Owen Smith: Corbyn is exploiting my former work in pharmaceuticals

Labour leadership hopeful Owen Smith has accused Jeremy Corbyn of using his previous career as a lobbyist for the pharmaceuticals industry as “a stick with which to beat me”.

In a speech on the NHS at the University of Salford on Monday, Smith said he was not ashamed to have worked for companies that make medicines to treat conditions such as cancer, diabetes and asthma, and that big pharmaceutical firms provided an important service to the NHS.

“The NHS doesn’t make medicines. It helps with research, but it can’t make medicines,” he said. “It would be physically impossible for the NHS to be able to trial medicines around the world, so of course we will always rely on external forces, companies essentially, to be able to make medicines.”

Related: How much is the government really privatising the NHS?

Smith’s early campaign has been dogged by accusations that he lobbied for further private sector involvement in the NHS during his time working for pharmaceuticals companies Pfizer and Amgen. At the launch of his campaign in July, Jeremy Corbyn said medical research should not be “farmed out” to big companies such as Pfizer, but should be funded through the Medical Research Council.

The shadow chancellor, John McDonnell, later said that Corbyn’s comments had been misinterpreted, announcing that Labour would seek to reform or scrap a £1bn tax relief designed to promote innovation in companies, including in pharmaceuticals.

Speaking to the Guardian following Monday’s speech, Smith said: “Medicines have always been developed in the private sector and provided to the NHS. It was frankly a bit silly of Jeremy to say that all medicines should be developed in the NHS.

“That’s obviously totally implausible. It would bankrupt the NHS even if it were possible, which of course it isn’t, and he was just using the fact that I’ve worked for big biotech companies as a stick with which to beat me.

“Truthfully, it’s useful to have somebody who understands how big companies operate and it’s completely wrong to suggest that that in any way means I’m in favour of private provision. I’ve never been in favour of it.”

Asked if he had any criticism of his former employers, Smith said: “Yeah, I think medicines should be cheaper, generally. That’s the key criticism I have. I think medicines should be cheaper across the world.”

In his speech, the former shadow work and pensions secretary spoke about the threat of creeping privatisation in the NHS and highlighted Department of Health figures showing that spending on private sector NHS providers had doubled under the Conservatives, from more than £4bn in 2009-10 to £8.7bn in 2015-16. Smith has pledged to increase health spending by 4% a year if he becomes prime minister.

Speaking to an audience of supporters and journalists in Salford, Smith argued that the last Labour government had opened the door for the Tories to introduce an increasing amount of private sector involvement in the health service.

“I do think the last Labour government did use private sector providers in order to clear [waiting lists for] hip operations and knee operations and cataracts, and for those individual patients I think that was a worthwhile thing because we inherited – as we will again – massive waiting lists for those key bits of surgery,” he said.

“The reality is I think we failed to appreciate the way in which the Tories would use those words and use the fact Labour had relied on some private sector provision as a Trojan horse for what they wanted to do, which was to break up, denationalise and privatise the NHS. I think perhaps we were naive about the extent to which they would usurp those themes and subvert them.

“I think we need to be clear in this generation, as I am, that we have red lines and those are that we want this NHS to be publicly owned, publicly delivered – 100% if possible. There will always be some instances, as I said, medicines, that are effectively produced in the private sector and purchased by the NHS, but we should be very, very clear that what we want is something that represents that fundamental Labour belief.”

Owen Smith: Corbyn is exploiting my former work in pharmaceuticals

The genuine explanation medicines cost so considerably and why huge pharmaceuticals are so rich | Molly Scott Cato

A laboratory at GlaxoSmithKline: Revenue are ‘the reward to the organization for investing in analysis … without this kind of an incentive new medication would not be invented’. Photograph: Sipa Press/Rex

This morning we heard of the row amongst the drug company Roche and the government’s drug adviser, the National Institute for Wellness and Care Excellence (Good), apparently negotiating more than the last six months of the lives of women suffering from breast cancer. At situation was the £90,000 per patient that Roche is charging for the drug Kadcyla, which is not a remedy but can lengthen lifestyle. Protected by what are recognized as intellectual property rights, the firm has a legally sanctioned monopoly and is free to set its cost. This approach is a game of chicken amongst the business and the government, which is subject to lobbying by desperate families but also restrained by a constrained budget.

Pharmaceutical organizations can extract massive revenue by controlling understanding about how to make their medicines. Economic theory about industry competition would recommend that, on seeing the massive income being made, other producers would enter the market and produce the drug a lot more cheaply. This is precisely what manufacturing organizations have been carrying out in current many years, especially in India, offering generic medication to individuals in the world’s poorer nations. But this has been challenged by large pharmaceutical companies, which use their intellectual property rights to constrain the operation of market forces to their benefit, and to the disadvantage of the world’s bad.

The 1st test case of the rights of companies to revenue v the rights of the world’s folks to lifestyle was fought in South Africa in the late 1990s. At that time as numerous as a quarter of its individuals of working age were HIV good, and the government determined to disregard global law and import generic Aids medication from India. The value variation remains staggering – $ 350 for a year’s provide compared with $ ten,000 for the branded medicines – so a bad nation like South Africa had little choice.

South Africa was able to justify its actions under clauses in the trade-related intellectual house rights (Journeys) agreement exempting nations that encounter public well being disasters, but its actions have been challenged by the US trade representative and action was taken against the South African government by the Pharmaceutical Makers Association of South Africa. The government’s courage was rewarded and the situation was ultimately withdrawn in 2001, with the agreement of a deal on sensible pricing and availability of Aids medicines.

The lack of a free marketplace in pharmaceuticals puts pressure on health systems in richer economies as well, due to the fact the price variations are large: the British Generic Companies Association says: “The average price to the NHS of a generic medicine is £3.79, while the regular value of a branded medication is £19.73.” The distinction of £16 is the reward to the organization for investing in analysis and improvement. The argument for this suspension of normal marketplace forces is that with out this kind of an incentive new medication would not be invented.

The row between the United kingdom government and Roche implies that this argument is beginning to unravel, but it also factors towards the underlying dilemma: the lack of true competition. Whilst the rhetoric of totally free markets is much more widespread than ever, the actuality has been an rising degree of consolidation in recent years. The alliance in between Novartis and GlaxoSmithKline is the latest instance, followed swiftly by the AstraZeneca bid for Pfizer.

And the difficulty of market place consolidation and corporate electrical power is not constrained to the pharmaceutical sector. Just last week, the German publisher Axel Springer accused Google of in search of to set up a “digital superstate” and there was also speculation about a merger between the beer giants SABMiller and AB InBev. February, meanwhile, saw the merger of banana giants Fyffes and Chiquita.

The trade talks taking place amongst the EU and US might additional diminish the electrical power of national governments to control consolidation: the draft Transatlantic Trade and Investment Partnership is explained to threaten governments with damages if they introduce legislation that may undermine the returns corporations count on to obtain from their investments within national territories. Enforcement of industry competition and anti-believe in action may possibly be liable to legal action.

Health commentators appear to have been distracted by the debate about privatisation from looking too closely at the industry power of huge pharmaceuticals. Individuals who care about wellness and freedom – dammit, even these who care about a working capitalist economic system and fair competitors – ought to be raising a lot more questions about the way our medication are produced and how the expertise over existence and death is owned and managed.

The genuine explanation medicines cost so considerably and why huge pharmaceuticals are so rich | Molly Scott Cato