Elections

'Not for sale': Why the UK is so touchy about its health service being part of a US trade deal

Key Points
  • When U.S. President Donald Trump said that the U.K.'s National Health Service (NHS) would be part of a "magnificent" trade deal with the U.K., most Brits recoiled in horror.
  • With the U.K.'s Conservative government looking increasingly likely to win a majority in a snap election on Dec. 12, it's likely to pass a Brexit deal and will then be looking to negotiate a trade deal with the U.S.
  • Concerns for the NHS as part of a trade deal have come to the fore.
Protesters call for an end to austerity policies which lead to underfunding and staff shortages in the NHS, and demand that it remains publicly owned and accessible to everyone. June 30, 2018 in London, England.
Barcroft Media | Barcroft Media | Getty Images

When President Donald Trump said that the U.K.'s National Health Service (NHS) would be part of a "magnificent" trade deal with the U.K. that he promised earlier this year, most Brits recoiled in horror at the idea of their precious institution being offered up to U.S. business interests.

With the U.K.'s Conservative government looking increasingly likely to win a majority in a snap election on Thursday, and if so, likely to pass a Brexit deal, it will then be looking to negotiate a trade deal with the U.S.

This is when questions over whether the NHS is part of a deal — and whether that will lead to full access for U.S. pharmaceutical companies to the U.K. health service market — will be in sharp focus. The Conservative Party's main political rival, Labour, has focused on the NHS as a key election priority.

In fact, the NHS is the most important issue for voters (even more so than Brexit) ahead of the December election, according to an Ipsos Mori poll.

Trump tried to row back on his previous comments on the NHS last week when, during a visit to London, he said he wasn't interested in the NHS being part of a post-Brexit U.S.-U.K. trade deal even if it was "handed to us on a silver platter."

But veteran U.K. politicians and economists say the U.K. will have to accept that it will have a weaker position negotiating a trade deal with the U.S. when outside the EU, and that it's likely the U.K. will have to accept more U.S. access to its health-care system as part of a potential deal.

"Everything is on the table according to Mr Trump," Vince Cable, the former leader of the Liberal Democrats, told CNBC Tuesday. "And I suspect it's one of those issues where the weakness of the British negotiating position is crucial."

"The Americans don't need a trade deal with us, they hold all the cards. Our negotiating position is very weak and one of the things the Americans will want is full access for their companies (to the NHS). That doesn't mean privatization in terms of buying up all the assets of the NHS, but things like the drug pricing regime will be open to being weakened," he said.

"The way the drug pricing regime works in Britain is that it keeps drug prices low which the Americans think is a theft of their intellectual property and that's where the arguments will be."

'The NHS is not for sale'

The National Health Service, or "NHS" as it's widely known, is a cherished institution in the U.K. providing free public health care at the point of use. The NHS is seen as a bastion of the welfare state that was established in a post-war era (in the case of the NHS in 1948) of social reforms under a left-wing Labour government.

The first line of the NHS Constitution states that "the NHS belongs to the people" and many Brits feel protective over a service they have relied on for at least at one point in their lives. The service has been under severe pressure in recent years from funding restraints, increasing demand for services and staff shortages — which have been exacerbated by the Brexit vote.

This is why the concept of U.S. pharmaceutical businesses gaining greater commercial access to the NHS is an unpalatable proposition for many among the British public and politicians — even though U.S. companies can already bid for NHS contracts.

Prime Minister Boris Johnson has repeatedly insisted that the NHS "is not for sale," although the opposition Labour party has insisted that the health service would be under threat if the Tories oversee a future trade deal with the U.S.

Britain's Prime Minister Boris Johnson (L) and Britain's Health and Social Care Secretary Matt Hancock (C) walk with nursing staff during a Conservative Party general election campaign visit to Bassetlaw District General Hospital in Worksop, central England on November 22, 2019.
CHRISTOPHER FURLONG | AFP | Getty Images

Shadow Health Secretary Jonathan Ashworth said in summer that "if our NHS is taken over by U.S. corporations, it will undermine it as a free, universal public service."

But one health-focused think tank, the Nuffield Trust, has tried to calm concerns that the NHS could cease to be a free, universal public service.

"A trade deal would not have the power to stop the NHS being a free, universal service. Trade deals focus on removing barriers to companies accessing markets already available in other countries, and protecting the interests of investors in other countries. They do not redesign the funding of public services," Mark Dayan, policy analyst and head of public affairs at the Nuffield Trust, wrote in a response to Ashworth.

"A less drastic interpretation of this concern is that a trade deal would allow U.S. companies to bid to provide clinical services funded by the NHS, competing with NHS trusts. This looks more plausible because government procurement of services is frequently covered by trade deals. But U.S. companies already have these rights," Dayan added.

Dayan noted, however, that the U.K. could potentially be "locked in to contracting out" and that potential legal challenges could arise if the level of legal rights companies might have to access contracts was reduced, under a Labour government, for example. He also said that the cost of medicines was more likely to be the real issue for the NHS in any future deal.

"There is a danger that in our search for hidden dangers to the NHS, we are missing the one that could hardly be more obvious. Trump and his government have repeatedly complained that the USA pays too much for medicines in part because European countries pay too little," he noted, saying the U.S. would likely push for the U.K. to pay higher prices for drugs.

Britain's Labour Party leader Jeremy Corbyn (L) greets NHS staff as he arrives to visit Crawley Hospital in Crawley, south of London, on October 30, 2019 ahead of the launch of a general election campaign.
TOLGA AKMEN | AFP | Getty Images

Roger Bootle, founder and chairman of Capital Economics, told CNBC Tuesday that he believed arguments over the NHS, and fears over it being "sold off" to the U.S. had been "grossly overdone."

"The expression that the U.S. will want to 'buy the NHS' — you can't buy the NHS, it doesn't make any sense. I think the relevant issues are about the access of U.S. companies to the U.K. health market — of course, they do already have access but perhaps they'd have better access," he said.

"There's the issue of the power of the NHS with regard to the prices it pays for drugs. I guess it's possible, it's conceivable, that as part of a trade deal it could be agreed that the NHS will pay higher prices for American drugs but I don't think that's very likely, frankly. And I think the end result is that if American firms are able to compete in our health market, the eventual effect of that and increasing competition, is likely to be beneficial for the U.K. as an efficient health care provider."

Politicking

As pressure has risen on Johnson to deny accusations that the NHS is up for sale, he has insisted that the NHS is "off the table" in any trade negotiations. U.K. Health Minister Matt Hancock has also tweeted that "the NHS is not for sale" — though he somewhat ambiguously added "yes we'd love to make it cheaper to buy your life-saving pharmaceuticals — but the NHS will not be on the table in any future trade talks."

Tweet:

The public is wary of what the government could do in a post-Brexit trade deal. A poll of 2,000 people by Survation in October showed that more than 70% of respondents think the NHS should be safeguarded, while 45% said the statement "Boris Johnson is not telling the truth" when it comes to the NHS was closest to their view.

The NHS is a key concern for voters ahead of Thursday's election and both the Conservatives and Labour have pledged additional funding for the NHS, more hospitals and more doctors.

Despite government reassurances to the contrary, there were reports in October that senior civil servants had had "secret" meetings with representatives from U.S. companies to discuss the NHS in post-Brexit trade talks.

Then Labour leader, Jeremy Corbyn dropped a bombshell in late November when he produced leaked, un-redacted documents purportedly from the Department for International Trade detailing discussions between U.K. and U.S. officials over a potential post-Brexit trade deal.

The 451-page dossier, not seen or verified by CNBC, purportedly contains references of U.S. negotiators mentioning concerns over drug prices and discussions over extending patents (once these expire the NHS is able to buy cheaper, generic versions of branded drugs) and modifying the U.K.'s patent regime, which could affect its relationship with similar regimes in Europe, the BBC noted.

Corbyn said the documents were "proof" that the NHS would be up for grabs in any future deal. The Conservatives rubbished Labour's claims over the documents, calling them "nonsense." It has also called for an inquiry into how the documents were leaked.

In the final day of campaigning before Thursday's election, the NHS still remains a focal point with both Labour's Corbyn and the Conservative's Johnson expected to reiterate funding pledges for the health service.

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