How could TTIP affect the NHS?

Many believe that public services in Europe, particularly the NHS, will be among the biggest prizes that TTIP will provide for US based corporations that are looking to expand. With the EU the site of nearly one third of world health spending, TTIP will create new markets for the private sector by opening up public services and government spending to unrestricted competition from wholly or partly US-owned, profit-driven corporations.  The fear is that, if agreed, TTIP will change the whole emphasis of NHS health care: the priority will become the rights of transnational corporations rather than the care of patients.

Over the past year or two, the NHS has become a lever for public opposition to TTIP. In response, there are repeated assurances from the European Commission (among others) that, under TTIP, EU member states like the UK will retain the right to manage their health systems as they wish. This may be true – up to a point. What is not mentioned are the possible consequences, should the UK chose to exercise this right.

Investor protection measures like ICS and the NHS

Take the example of investor protection measures like ISDS or, more likely now, the Investor Court System (ICS). If TTIP includes ICS, the treaty will give US based investors the right to claim massive compensation if the UK government introduces initiatives – such as nationalisation of the NHS – that could potentially reduce those investors’ profits.

Some countries, such as Finland, have found that using private companies for providing state-funded health services has led to increased costs and poorer service, and so have returned the provision of services to the state. However, in the case of the UK, if TTIP is agreed and includes an investment protection measure like ICS it would be virtually impossible in future for a UK government to reverse the privatisation of the NHS resulting from the Health and Social Care Act (2012) – at least impossible without facing huge compensation costs.

Similarly, if ICS is included in the treaty, the fear of being sued for huge compensation may inhibit any future government from ending the contracts that many NHS Trusts have entered into with US based private investors under the Private Finance Initiative. These contracts can be for as long as 60 to 100 years and often mean that NHS Trusts are repaying debt for new buildings or infrastructure at usurious rates of interest.

In restricting the right of the UK government to regulate, TTIP will also have an effect on our standards of health. ISDS will give any US company operating in the UK health market the right to sue the government if it introduces new public health regulation, or health protection and health promotion policy measures that might affect these companies’ future investment or profit opportunities. So evidence for safer or more effective treatments, or advances in clinical knowledge, could not be put into practice (at least without the risk of being sued) if this affected the anticipated profits of existing providers.

If TTIP is signed, the inclusion of an investment protection measure like ICS will mean that repealing the Health and Social Care Act will become almost impossible. (http://www.newstatesman.com/politics/2013/12/how-eu-making-nhs-privatisation-permanent).

At the same time, harmonisation of health and safety regulations is likely to mean the downgrading of UK public health measures governing the use of food labeling, pesticides, chemicals, the presence of hormones in meat production and so on. The EU generally has higher standards of health and safety regulation than the US because of different methods of deciding safety standards: the EU uses the ‘precautionary principle’ (where tests must prove substances are not harmful) while the US approach is to assume that something is safe unless proved otherwise. ‘Harmonisation’ is likely to mean that the standards currently set by the EU will have to be lowered to be closer to those of the US.

The effects of TTIP on NHS staff

The USA has not implemented some of the most fundamental labour rights set out by the International Labour Organisation (ILO) and recognised by the EU, such as the rights of collective bargaining and freedom of association. This means that standardisation across the EU and US brought into effect by TTIP could bring about a ‘leveling down’ to the labour standards found in the USA, rather than leveling up to those required in the EU.

TTIP will open up public procurement to US-based investors. The implications of this for the NHS are unclear, but the treaty may mean it will no longer be possible for those commissioning NHS services to specify ‘performance measures’, such as minimum wages or gender balance. They may also be prevented from insisting on use of the local (i.e. a UK) workforce.

TTIP and the cost of medicines

There is serious concern that TTIP will put the profits of pharmaceutical companies before patients’ interests through increasing the price of medicines and reducing patients’ access to them.

There are currently a couple of ways of controlling the costs of pharmaceuticals in the UK, one of which is a voluntary scheme which controls the maximum price of prescription drugs supplied to the NHS, and the other statutory control regulates the profits that a pharmaceutical company can make.   However, lobbyists for the pharmaceutical industry claim that regulations controlling price represent  burdensome non- tariff barriers that should be removed under TTIP.  It’s fairly safe to assume that this will increase the cost of drugs for the NHS.

It’s also thought that the TTIP chapter on intellectual property includes provisions that could undermine public health safeguards by giving pharmaceutical companies increased patent protection for pharmaceuticals.

In the pharmaceutical industry, patent protection is important because of the high costs of developing new drugs and the ease with which, once developed, they can be copied by competitors. When a pharmaceutical company takes out a patent on a drug that it’s inventing this means that, during the life of the patent, it’s the only company that can make or market the drug, which it sells under a brand name (e.g. Neurofen).  The lifetime of a patent varies between countries (it’s generally around 20 years but as patents are often taken out during the development of a drug, the patent may expire about 10 years or so after it has been approved for use). Once the patent expires, the inventing company’s monopoly ends and the identical formulation can be made and sold by other companies as a ‘generic’ drug (e.g. ibuprofen), at which point the market cost of the drug drops significantly (http://www.news-medical.net/health/Drug-Patents-and-Generics.aspx).

TTIP’s provisions on patent protection may include:

  • reducing the standards for what counts as a new invention through allowing the ‘evergreening’ of patents (i.e. extending a company’s monopoly on an existing drug by making minor modifications to its substance or dosage and obtaining a new patent, so deferring the appearance of a cheaper, generic version of the drug on the market);
  • extending the term of a patent by including the time it takes to obtain a patent in the period of time the patent covers
;
  • introducing ‘data exclusivity’ that locks up the clinical data used to develop a drug for a specific period and prevents competition from other companies during this time;
  • Creating new rules that limit the freedom to challenge patent applications where these seem frivolous or suspect.

The main implication of these changes would be to reduce access to affordable generic  drugs and so put additional pressure on health budgets.

TTIP and the assessment of new health technologies and drugs

At the moment there is a difference in the way that the EU and US assess new technologies and drugs. In the UK, for example, the regulatory harmonisation that TTIP aims for has implications for the role of the National Centre for Health Clinical Excellence (NICE). NICE makes evidence-based decisions concerning the drugs and technologies that can be used by the NHS, as well as providing both an assessment of the efficacy of these and a means of controlling cost. It’s feared that the work of NICE will be undermined by regulatory harmonisation, given TTIP’s ambition to reduce barriers to trade rather than protect public health.

The precedent of TPP

Negotiations for the Trans-Pacific Partnership between the USA and 11 other Pacific Rim countries have recently been completed and the treaty currently awaits ratification. This means that the text of this FTA is now in the public realm and may provide some indication of US negotiators’ priorities for TTIP. The text is still being analysed by trade experts and public interest groups but it’s already clear that, among many other concerns, TPP will grant new privileges and protections to pharmaceutical companies. For example, patent protection will be extended beyond 20 years, meaning that people will have to wait longer for affordable, generic medicine to become available.

In addition, previous leaks of TTP documents suggest that it’s concerned not just with the patenting of medicines, but with expanding the scope of what can be patented – including, for example, diagnostic, therapeutic and surgical methods of treatment.  Allowing patents on these could lead to a situation where doctors may be prevented from using a particular method of diagnosing a disease, or where payment of a royalty is required for using a surgical or diagnostic method. http://www.unitaid.eu/images/marketdynamics/publications/TPPA-Report_Final.pdf

It also appears that TPP’s chapter on E-commerce will impact on the regulation of data flow across borders and so will undermine privacy protections for sensitive personal health data.

The NHS, TTIP and Freedom of Information (FOI)

Both the Department of Health and the Department of Business, Innovation and Skills have commissioned legal advice on the implications of TTIP for the NHS. However, both Departments refuse to release the nature of the advice they have received on the grounds that disclosure would probably make government officials more cautious about obtaining legal advice on other sensitive aspects of TTIP, on other trade negotiations, or on the formulation of policy more widely in future (See for example, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/494166/foi-2015-28993-TTIP-transatlantic-trade-and-investment-partnership-impact-on-the-NHS.pdf)

 

See also our page on whether the NHS is exempt from TTIP

For a detailed article on the question of whether the NHS is subject to competition law, see http://eutopialaw.com/2013/07/19/is-the-nhs-subject-to-competition-law/

How public services are at risk from FTAs – http://www.waronwant.org/media/ttip-ceta-tisa-and-public-services and  http://corporateeurope.org/sites/default/files/attachments/public-services-under-attack.pdf

For more details of the Trans-Pacific Partnership FTA see http://www.democracynow.org/2015/11/6/full_text_of_tpp_trade_deal?utm_source=Democracy+Now%21&utm_campaign=da3352b3dd-Daily_Digest&utm_medium=email&utm_term=0_fa2346a853-da3352b3dd-191071569

updated March 2016

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