The EU–US Free Trade Agreement: what it might mean for healthcare

Negotiations that are in train to agree a free trade pact between the US and the EU – creating the largest free trade zone in the world – would have a significant impact on healthcare systems. Such an agreement could have “very beneficial effects,” said Bernard Merkel, policy analyst for the European Commission’s DG Health and Consumers (SANCO). But, he told delegates at the 16th European Health Forum, it will be, “very difficult to achieve a good negotiated deal that everyone can sign up to.”

The stated ambition of TAFTA negotiators is to conclude the agreement by November 2014. However, it is already widely assumed the talks will drag into 2015. Merkel pointed to the discussions on a Trans-Pacific Partnership between the US and Pacific and Asian countries, which have already lasted five years – with new issues still coming onto the table. 

One reason it may take a while to reach agreement is that most of the EU’s previous free trade agreements have been concerned with lowering tariff barriers on goods. But with the average excise duty on goods traded between the EU and the US standing at just 4 per cent, tariffs are not at issue in TAFTA. Rather the main concern is non-tariff barriers – in the form of differing rules and regulations - that add around 20 per cent to the cost of trade between the two blocs. 

There’s a significant prize if an agreement can be reached, with estimates that this would generate yearly GDP growth of 0.5 per cent for the EU and 0.4 per cent for the US, up to the year 2027.

The non-tariff barriers include the way clinical trials are conducted, how drugs are licensed, different rules for genetically-modified organisms and different consumer protection requirements. These are but a few of the reasons negotiations are likely to be protracted. “There are thousands of [rules and regulations], and the issue is not only what applies in the EU and the US, but how these rules and regulations are made,” Merkel told delegates meeting to discuss how to build, ‘Resilient and Innovative Health Systems for Europe, at the European Health Forum last week.

Despite the focus in health on products such as pharmaceuticals and medical devices, most of the discussion is going to be on regulation. “We have different views about clinical trials, how they are carried out, and in particular what happens to the information that results from clinical trials,” said Merkel. “Data protection and data rules are going to be one of the hardest nuts to crack, in a whole range of areas.”

To complicate matters, Europeans and Americans each think that they have higher standards of public protection, and are keen to advance their own models. Europe is much more committed to the precautionary principle, while in the US the approach is that a product should get marketing approval in the absence of evidence that it is unsafe.

The question of the mutual recognition of approvals of drugs and medical products could be one subject of the negotiations, according to Angela Brand of the Institute for Public Health Genomics at Maastricht University. “A key issue on the negotiations is the role the independent national testing and supervisory authorities will play in the future. The question arises of whether the US Food and Drug Administration will accept European approvals and vice versa,” Brand said 

The elephant in the room is the question of opening up healthcare service provision. Health services represent the biggest market in the world – far larger than automobiles, for example. But at present it is exceptionally difficult for US health service providers to set up in some European countries. None of this has yet been discussed in the talks, said Merkel – but he warned that some in the US are now calling for the agreement to include services.

Brand believes the negotiations in healthcare should focus more heavily on services than in other sectors. “Personalised medicine is ever more important, and in this sector in particular it is becoming increasingly impossible to distinguish between products and processes,” Brand said.

All this, though, may prove to be academic. As Petru Luhan, an MEP from Romania, noted, health systems vary throughout Europe. Without clear standards at the EU level it would be, “Difficult for us to align our regulatory frameworks with the US,” he said. “This is where we should start.”