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Putting the Public Back in Public Health

Summary:
As pharmaceutical companies continue to ratchet up drug prices, the burden on public health agencies like the UK's National Health Service is becoming unsustainable. Rather than looking on as public investments are channeled into private profits, governments need to step in to guide innovation toward collective goals. LONDON – The United Kingdom’s National Health Service marked its 70th birthday this year, so this is a good time to reflect on the NHS’s past and consider its future. The NHS has long been a source of inspiration in health-care debates around the world. But if it is not put on a more sustainable footing, it could become a cautionary tale. Cynthia Johnson/Liaison/Getty Images

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As pharmaceutical companies continue to ratchet up drug prices, the burden on public health agencies like the UK's National Health Service is becoming unsustainable. Rather than looking on as public investments are channeled into private profits, governments need to step in to guide innovation toward collective goals.

LONDON – The United Kingdom’s National Health Service marked its 70th birthday this year, so this is a good time to reflect on the NHS’s past and consider its future. The NHS has long been a source of inspiration in health-care debates around the world. But if it is not put on a more sustainable footing, it could become a cautionary tale.

When the NHS was founded in 1948, its mission, to provide universal high-quality health care, was daringly radical. In time, though, it came to represent a fundamental pillar of the modern welfare state, alongside education and public provision for old age.

Today, however, the NHS faces mounting challenges, owing to the years of “austerity” after the 2008 financial crisis, as well as to larger changes in the pharmaceutical industry’s business model. With corporate governance increasingly oriented around narrow financial indicators such as quarterly earnings, drug companies have hiked up medicine prices, and the NHS is bearing the costs. Making matters worse, many drugs would not even exist if not for public investment. Last year, the NHS in England spent £1 billion ($1.28 billion) purchasing medicines that have received investments from the UK Medical Research Council and other public bodies. In the United States, the National Institutes of Health (NIH) spends more than $37 billion on biomedical research every year, particularly in areas that are too risky for the private sector. And, worldwide, the public pays for an estimated two-thirds of all upfront costs for pharmaceutical research and development.

High drug prices can have ripple effects beyond public health around the whole world. It creates a huge barrier to access to medicines for two billion people and pushes 100 million people into extreme poverty every year. Beyond the human suffering, this imposes high economic costs. The lost human capital includes not only those who are forced out of the taxable workforce by personal illness, but also those who must drop out to care for them.

Most crucially, it is increasingly difficult to balance the goals of ensuring patient access to effective medicines, managing rising health-care expenditure, and incentivizing innovation. Even if access to health care were assured, and pricing well managed, there would still be a problem with the current direction of health innovation. Diseases that do not create potential growth markets are largely ignored. Between 2000 and 2011, only 4% of newly approved drugs were for neglected diseases that affect predominantly lower- and middle-income countries. Meanwhile, in the US, 78% of new...

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