Part Two: Chapter One Free Market Economics

If the Jimmy Saville/Cyril Smith/Ted Heath/Adam Johnson/Muslim paedophile ring scandals have taught us anything, it is that more men than we wish was the case are attracted to and will have sex with children and jailbait if they can get away with it. (*) Market values don’t address this, they would, if permitted make it much worse by supplying the demand. The market economy, when fully unregulated by inconvenient laws leads to children cleaning chimneys, not to mention rich and powerful men’s cocks.

Price must not be the only driver. Higher and nobler human and divine values must be  part of the picture. Trust, love, peace with your neighbours, generosity and selfless giving, loyalty, respect, self-control, kindness, valuing and striving for excellence, tenacity and determination, inclusiveness and sustainability; these are all values which make schools, neighbourhoods, workplaces safe, supportive, sustainable and successful, pleasant places to work, study or live. The absence of these values makes neighbourhoods like the Baltimore of The Wire or the South Central L.A. of Boyz n the hood. The market economy according to FME theory has no place for any of these, it values them at 0p.

* we have not learned from the papers about the equally horrifying numbers of women who sexually abuse very small children and even infants – the brave claim ‘publish and be damned’ doesn’t seem to be working here – remember the cosy, easy template

It’s a crock that cheap and ever cheapening prices are a good thing. Take pharmaceuticals. As I say, our government have fully signed up to this ‘do it cheaper or else we’ll spend our money elsewhere’ strategy.

In 2015 Alan Urry presented a BBC Radio 4 programme (*) investigating why the UK is experiencing shortages of some medicines, including some essential medicines. Some have been unavailable at all. There have been serious medical problems suffered by some patients because of these shortages. All of the drivers Urry found have a common root, NHS procurement policies driving down prices to below sustainable levels. Urry summarised the problem thus,

‘Some people have suggested to us that we’re no longer paying enough for some medicines and that the market has been driven down so low that that itself is contributing to supply shortages.’

How does that work exactly, the market driven so low that it produces product or medicine shortages?

There are a few stages on the way there. One, the NHS is almost a monopoly purchaser and acts as one. It, not the supplier, sets the price it will pay for medicines. It doesn’t just set them as cheap as possible, it sets them too low for pharmaceutical companies to make a profit. Here’s an example,

SMITH One example of a product used to treat lung cancer, that’s seen the price fall over five years since the patent expired by  96%. It dropped from about £160 of the originator’s price and you’d expect to see, you know, a reduction of 80% or 85%, something like that, but it’s dropped down to not much above £6 and some of our members, who manufacture particularly in the UK or Western Europe, find that price doesn’t even cover their cost of goods. The result of that is though there are twenty companies that are licensed to manufacture the medicine, only three or four ever tender for the NHS England contracts.

So we have a bogus, pretend version of competition, where companies, if they want the business, have to ‘compete’ to produce at the below rock bottom price NHS procurement has decided they’ll pay. Yes, I know, I thought our genius Government had chosen free market economics and opposed monopolies because ‘competition drives up standards and drives down prices’ but it must only believe this is true for other people.

So, I daresay you can guess what happens next. They don’t bid at all. So nobody makes the drugs. And there’s another reason why drug manufacturers don’t bid.

Smith explains, ‘At the moment they (NHS procurement) choose the price but they don’t commit to buy, so to meet that demand we will have to have the product in the warehouse but we might never sell it. That massively increases the commercial risk that manufacturers face, and that’s part of the problem. ‘

This isn’t Max Factor making cosmetics, these are medicines all Britons need hospitals and pharmacies to have available at all times. These shortages and scarcity are created by the misguided belief that driving down prices is the only thing that matters.

Do our truthful, reflective Government cough ‘Er Sir Humphrey, we may have to take another look at this policy’? No they give statements like this, claiming their procurement model ‘meant best value for the NHS, and that patients have access to medicines at an economically sustainable price. They said they didn’t simply accept the lowest price but would consider other factors like security of supply, and they argued the tendering model they use has served patients well by helping to maintain supply.’

Urry’s programme proves that’s untrue. Any chance of punishment for deliberately harming Britons and lying about it?

* ‘Missing medicines’ File on 4. 29/9/15.

The programme didn’t investigate how much in bonuses (perhaps paid as a percentage of reduced purchasing costs) is on the line? FME theory, that those pharmaceutical companies must be inefficient doesn’t address the problem Urry uncovered. It is the monopoly buying power of the government agency that causes this distortion. In a truly free market, companies are not required to produce unprofitable products, they can drop them and so they do. But the market he describes is far from free, it is rigged and distorted. It is only because of the rigged government price, again, far from the natural balance achieved by competition between demand and supply that FME preaches, that the manufacturers can’t make a profit. A workable solution would be to have a nationalised supplier. That supplier’s remit would be to make all the drugs necessary, supplying all the needs of all our UK population and they wouldn’t be required to additionally make a profit. However, such an idea is anathema to the FME theory our rulers have decided is the only way to go, so don’t hold your breath.