Medicines in the U.K. cost about a third of U.S. prices, and Trump has directed much of his “foreign freeloaders” rhetoric toward European states, arguing other countries should pay more for U.S. pharmaceutical research efforts. | Matt Cardy/Getty Not playing NICE: UK drugs gatekeeper in US crosshairs Pharma sets sights on unwinding drug pricing assessments in post-Brexit trade deal.

LONDON — The U.S. wants Britain to buy more of its drugs after Brexit — but it also wants Britain to pay more.

During Donald Trump’s visit to London this week, he urged the U.K. to get moving with its plans to quit the European Union so it can forge a “phenomenal” trade deal with the U.S.

As part of that deal, the U.S. could seek to dismantle one of the U.K.’s most prized health system components — the value assessments undertaken on new medicines to keep costs down, and limit the amount paid out to drugmakers.

With both Trump and U.S. Ambassador to the U.K. Woody Johnson saying health care will be a strong focus in a future trade deal, filings to the U.S. trade department show American pharmaceutical companies want to chip away at the so-called health technology assessment done by the National Institute for Health and Care Excellence (NICE) as part of that agreement.

It’s a hefty demand that could stall any trade talks from the start, but if realized would have pricing implications for drugs worldwide.

In 2017, American biopharmaceutical exports to the U.K. were valued at over $3.6 billion while the U.S. imported $5.5 billion from Britain.

Medicines in the U.K. cost about a third of U.S. prices, and Trump has directed much of his “foreign freeloaders” rhetoric toward European states, arguing other countries should pay more for U.S. pharmaceutical research efforts.

“Their biggest issue is with medicine prices,” said David Henig, former trade negotiator for the U.K. government and director of the U.K. Trade Policy Project at the European Centre for International Political Economy (ECIPE).

NICE, set up in 1999, has earned its reputation as the U.K. drugs gatekeeper precisely because of its impact on keeping costs down. The U.K. “is not just a big buyer [of pharmaceuticals] in its own right, it’s also used as a reference price for perhaps up to 25 percent of global pharma sales,” Henig said this week.

The gatekeeper’s work in measuring the value of new medicines would be considered by the U.S. as “a technical barrier to trade,” said Martin McKee, professor of European public health at the London School of Hygiene and Tropical Medicine. “So they would want to scrap it entirely.”

In a January submission to the U.S. Trade Representative (USTR) on the U.K. deal, American drugs lobby PhRMA took aim at the process, referencing precedents in trade deals agreed with Mexico, Canada and South Korea on drug pricing.

“They propose … an agreement by both parties to recognize a variety of value criteria; and that [health technology assessment] should not be the principle framework for assessing value,” said Sam Lowe, senior research fellow at the Centre for European Reform.

Asked about PhRMA’s goals, a spokesperson referred to the submission, which said the trade deficit between the U.S. and U.K. is “indicative of the significant need to negotiate a free and fair-trade agreement that eliminates non-tariff barriers and fosters greater exports to this important market.”

In 2017, American biopharmaceutical exports to the U.K. were valued at over $3.6 billion while the U.S. imported $5.5 billion from Britain.

But Brits’ protectionism toward their health service and fear of the influence of American pharmaceutical companies will play into the politics of any deal that makes the U.K. market appear friendly toward the U.S.

“If I were to be a betting man, I would say that the U.S. would need to drop [drug pricing] as a substantive ask in order to get a deal over the line … maybe … because however impactful or not measures would be is sort of irrelevant in that it just won’t pass muster with the British public,” said Lowe.

While neither side is yet to establish its negotiating mandates for a trade deal some are looking to Washington’s deals with Australia and South Korea as potential precedents.

In a statement, USTR said that “the United States believes that U.K. patients should have access to cutting-edge U.S. products and services through the NHS.”

“We would like the NHS to be able to purchase from U.S. firms on the same conditions as it purchases from any other firms, with the best interests of patients in mind,” the department added.

The U.K. government declined to comment for this article, pointing to a tweet from Health Secretary Matt Hancock on Wednesday insisting that the National Health Service would not be on the table in any trade agreement.

U.K. Foreign Secretary Jeremy Hunt said this week that pharmaceuticals would be considered.

Chilling effect

The noise adds to existing pressure from drugmakers on the U.K. assessment process. Amid a yearslong impasse between U.S. pharma firm Vertex and U.K. regulators over the company’s cystic fibrosis drugs, Vertex last summer called on the U.K. to update its value assessment for innovation, in a letter to Prime Minister Theresa May.

Vertex CEO Jeff Leiden argued the “current processes have significant limitations in how they capture and value the full medical, societal, economic and innovation benefits of such precision medicines.”

NICE has already committed to review its assessment to take into account wider societal benefits, as part of the new five-year drug pricing deal that began in January.

But the status quo is also strongly supported. In 2013, NICE tried and failed to deliver a new methodology that included wider societal benefits, such as effects on carers and the welfare system, and a rating for disease burden. It was unable to reach agreement among stakeholders, so the model was scrapped.

According to PhRMA, “narrow approaches to HTA, such as rigid cost-effectiveness methodologies, should not be the principle framework for assessing value.”

The lobby called for the U.K. to “recognize that prices of medicines should be based on a variety of value criteria that reflect considerations such as the tangible benefits to patients and health care systems, patterns of disease burden, and national socio-economic indicators.”

PhRMA also wants to see the creation of an appeals court to which companies would have recourse if they were unhappy about NHS drug prices.

This could have a “chilling effect” on price talks in Britain, McKee said, resulting in the NHS conceding to higher prices to avoid costly legal fees fighting deep-pocketed pharma companies.

Setting boundaries

While neither side is yet to establish its negotiating mandates for a trade deal — talks can’t start until the U.K. leaves the EU — some are looking to Washington’s deals with Australia and South Korea as potential precedents.

Korea’s deal allowed companies to apply for “an increased reimbursement amount” if it is “not based on competitive market prices.”

Australia’s drug pricing mechanism, which allows companies to “apply for an adjustment to the price of a pharmaceutical,” was included in an annex but it nonetheless has had an impact, according to Thomas Faunce, of the Australian National University. Such clauses are “another example of the U.S. technique to alter the domestic regulatory systems of other nations to achieve greater profits for U.S. companies,” he wrote in 2014.

McKee said the U.S.’s own Affordable Care Act demonstrates the power of industry’s interests — the regulation explicitly prevents the development or use of a “dollars per quality adjusted life year (or similar measure that discounts the value of a life because of an individual’s disability) as a threshold” for pricing and reimbursement decisions.

According to McKee, “pharma lobbied very hard” to ban any cost-effectiveness calculations similar to NICE’s from being included in the health care reform. “They won’t concede it easily,” he added.

Sarah Owermohle contributed reporting.

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