US big pharma wants Trump to take a swipe at our PBS
The government is vowing to slash the price of medicines if it wins the election, but in the meantime, big pharma in the US has set its sights on reining in Australia’s pharmaceuticals subsidies.
The Pharmaceutical Benefits Scheme is a pillar of Australian healthcare, helping to make selected medications cheaper for patients, but it remains a complicated system in need of repair and facing attack from US pharmaceuticals giants.
In this latest pre-election pledge, Labor is promising to reduce the cost of PBS medications from a maximum of $31.60 to $25 – a move that would be welcomed by people experiencing cost-of-living pressures.
Trade war
But it also comes as the Australian government is expected to resist increasing pressure from the United States’ ongoing trade war, with potential for the next round of tariffs to target pharmaceuticals.
In February, the White House released a statement saying it would next focus on “reciprocal trade and tariffs” which would target policies it deemed to be “unfair”.
There is an assumption domestic policies of countries could be targeted. At the same time, the US government is being lobbied by big pharma to target Australia’s pharmaceutical industry.
While its lobbying is not new, there is concern that President Donald Trump could pay attention to it. One example of this is a submission to the US trade division by the group PhRMA, which represents US pharmaceutical companies. Late last year, it wrote that Australia presents multiple intellectual property challenges and market access barriers.
It also specifically named the PBS, saying it was a particular problem for multiple reasons including “weak patent law enforcement” which it says makes it hard for manufacturers to “resolve” patent challenges prior to a competitor product entering the market.
The group also expressed frustration about difficulties getting products listed on the PBS in the first case.
“The PBS remains one of the few health programs in the world required to demonstrate a particular standard of cost-effectiveness and investment remains low in comparison to the overall health budget,” the submission states.
Felicity Deane, a professor of trade law with Queensland University of Technology, believes the US pharma industry has stepped up its lobbying of President Trump.
“They’re basically saying that the PBS is a problem in terms of market access,” she says.
“We can only assume they would lobby a tariff on Australian pharmaceuticals entering the market that’s paid by the importer.”
The concern is whether or not the Australian government would bend our domestic policies to make them more palatable to the US if we were faced with higher tariffs.
Both sides of Australian politics have vowed to protect the PBS if the Trump administration does attempt to come for the treasured scheme, and it is something the Australian public is not likely to tolerate.
“As an Australian, I would be outraged that we are letting the Trump administration dictate what our laws and policies are, particularly about something as important to Australian society as access to medical care. It’s a long-standing part of Australian society that we believe people should have access to medical services and to medicine,” Professor Deane says.
However, Professor Deane says the rules around Australia’s PBS apply to everyone, even Australian manufacturers. That in itself could make it difficult to argue the scheme is particularly harmful to US industry. There is also a lot of uncertainty about what the next round of tariffs, due in April, will look like.
Women’s boost
Earlier this week, the government announced birth control, fertility and endometriosis treatments would be added to the PBS. From May, the progestogen-only contraceptive pill, Slinda, and the new endometriosis treatment Ryeqo will be added to the scheme. Both are significant inclusions that will offer relief to thousands of women, with the government estimating 100,000 women will use the Slinda pill at the cheaper price.
Meanwhile, the IVF combination therapy Pergoveris will be added to the PBS by April. The therapy uses multiple “pens” of hormone-based medication to improve fertility in women with specific hormone deficiencies. Previously, a full treatment cycle would cost up to $3500.
Earlier this year, more drugs including menopausal hormone therapies and contraceptives were added to the PBS. It was the first time in more than 30 years common oral contraceptives had been added to the scheme.
That announcement followed a $573m government pledge, made in February, to improve women’s healthcare – a move that has also been supported by the Coalition, which has promised to match the commitment if it wins the election.
The ultimate winner from that earlier pledge will be women who have struggled to access affordable medications for common conditions.
Cost saving
If a cut to the cost of medications listed on the PBS goes ahead, it will benefit anyone with a Medicare card who receives a script under the public scheme.
It is not the only recent change to the scheme. Since September 2023, almost 300 drugs have been gradually made eligible for 60-day prescribing. It means a patient can receive two months’ supply of certain drugs with just a single prescription. This was part of a push to make medications cheaper, especially those needed to treat chronic conditions.
In 2022, the government reduced the number of scripts a patient needs to fill before the PBS Safety Net kicks in. Once the safety net is activated, typically when a patient spends $1648 on PBS medications, the cost of future medicines on the scheme drops to around $7.70.
Tangled scheme
But for all the change, problems have persisted with the scheme itself and, to put it politely, the PBS is a complicated, bureaucratic, tangle of a scheme.
It began in 1948, offering free medications to pensioners and a select number of other “lifesaving” and “disease-preventing” medications were also included on the scheme and offered to members of the community.
Today, it has grown to be part of Australia’s National Medicines Policy. Drugs included on the PBS are subsidised by the government, with the patient making a capped co-payment. Most of the medications are dispensed by a pharmacist and intended for use by a patient at home.
The PBS is overseen by the Pharmaceutical Benefits Advisory Committee, an independent expert body appointed by the federal government. It is made up of doctors, health professionals, health economists and consumer representatives.
The role of the PBAC is to recommend which medications should be listed on the PBS, and no new medication can make it onto the list without being recommended by the group. After that, the government then needs to agree to subsidise it.
Drug shortages
But inclusion on the list does not necessarily mean a drug will be available.
For years, women experiencing problematic symptoms of menopause have experienced ongoing shortages of the hormone therapy that can offer them relief. There have also been shortages of ADHD medications, causing huge distress to parents of children with the disorder, as well as other people who live with the condition.
There is often little transparency around why the shortages exist, but “manufacturing” issues are almost always cited.
Australia also competes with other nations to secure supplies, and our small population means we are not always considered to be a priority market.
When shortages do occur, the government may try and secure an alternative supply from another country.
Regulatory approval
For a drug to even be considered for inclusion on the PBS, it first needs regulatory approval. In the first instance, that happens via the Therapeutic Goods Administration, which determines the safety, quality and viability of the therapy.
The cost of any medication is set by the drug’s manufacturer and, as is often seen in other markets like the US, even everyday medications can be cost prohibitive. That’s where the PBS helps to reduce those costs.
Vaccines and immunisations also require TGA approval, but then go to the Australian Technical Advisory Group on Immunisation before potential listing on the National Immunisation Program.
The NIP and PBS sit along with the Medicare Benefits Schedule, which lists all the treatments and medical services covered by the government. Collectively they make up the government’s health technology assessments.
Slow process
Despite its vital work, the group that advises which drugs should be included on the PBS meets only three times a year. That makes it difficult for the group to respond to real-time medication shortages or increases in demand. It also means decision making can be painfully slow, with one report finding medicines greenlit by the TGA took an average of 591 days to be accessed through the PBS.
As reported by The Australian last November, the group announced it would limit the number of products it would assess as it grappled with demand. This meant decisions about whether to include certain cancer treatments and chronic-disease medications were deferred to an unspecified date.
At the same time, the group advised it would institute a “maximum total number” of drugs considered at each meeting.
At the time, Health Minister Mark Butler said he was “deeply concerned” by the PBAC’s decision, saying submissions “should be dealt with in the timely way that sponsors and patients expect”. It was a sentiment backed by opposition health spokeswoman Anne Ruston.
It also means that whoever wins the federal election will be tasked with the unenviable challenge of unpicking the mess surrounding the PBS.
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