Pfizer broadside on PBS productivity amid pharma tariff fears

Australia ‘undervalues’ the products of drug companies, Pfizer has told the Productivity Commission, echoing US lobbyists frustrated with the Pharmaceutical Benefits Scheme.

The US pharmaceutical sector has called on President Donald Trump to leverage changes to the Pharmaceutical Benefits Scheme in tariff negotiations. Picture: AP

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Multinational conglomerate Pfizer has accused the Pharmaceutical Benefits Scheme of “under­valuing” medical products in a submission to the Productivity Commission, echoing the push by American pharmaceutical lobbyists for the subsidy program to be targeted in tariff negotiations.

The PBS provides discounted drugs based on the advice of independent assessors who test the cost-efficiency of products against other offerings approved in the Australian market.

It came under increased pressure from the Pharmaceutical Research and Manufacturers of America following the election of Donald Trump.

PhRMA in January pleaded its case to the US President to pull the PBS into tariff negoti­ations and drive up Australian pharmaceutical prices in the process. The lobby group said US products faced a system that “undervalues new innovative medicines”, and Mr Trump should “leverage ongoing trade negotiations” to change the scheme.

Pfizer told the Productivity Commission the PBS “under­values (drugs and vaccines) with high discount rates, under-­accounting for benefits accrued over multiple budget cycles, exclusion of broader societal benefits, and limited acceptance of real-world evidence”.

The submission was made to a review of care economy sectors, set to hand down an interim report in August or later this month, with a final report due in December.

“Decision-making on whether preventive health interventions should be funded does not consider productivity benefits,” the submission reads. “This means significant economic impacts of medicines and vaccines are not captured, leading to perverse outcomes where potentially significant preventative interventions are found not to be cost-effective for government and the productivity benefits of supporting healthy Aus­tralians to stay in the workforce through medicines and vaccines are lost.

“Over the last decade, while the total PBS spend has increased, the proportion of the PBS that funds innovative medicines has seen minimal growth. This means, as a proportion of GDP, the government’s expenditure on innovative medicines is going backwards.”

Pfizer operates across Australia and the US, with global outposts. It has called for productivity reforms on the PBS.

The submission drags the $18bn scheme providing 930 different medicines into the national productivity debate, which has defined the early months of the government’s second term.

The Albanese government has committed to reform the PBS through implementation of its Health Technology Assessment review, announced last September.

A central criticism of the scheme has been its lengthy wait times for subsidy approvals, with competitive bargaining often coming at the expense of patient urgency.

Pfizer singled this out, pointing to a 466-day average wait between approval for use and approval for subsidy.

“This delay negatively impacts patient outcomes and our economy as treatment is delayed. We must transform our funding models so Australians have access to innovative medicines and vaccines as soon as possible, with broad access, at prices that value innovation and are affordable for government and patients,” its submission reads.

In contrast, it lauded Australia’s National Immunisation Program, particularly for the economic impacts of vaccination during the pandemic. Pfizer is one of five Australia-approved Covid vaccine suppliers.