Health needs conflict with drug profits

So the Office of Fair Trading has revealed what everyone in the health service has known for 50 years: successive governments have sustained the compromise which trades the needs of the NHS and its patients against the profits of the pharmaceutical companies. The OFT's study, carried out since 2005, identified several drugs where it said prices were "significantly out of line with patient benefits". Treatments for blood pressure and cholesterol were among those identified. Some treatments which are prescribed in large volumes are up to 10 times more costly than other drugs offering similar benefits. The news broke on the day that it was revealed that 132 NHS trusts are heading to overspend by £1,318m, and are being forced to cut services and reduce staff. At the moment, the PPRS (pharmaceutical price regulation scheme) agreed every five years between the Department of Health and the drug companies effectively "caps" the amount of profit any one company can make. But within that company's profit margin - calculated according to their investment in the UK as well as the range of drugs they make - new drug prices can be set as high as the company wishes. This has led to prices as high as £30,000 or £40,000 a year per patient for a the latest drugs, sending the total NHS drugs bill soaring to £11 billion a year – twice the level of five years ago.

This conflict between health need and profit is being played out throughout the world. Thailand's minister for health Dr Mongkol na Songkhla, says price talks with major drug firms had become "easier" since Bangkok issued compulsory licences allowing generic drug production on two HIV/AIDS drugs and a medicine for heart disease. The licences allow Thailand's government to make or buy copycat versions of medicines needed for public health measures. Drug makers have reacted angrily. A lobby group for the industry representing 38 foreign drug makers in Thailand has said the action is completely unprecedented and it believes another 11 drugs would soon be targeted. Mongkol too has suggested other "essential medicines" to fight cancer, heart disease and other leading causes of death in Thailand were being examined. As he says, the majority of the population in Thailand cannot afford patented drugs. Mongkol has rejected industry arguments that high prices are necessary because drug companies need to invest heavily in research and develop new medicines. The corporations, he says, could compensate by cutting inflated marketing costs. The OFT report will not change the basic arrangements in Britain, whereby a handful of transnational corporations actually restrict the development and sale of drugs in order to ratchet up profit margins. The real question is, if 1.3 million people can work in the not-for-profit £96 billion budget NHS, with the majority of basic research done in publicly-funded universities, why can’t drugs be produced in the same way? We need Big Pharma like we need a hole in the head.

Gerry Gold, economics editor