Australia on alert over Trump attacks on cheaper medicines

Australians face a challenge to the $18 billion federal scheme that cuts the cost of essential medicines after US President Donald Trump ramped up his threat to impose trade barriers on pharmaceuticals to protect American companies.

Health advocates are warning against any move by the Trump administration to target the subsidies under plans to impose reciprocal tariffs on dozens of countries from next month, after years of complaints from US companies about the hit to their profits from the way Australia controls prices.

Donald Trump is set to unleash another wave of tariffs in early April.Credit: Bloomberg

The concerns come as Prime Minister Anthony Albanese rules out imposing tariffs on American exports in response to Trump’s 25 per cent tariffs on steel and aluminium, saying the retaliation would push up domestic prices and hurt Australian consumers.

The federal government is on alert for any move from the Trump administration to levy Australian exports, ranging from beef to wine, after the president picked more fights with allies, including threats to impose a 200 per cent tariff on wine from the European Union.

“We have been very clear that we do not regard this as an act of a friend,” Albanese said of Trump’s decision.

“We do not impose tariffs on US goods into Australia, and we expect the same [treatment].”

Albanese ruled out responding with tariffs on US goods, saying this would hurt Australian consumers and also undermine the argument to the president that his tariffs were an act of “self-harm” on American consumers.

Former Labor leader Bill Shorten put the idea of retaliation on the agenda on Friday morning by telling the Seven Network that “every option’s got to be on the table” if the US escalated the trade war.

“If they keep putting tariffs on all of our goods, we have to reciprocate,” said Shorten, who is now vice-chancellor at the University of Canberra.

Opposition Leader Peter Dutton seized on the remark to claim disunity in Labor ranks over the response to Trump while rejecting reciprocal tariffs and saying he did not agree with what Trump had done.

Dutton criticised Albanese for not being able to stop the tariffs on steel and aluminium, saying Albanese “can’t even get a phone call” because there was no direct call with Trump this week. Albanese spoke to Trump on the phone in November and early in February.

With attention turning to other trade threats to Australia, health advocates warned that US companies would revive their campaign to scale back the Pharmaceutical Benefits Scheme in order to increase their profits.

“Australians’ health shouldn’t be reduced to a bargaining chip in a trade war with the Trump administration,” said Consumers Health Forum of Australia chief Elizabeth Deveny.

“There is both a health and economic argument here. A healthy Australia leads to a higher economic participation and more productive Australia. Our economy can’t afford to have a sick Australia.

“For a very long time, Australians have emphatically said that they don’t want to go down the path of a US-style healthcare system.”

The scheme cost $17.7 billion last financial year and helped reduce the cost of 930 different medicines, reflecting decisions by an expert committee that decides which medicines deserve subsidy on public health grounds.

This week Trump blamed Ireland for luring pharmaceutical companies out of the US, and he complained during his first presidency about countries that imposed costs on the US industry.

Australian Fair Trade and Investment Network convenor Patricia Ranald said the US continued to claim the PBS was a “non-tariff barrier”, and this could encourage the Trump administration to target the scheme.

“I’ve read Trump’s executive order on reciprocal tariffs and what it says is that the US will impose tariffs where other countries have either tariff or non-tariff barriers that the US objects to,” she said.

“So the PBS comes under the heading of a non-tariff barrier, in their view. I think it’s vital for the government to take a firm line. The US is weaponising tariffs in order to influence the domestic policies of other countries. I don’t think it’s a reasonable ask for the Americans to say, well, you should change your PBS system in order to pay our drug companies more.”

Trump’s commerce secretary, Howard Lutnick, has said the president will move on reciprocal tariffs by April 1 after getting advice from the Treasury and other agencies about the barriers to US exports.

Pharmaceutical products are the third-biggest category in Australia’s exports to the US, after beef and gold. The category includes plasma exports from biotech giant CSL, a company that also has large US operations.

“The situation in the US is fluid,” a CSL spokesman said. “We are monitoring developments closely and preparing for a range of scenarios.”

MS Australia chief executive Rohan Greenland said he was confident all sides of politics would back the PBS against any criticism from the US after seeing bipartisan support for the scheme at other times when US industry objected to the scheme.

Greenland said the PBS supported therapies that were life-changing for people with multiple sclerosis.

“We are so grateful for the strong support for the PBS over many years from both sides of the aisle,” he said.

“We’ve really got a robust system in Australia – and long may that continue.”

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