Guest blog: Ruth Bergan on the Impact of Trade Deals on the NHS, Data and Value Capture

The impact of trade deals on healthcare was hotly debated ahead of the 2019 General Election. The focus was on whether the NHS was going to be ‘on the table’ in trade negotiations with the US, and a series of leaked documents showed that the US clearly had the NHS and medicine pricing in its sights and that the UK didn’t appear to be doing a great deal to steer them in a different direction. Much less attention has been given to the impact that a trade deal with the US, or other countries, will have for health data, yet the UK is putting significant energy into the inclusion of very extensive digital chapters in all of its trade deals, which could have lasting implications for the management of patient data.

Healthcare is covered in services chapters

Trade agreements can have profound implications for the way we design healthcare. Important public policy areas such as the provision of health services, patents for medicines and even medical qualifications are increasingly being brought into the trade agenda.

The most obvious place to look for healthcare coverage is in the services chapter of trade deals. The definition of ‘services’ in a trade deal covers everything from architecture and finance to health, water and energy. EU deals (now ‘rolled over’ into UK law) liberalise any service in any sector except “services supplied in the exercise of governmental authority”. At first glance, this appears to be a significant carve-out, and it might be expected that the NHS would therefore be exempt. However trade deals also define what it means for a service to be supplied in the exercise of governmental authority, and it excludes any service which is “supplied on a commercial basis, or in competition with one or more service suppliers.” (See for example CETA chapter 9, Article 9.1). Given the extent of privatisation in the UK – it is relatively difficult to name a service that isn’t either provided for a fee (dentistry, opticians) or available from a private provider – this means most NHS services are covered by provisions in trade deals unless the UK specifically exempts them.

Once this commitment is inserted into a trade deal, it effectively locks in liberalisation and therefore the privatisation that is already in place, and creates added pressure to continue to privatise and increase liberalisation. It would be technically possible for the UK to reverse levels of privatisation in place at the time of signing a deal, but this would involve negotiations with trade partners with associated costs that could make such a reversal unfeasible.

Countries can choose a more or less cautious approach to liberalisation before negotiations start. A ‘positive list’ approach means that you only commit to liberalise the services that are named in the annex to the trade agreement. This approach makes it easier for governments to have a good understanding of which services are covered. However the UK seems to be opting for a negative list approach, which means that all services are covered unless they are specifically listed in the annexes. This makes it much more difficult to understand the implications of the deal and also means that any future services will be included.

Other chapters also impact on healthcare

There are a number of other provisions in trade deals that have implications for healthcare, two of the most significant are those on intellectual property and investment.

Intellectual property chapters have significant implications for the cost of medicines. They tend to extend patent terms, making it harder to produce generic medicines at a lower cost. They limit the use of compulsory licenses and lower the criteria for patentability so minor modifications to products (such as changing from a pill to a powder) can result in a new patent, further delaying the market entry for cheaper generic medicines. They also make it harder for generic medicines to enter the market by forcing generic reproductions of medicines to go through new – expensive – clinical trials.

The Indian and South African Governments, with the support of other countries and a large number of non-governmental organisations from around the world, are calling for these trade rules to be suspended to allow the most effective, affordable roll out of Covid vaccines. At the time of writing, this move is being resisted by the UK and other relatively richer countries, who claim that they “have not identified clear ways in which IP has acted as a barrier to accessing vaccines, treatments, or technologies.”

Many trade agreements contain investment protection chapters, which offer significant privileges to international investors. They generally include very broad definitions of what constitutes a covered investment, including for example shares held in a company, and broadly-defined provisions such as for ‘fair and equitable treatment’, both of which provide the maximum potential for investors to challenge policies.

These chapters also contain ‘Investor-to-State Dispute Settlement’ (ISDS) mechanisms which provide specific means for international investors to sue governments directly if a policy or its implementation negatively affect their investment. There are a number of examples of companies using these provisions to challenge health policy: Philip Morris sued Uruguay and Australia for introducing plain packaging for cigarettes; Achmea sued Slovenia for a partial reversal of the privatisation of health insurance and Cargill sued Mexico for introducing a tax on high fructose corn syrup.

If a company is successful, the awards are generally in the millions, if not billions of dollars. There is evidence that the significant costs that can be incurred are deterring countries from introducing new legislation where they fear a claim.

Patient data and trade deals

Increasing amounts of data are being gathered by the NHS about patients and there are a number of initiatives underway, inside and outside of government, to try and assess the value of this data. However, it is already clear that it is significant: “the curated NHS data set is an intangible asset with a current valuation of several billion pounds and a realisation of £9.6bn per annum in benefits… that could be unlocked following the generation of insights.”

Debate is ongoing about how to regulate the collection, storage and use of this and other electronic data. The aims of such regulation could include: the protection of patient confidentiality, market regulation to ensure a balance between benefits to the NHS and patients and returns to the organisations developing new products. There is some existing regulation but it is in its infancy and there is already evidence that more work is needed to ensure it is effective: there have been numerous breaches of existing rules, often linked to a lack of capacity in NHS trusts to properly write and manage contracts with data businesses. One such example saw the Royal Free Hospital breach privacy laws when it gave patient data to DeepMind, owned by Alphabet Inc., Google’s parent company.

Despite this, the development of digital trade rules is happening at pace with significant implications for individual and patient rights and for the ability of governments and communities to reap the benefits of such a valuable asset.

A relatively new innovation in trade deals, ‘e-commerce’ chapters cover the governance of data collection, storage, use and sharing, as well as online interactions. The Comprehensive and Progressive Trans-Pacific Partnership (CPTPP – which the UK is currently applying to join) and UK-Japan agreements are among the first examples. Proposals for an e-commerce agreement at the WTO are also at a relatively advanced stage. An agreement at the WTO is likely to be ‘plurilateral’ and would therefore not apply to all member countries, however it would send a strong signal of the direction of travel which the majority of countries would be likely to follow. WTO agreements must be used by member countries as the baseline for all future bilateral trade agreements.

The provisions of e-commerce chapters tend towards the maintenance of minimal regulation. They generally seek to:

• Prevent or minimise limitations on cross-border sharing of data or requirements to store or process data locally;
• Prevent governments and public bodies from requiring access to or transfer of computer code, algorithms or other data-driven products, which might otherwise be required in order to support industrial strategies;
• Prevent governments from charging tariffs or other fees on cross-border trade in digital products and data.

The risk is that debates about how we govern health data and the rest of the digital sphere, and who benefits from the data that we all generate every day, together with efforts to develop appropriate regulation, are side-stepped as decisions are instead made in the course of trade negotiations. This would mean that rules and regulations relating to data and online activity were developed with the primary aim of enabling trade, rather than in response to a broad debate that takes full account of human rights and the equitable sharing of value. This tendency is exacerbated by the fact that major technology companies have already been heavily involved in shaping trade rules whilst other stakeholders have had much less influence:

“Despite having no experience in drug discovery or development, tech giants like Amazon, Microsoft, Apple, Alphabet and others are making major investments in health and wellness. They are vying with pharma titans like Pfizer, Merck, GSK… In the future, these two industries will compete for access to patient data and the ability to benefit from it. Whoever is best able to utilize every individual’s digital health record, fed by his or her “data-ome,” will capture significant new profit pools and disrupt existing ones.”

Trade agreements contain some exemptions for, for example, government procurement, so that the rules outlined above might not apply to some or all health data but governments often find it difficult to design such exemptions in such a way that they properly exclude specific kinds of data, and the exemptions can be narrowly defined and difficult to utilise.

Conclusion

Trade agreements already have significant implications for the provision of health care. Provisions in trade deals can make it difficult to amend or reverse decisions regarding privatisation and increase the cost of medicines. There are also significant potential risks associated with the inclusion of e-commerce chapters that could have implications for the large amount of patient data that is currently collected by the NHS. The Trade Justice Movement believes that it is too soon for trade deals to lock in a relatively unregulated approach to the digital sphere, and in particular to the gathering, storage and use of health data, and that it is therefore premature to pursue further e-commerce chapters in future trade agreements. For this reason, the UK Government should seek an exclusion from the e-commerce provisions of the CPTPP and monitor carefully the impact of existing provisions in deals like the one with Japan.

 

Ruth Bergan is a Senior Adviser at the Trade Justice Movement, the UK national civil society network engaged in policy and advocacy work towards socially and environmentally sustainable global trade. Ruth has led the organisation for the past eleven years, providing policy expertise on a breadth of trade policy issues, including the EU’s Economic Partnership Agreement negotiations with developing countries, the UK’s investment protection provisions, and new work on the interactions between trade and climate change.