UK-Swiss trade deal held up over pharma row

LONDON — A pharma row between Switzerland and the U.K. risks derailing trade talks, with British officials concerned Swiss demands could push up NHS bills, two people with knowledge of the talks have told POLITICO.

Britain and Switzerland launched talks in 2023 on an enhanced free trade agreement, with the tenth negotiating round taking place earlier this month.

But the discussions now risk stalling amid a long-running dispute over intellectual property protections for pharmaceuticals, the two industry figures cited higher said.

At the center of the disagreement is something called a Supplementary Protection Certificate (SPC). The U.K., Switzerland and the EU all operate SPC regimes, which extend patent protection for pharmaceuticals beyond the standard 20-year term.

Swiss negotiators want these existing protections for its powerful pharma industry explicitly written into the upgraded free trade agreement, effectively locking in the current level of intellectual property protection between the two countries.

Cabinet split

Supporters argue the change would provide long-term certainty for investors and prevent either side from weakening their protections in future.

But the U.K. government has resisted this push, amid internal departmental tensions over the issue.

Swiss negotiators want these existing protections for its powerful pharma industry explicitly written into the upgraded free trade agreement, effectively locking in the current level of intellectual property protection between the two countries. | Fabrice Coffrini/AFP via Getty Images

According to the two industry figures, the Department of Health and Social Care is leading the resistance, citing concerns that extending exclusivity periods could increase medicines costs for the NHS. 

The Department for Business and Trade and Office for Life Sciences, meanwhile, are said to be supporting a wider push from the pharmaceutical industry to accept the Swiss demands, arguing that it will encourage innovation.

The Swiss are “very angry, understandably, and [the pharmaceutical] industry are angry, because the U.K. has turned around and said: ‘No, we don’t really want to do this,’” said one of the people briefed on the talks. They were granted anonymity to discuss private negotiations.

“The U.K. and Switzerland have always been partners internationally on promoting innovation and strong IP rights. For the U.K. to turn around to Switzerland and say: ‘Even though this is law already, we’re not willing to write it into the FTA,’ is like abandoning your best buddy.” 

By refusing to include IP protections in the deal, “it reduces the incentive to put a medicine on the U.K. market,” they explained. “Because, if you’ve got less protection for a period of time, then you’re not able to recoup as much of your money invested in the development of the medicine.”

EU overhaul

The EU is currently overhauling its pharmaceutical laws, after the Council of the EU and European Parliament reached a deal on an “EU pharma package” to update pharma’s monopoly rights for new drugs, streamline regulatory processes and oblige companies to launch in EU markets if countries request it.

Brussels is also considering a new bill that will give homegrown biotech drugs an extra year of patent protection through an SPC — a measure which will soon begin  legislative talks in the European Parliament and among national experts.

“The EU is changing its IP rights,” noted the person familiar with the talks. “So the suspicion is that, if the EU reduces their protections, then the U.K. might go: ‘Well, we want to be able to reduce our protections as well to compete for the generics industry.’”

In an update published on Tuesday after the latest round of negotiations, the Department for Business and Trade said: “The government will only ever sign a trade agreement which aligns with the U.K.’s national interests, upholding our high standards across a range of sectors, alongside protections for the National Health Service.”

Standing up to Big Pharma

Nick Dearden, director of the social justice organization Global Justice Now, said it was “imperative the U.K. stands firm against tighter intellectual property restrictions which will only make medicines more costly and make it harder to stand up to Big Pharma bullying.

“Over the last 12 months, Britain has been held over a barrel by drug monopolies empowered by [U.S. President] Donald Trump’s corporate trade agenda, and the government has already agreed we’ll pay far more for our medicines. The very last thing we want to do is hand these companies even more power.”

Last December the U.K. agreed to raise how much its National Health Service spends on new drugs, in a concession made under pressure from the Trump administration in return for tariff-free access to the U.S. market.

“Negotiations with Switzerland continue to be constructive and are taking place across a range of areas, including services and investment, intellectual property and goods,” a government spokesperson said.

The Swiss Embassy declined to comment on ongoing negotiations.