Can Labour take on big pharma?

At this year’s Labour Party conference Jeremy Corbyn launched a new policy document on the pharmaceutical industry. He gave the example of nine year-old Luis Walker, who has cystic fibrosis but has been “denied the medicine he needs because its American manufacturer refuses to sell the drug to the NHS for an affordable price”. He went on to say that many others were being “denied lifesaving medicines by a system that puts profits for shareholders before lives”. In the case of cystic fibrosis, the company that holds the patent, Vertex, is asking for £105,000 per patient a year and rejected the NHS’s offer of half-a-billion pounds over five years.

Labour’s document – Medicines for the Many: Public Health before Private Profit – is a devastating critique of the industry, as well as the current policies on research and development. The government ploughs billions into R&D, benefitting hugely profitable companies, yet pays out billions more to buy the medicines developed from that research.

Not only that, the model is based on “skewed incentives that drive high prices and often waste scientific and financial resources”. Research frequently results in marginal, but profitable, improvements on existing drugs rather than real steps forward. There is less profit in finding a quick cure than in long-term treatment for chronic illness. In order to safeguard their profits, companies have no incentive to share the benefits of their scientific research, reducing collaboration and inevitably slowing progress.

Health innovation is incentivised by the granting of patents. These prohibit the production of an invention by anyone else without the patent holder’s permission – for at least 20 years. This legal monopoly allows companies to hike up prices unchallenged by competition, generating huge profits. The bulk of NHS spending on medicines goes on patented ones – £18 billion in 2018. In effect, these big businesses drain the NHS of resources that could be used to improve patient care.

For many years, lower income countries have suffered at the hands of drug companies as millions of people are denied lifesaving and life-changing medicines because of vastly unaffordable prices. Increasingly, it is also a problem in the so-called ‘higher income’ countries.

The policies put forward in Medicines for the Many include existing legal tools, attaching conditions to public money being invested into research, and “the establishment of publicly-owned, democratically-controlled pharmaceutical companies that could deliver the medicines we need at prices we can afford”.

The existing legal tools include using flexibilities in Trade-Related Aspects of Intellectual Property Rights (TRIPS). These are international agreements under the World Trade Organisation supposedly balancing property rights with the human right to health. Governments can issue what in UK law are called ‘Crown use licences’. They allow other manufacturers to produce cheaper generic versions of patented drugs and were used in Britain in the 1960s and, more recently, internationally – often as a bargaining threat to get companies to reduce prices.

The document proposes that the conditions attached to public money for R&D could specify things such as affordability of final product and open access to research data. It also proposes an approach called ‘delinkage’. This is meant to delink high prices from research investment and, instead, provide incentives by other means such as upfront grants, subsidies and “innovation inducement prizes”, rather than the patent monopoly system. The NHS would save on previously high prices. But extra government money would presumably be diverted into these inducements to compensate for companies losing their super-profits.

The publicly-owned drug manufacturing company would be funded by a new state-owned investment bank. The report’s authors point to examples around the world where they do exist, although significant public manufacture is largely in smaller markets (with the exception of China). To set up a significantly sized company in a major economy such as Britain would be seen as a massive threat to big business and would be resisted tooth and nail.

The report wants to put “the NHS, patients, researchers and public health experts at the centre of decision making”. Yet to do that would require democratic workers’ control and management, involving patients, staff and the wider public.

The Socialist Party would welcome any measures that have an effect on reducing medicine prices, saving and drastically improving lives. Many campaigners have pushed for these kinds of measures, such as those who have taken up the case of the cystic fibrosis drug mentioned in Jeremy Corbyn’s conference speech. We go further, however, and propose the nationalisation of the existing drugs companies and their integration into a socialist and democratically-controlled NHS.

In some cases, international pressure has been applied on the drug companies. For example, drug companies fought to maintain their high prices for HIV treatments in Africa and elsewhere in the neo-colonial world. At tens of thousands of pounds per year per patient, they condemned the millions of people who could not afford them. But now, the production of cheap, good quality generic medicines has reduced those costs to around £50 a year. So even this basic demand for human life was only achieved with a huge battle with the drug companies, by international political pressure and mass struggle, for example in South Africa.

However, what would be the drug companies’ attitude in much more profitable markets in the west? Undoubtedly, they would fight these proposals even more ferociously. They exist not to make medicines but to make profits, and the report asks: “In the context of Brexit, will these reforms drive away the pharmaceutical industry and undermine jobs and the economy?”

Its answer is that creating centres of research excellence would be attractive for the location of companies. It says that expanding the role of the state does not “negate the participation of the private sector, but rather redefines its role”. Moreover, that “a beneficial situation for all actors can be achieved” if we “reward risk taking” and “incentivise what is socially optimal”.

This leaves the big companies to dominate the market and appeals to their ‘better nature’. They will fight back unless the amount being pumped into their pockets by subsidies matched the scale of their current huge profits. They would still be free to avoid tax, use their huge lobbying power and, yes, threaten to pull out of the country. It would still be the case that, as the document says, “patients are held hostage by a system in which innovation is inextricably tied to private ownership”.

A fully publicly-owned and democratically-controlled pharmaceutical industry, integrated into the NHS and part of a wider socialist economy – with the public ownership of the banks and major companies – would allow a real expansion of innovation and a huge improvement in health. Secrecy in research and development, profiteering and reluctance to reinvest in new steps forward could be abolished. Genuine cooperation by researchers and with NHS staff could be achieved.

One of the countries singled out for praise in the document is Cuba. Despite being a poorer county and despite the lack of real workers’ democracy, its planned economy has achieved much. Its health indicators compare with more developed countries, it created cutting-edge treatments and exported its knowledge and skills to many lower income countries. However, decades of sanctions, isolation and the pressure of international capitalism has meant that many of its gains are being rolled back. A small public sector in a much larger capitalist system can only achieve so much.

Cuba is not the model for a democratic socialist society for the Socialist Party and the world organisation we are a part of, the Committee for a Workers’ International (CWI). But it is a small indication of the potential of a planned economy. What more could be achieved by democratically planned socialist economies, including in the wealthier countries, collaborating together?

Internationalism is a necessity. The benefits of international cooperation and solidarity between governments, publicly-owned organisations and peoples are flagged up in the document. But the drug companies are major examples of powerful transnational corporations that can up sticks and move easily around the world. This means that our struggle to change society, ultimately, has to be a battle carried through by the international workers’ movement.

Steve Score