#Big Pharma:Getting rich on the NHS…

Dispatches (Channel 4, 8pm, 29th Oct)) asked whether the handover of health services to the private sector is good for the public purse, let alone patient care?  The Government reforms mean multi-million pound NHS contracts are being awarded to companies such as Virgin Care.  Is this a good thing? As The Independent reports on the criminal wrongdoing of drug companies, the question is should we be worried about the increased role of companies who stand to make huge profits from reform of the NHS?

A central tenet of the health care reforms is the introduction of ‘any qualified providers’, which within a few weeks will force PCTs to let private firms provide NHS services.  This means the Department of Health will take the most potentially lucrative, standardised, high volume and low risk treatments provided by the NHS and offer these up to private companies, the Americans charmingly refer to private providers who deliver such treatment as ‘focused factories’.  These healthcare companies will already have had some influence on deciding which treatment will be handed over to the private sector. Companies like 2020Health ,who suggest we need to decentralise health and social care provision, and who, by chance, have links to the conservative party via  Tom Sackville (ex Tory health minister) and Julia Manning, their CEO and a Conservative candidate, not to mention 2020’s links to the two big pharmaceutical companies Pfizer (fined over 2 billion dollars since 2009 for criminal wrongdoing) and Lilly.   

Such downright unethical practice is linked to profit, pharmaceutical companies appear driven by a different set of moral and ethical standards than most professionals working in the health service.  The government is effectively asking advice from the market on creating a market for its products, which may actually damage patients health.   At least at present we have some line of accountability, once healthcare is even more fragmented that will soon be lost.  We just have to look at the financial sector and private care providers (Winterbourne View) to understand who pays for mistakes when ethical practice and accountability is absent.

Advocates of the increased privatisation of the NHS suggest by involving private companies in the development and delivery of health care standards will be improved, and cost less.  However, a report  by the Commonwealth Fund, comparing health care systems around the world, found where a significant proportion of healthcare was provided by the private sector it did not result in a better system across the board, in terms of price and utility.

For example the USA was no better than the UK. The most efficient system appears to be in Japan, where the report suggests the government keeps tight control of the pricing of treatments provided by the private sector. “Notably, the Japanese do not restrain spending by restricting access; rather, they do so by aggressively regulating health care prices.  Every two years, a panel of experts uses volume projections to revise the national fee schedule, which determines the maximum prices for nearly all health services, to keep total health spending growth within a target set by the central government. Providers’ profitability is also monitored, and when certain categories of providers (e.g., acute care hospitals or ambulatory specialists) demonstrate significantly greater profitability than the average, prices for their services are reduced. Despite such overt price controls, the results are hard to dispute—the Japanese enjoy the longest life expectancy in the world”.

Leys and Player’s book ‘The Plot Against the NHS‘ clearly outlines how we got to this point.  Both New Labour and the coalition government have not deviated from their cosy relationships with health sector providers who act as advisors to government on important policy making, however, we need not look too far a field to see the potential pitfalls of such an approach, unless of course it is highly regulated, such as in Japan.

However, the future of the NHS is not just about money, there are moral and ethical issues at stake here.

Danny Boyle highlighted the status of the NHS in British culture at the Olympics opening ceremony, and its good to stop and reflect on the place a universal system of healthcare has in British society, before it is too late. Dr Mark Porter, the leader of the BMA, makes a welcomed call for a health care system founded on social solidarity rather than a series of cash transactions, I think he may have a point.

About digalpin

I gained my social work qualification from the University of Southampton and worked for 14 years in mental health, disability and older people services. I am currently a senior lecturer in post-qualifying social work at Bournemouth University and am conducting research on government and societal attitudes and responses to the mistreatment of older people in health and social care provision for my doctorate. My views are my own.

3 thoughts on “#Big Pharma:Getting rich on the NHS…

  1. Any willing provider has been eligible to provide NHS care since 2008, albeit on policies that constrained their ability to generate profits;

    New Labours approach was based on regulating ’fixed prices’ – known as the national tariff. Although this was the stated approach of the earlier Conservative internal market (particularly under Major), they infact did not regulate enough, and what was intended to be a fixed price market, actually saw a great deal of variation (based on factors like volume, locality etc).

    The difference between these two approaches, and a great deal of research by Carol Propper and colleagues supports this, is that New Labours approach delivered better outcomes. Or in other words, competing on price, as opposed to quality (when prices are fixed) creates the conditions for a race to the bottom. Zack Cooper*, a health academic from the Chicago School of Economics (neo-liberal) states in his research “…that in a market with fixed prices, competition catalyzes improvements in clinical performance.”.

    Another argument, and the one for more competition, is that mechanisms that constrained prices to an average cost only permitted an average amount of increases in performance. Although, as far as I know, this has no basis in evidence.

    From recollection, I thought Lansley et al had to backtrack on this part of their plan, and move back toward less less variation…? His original plans were to introduce a tariff based on tiers of quality – so in theory the best care received higher remuneration.

    Whereas regular economic theory suggests price competition drives down costs and increases efficiency, economic theory also suggests that quality declines where quality is harder to observe than price. The most appropriate question for a tariff based on multiple tiers of quality is; how is quality measured? Interestingly, and paradoxically for the right, a tariff based on multiple levels of quality actually implies much more bureaucracy and regulation than a fixed price tariff.

    * Does Hospital Competition Save Lives? Evidence from the English NHS Patient Choice Reforms, LSE Health Working Paper No. 16/2010.

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