The National Institute for Health and Care Excellence (NICE) assesses the benefits of a particular drug and decides the acceptable cost for this benefit. Then the NHS negotiates with companies to lower their prices, rather than paying the market price.
NHS prices are also used by several countries as a reference point, meaning those countries will not pay more for drugs than the UK does.
There’s also a voluntary scheme signed up to by many drug companies selling to the UK.
The Association of the British Pharmaceutical Industry says this five-year agreement helps keep drug prices down too.
“The strict processes the UK has in place to ensure value for money mean we have some of the lowest prices for medicines in Europe and this is good for NHS patients,” a spokesperson said.
Why do the US pay so much for prescription drugs?
What does the US want?
The US view is this is unfair to Americans, who pay more, and “significantly undervalues” medicines that are costly to develop and make.
US trade negotiators have said that as part of a deal with the UK after Brexit, they want “non-discriminatory” access to the UK market.
As an example, in a free trade agreement with South Korea the US stipulated that prices for pharmaceutical products should be “based on competitive market-derived prices”.
This piece was published on 5 November 2019 and updated on 7 November.
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