The Blog

Drug Pricing Threatens Political Flashpoint For Labour

More funding for the NHS will not build a healthier nation if it leaks straight into the pockets of drug companies. The wellbeing of Britain requires the political will to strike a fair balance between private profit and public benefit.

With just a month to go before the climax of the Labour leadership campaign, both candidates might dwell upon a less anticipated September decision that could yet shape the future cost of Britain's healthcare.

Next month, the UK's Competition and Markets Authority (CMA) will decide whether or not Pfizer - the world's second largest pharmaceutical company - was inflating the cost to the NHS of epilepsy treatment by £50 million in 2013. That year, the CMA accused Pfizer of evading existing price controls for the treatment.

The CMA states Pfizer sold the medication to another drugs company - Flynn Pharma - which went on to package and re-brand the medication as a generic drug. But rather than the cost falling - as a generic drug - the cost to the NHS ballooned from £2 million to over £50 million. As a result, the CMA claims Pfizer has been pocketing between 8 and 17 times the amount it received before this new arrangement.

Hundreds of British people die of epileptic seizures each year and the drug that Pfizer manufactures is a key medicine used to reduce the likelihood or danger of seizures for about 50,000 people across the UK. Since there is research suggesting that some sufferers of the condition may have died from not having sufficient medication, the affordability of such medication is a life and death issue.

You might be forgiven for thinking that furores over drug pricing were largely the preserve of developing countries fighting "big pharma" back in 2002 to reduce the cost of life-saving medicines for diseases such as HIV/AIDS. In reality, the issue is far closer to home given UK taxpayers have been boosting the revenues of one of the sector's largest companies.

Clearly, some argue intellectual property (IP) protection is essential to incentivise investment by promising future years of monopoly profits. As it happens, Labour leadership candidate - and former Pfizer lobbyist - Owen Smith MP has argued in Parliament against government support for cheaper generic drugs for epilepsy.

Others take a contrasting view. Writing for the Labour Campaign for International Development, public health expert Ben Simms argues that prices for drugs fall "not because of the goodwill of pharmaceutical companies, but because, in defiance of them, we have seen the growth of competition from manufacturers of generic medicines".

In the CMA's case against Pfizer, IP is not so central an issue. The epilepsy medication in question is difficult to manufacture and therefore a monopoly stance is possible to preserve without IP protection. That highlights the need for a comprehensive approach to the good governance of pharmaceutical companies that harnesses profit for the public good.

More corporate responsibility programmes - conceived by the pharmaceutical sector - is not the answer. This was a sobering lesson of the public health crisis in Africa of ten years ago when advocates of corporate responsibility concluded that the responsible thing for business to do is align their lobbying activity with long-term societal needs. Today, that raises key questions about the political influence of big pharma. In the past, Pfizer made a large donation to the Labour think tank Progress, while the Conservatives have been accused of having a revolving door between their party and drug firms.

Above all, the stakes are about to be raised as the UK enters a period of negotiating new trade agreements. It is argued by Simms and others that trade agreements - such as the Trans-Atlantic Trade and Investment Partnership (TTIP) - pose a clear threat to future access to medicines in Europe and the developing world. It is a concern that as a candidate to lead progressive politics in the UK, Owen Smith has not said anything about TTIP, or even about the regulation of multinationals, on either his campaign or constituency websites. As we move into a period of negotiating new trade deals, not having a clear public stance on how to protect the powers of government keeping drug prices in check, will not be credible.

It's a timely reminder that while competition law may seem like a dull affair, the pricing of essential drugs needs to be a politically defining issue. The NHS can ill-afford either rising costs for essential medicines, nor the additional stress it will impose on clinical professionals as the human face of rationing. More funding for the NHS will not build a healthier nation if it leaks straight into the pockets of drug companies. The wellbeing of Britain requires the political will to strike a fair balance between private profit and public benefit.

Professor Jem Bendell is the founder of the Institute for Leadership and Sustainability at the University of Cumbria and former consultant to UNAIDS and the World Health Organisation on private sector issues.