With COVID-19 still raging, it’s unlikely that trade negotiators from the United States and the United Kingdom will finalize a bilateral agreement before year’s end.
Hopefully, the delay will afford both parties time to reflect on their priorities.
One trade issue that should be at the top of Prime Minister Boris Johnson and U.S. Trade Representative Robert Lighthizer’s negotiating list? Changes to the United Kingdom’s drug pricing and evaluation regime. Addressing pharmaceutical pricing will be challen ing, but it’s necessary to safeguard the future of biomedical innovation — especially amid the coronavirus pandemic.
For years, the UK’s National Health Service has imposed government price controls on American pharmaceuticals.
That has allowed Britons to freeride off American consumers and taxpayers, instead of shouldering their share of the research and development burden. And now, during the worst pandemic in 100 years, this unfair pricing regime threatens to undermine the ability of U.S. innovators to continue developing lifesaving therapies.
Fortunately, Ambassador Lighthizer and his team can address this disparity during negotiations with their UK counterparts. Promoting market-based drug pricing in any final U.S.-UK trade deal would benefit American and British patients alike.
You don’t need to have an advanced degree in behavioral economics to understand that price controls are bad policy.
For starters, they limit pharmaceutical companies’ ability to recoup research and development costs. This keeps firms from pursuing future research projects and developing more new treatments. And unfortunately, scaling back R&D efforts can cause massive layoffs and subsequent economic ruin.
When you consider that the U.S. biopharmaceutical industry supports more than 4 million U.S. jobs and contributes $1.1 trillion to our economy each year, it’s clear just how much we have to lose by letting price controls endure.
A wealth of research demonstrates the advantages of a world without price controls. According to a 2018 analysis from consultancy Precision Health Economics, lifting price controls in OECD countries could result in eight to 13 new drugs invented each year by 2030.
Such new medicines tend to be highly innovative. Fifteen of the 46 new drugs approved by the U.S. Food and Drug Administration in 2017 were first in class, meaning they treat diseases differently from any other existing therapy.
Recent drug advancements have saved millions of lives. For instance, the cancer mortality rate has declined by 26 percent since its peak in the 1990s; new and improved medicines account for nearly 75 percent of that drop. Antiretroviral regimens have transformed HIV/AIDS from a death sentence to a manageable condition. New gene therapies and immunotherapies are restoring sight to the nearly blind and healing cancer patients who were near death.
It’s more important than ever before that the United Kingdom stop free-riding on U.S. innovations. American biopharmaceutical firms are hard at work, using their own capital to research and develop countless COVID-19 therapies.
These firms will continue to feel comfortable making this risky investment only if they remain confident that the price of their discoveries will be dictated by market forces.
The United Kingdom’s history of using price controls to set drug prices challenges this much-needed assurance. And when the UK government ultimately devalues U.S. COVID-19 therapies, that could lead to fewer active research and development projects in the United States and across the globe.
President Trump has long sought to reduce other developed nations’ use of pharmaceutical price controls. His administration can make this vision a reality by making drug pricing a priority in U.S.-UK trade talks.
Charles Boustany is a retired physician and former congressman from Louisiana.