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<<Some of that effect is already visible, with industry sources saying there is evidence that pharmaceutical companies are pausing pricing approvals for new PBS listings, and in some cases reconsidering whether to apply for market authorisation at all, wary that Australia’s low published prices could be used against them in US negotiations.

“We also could see some medicines withdrawn from the Australian market to actually avoid detrimental pricing sequences,” MacLeman says. “And so, from our perspective, there will be a potential flow-on effect to Australia, and we may find that Australians will miss out on new medicines, and that it may have an impact on our very vibrant life sciences ecosystem.

“Because these innovative medicines companies will make decisions about where they’re going to invest and that could include not only the approval of medication and the reimbursement of medication but also where they do their clinical trials and where they invest in the education of our clinicians and provide healthcare.”

Another industry insider described the response from pharmaceutical companies as “not coordinated but cautious”. They said it was “more of a defensive crouch in a system where pricing in one market can now threaten revenue in another”.

“It’s a wait-and-see approach,” one Australian pharmaceutical executive tells The Saturday Paper. “But every delay could mean that someone here goes without treatment.”

Last week, Australian pharmaceutical industry trade publication BioPharmaDispatch reported that global pharmaceutical companies have imposed a pause on pricing approvals, including for new PBS listings, while the industry builds its understanding of the implications of Trump’s executive order.

According to BioPharmaDispatch, these delays are being compounded by the increasing resistance of health department officials to approve special pricing arrangements, under which pharmaceutical companies rebate the difference between the published price for medicines and the private price that the Australian government is actually prepared to pay.>>

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<<These arrangements, BioPharmaDispatch reported, have been a common feature of PBS pricing policy for more than a decade and are considered crucial to ensuring Australia’s access to innovative medicines.

“If we’re paying more for medicines, it does ultimately mean either we’re taxing people more or ... we are forgoing something else such as giving hospitals less money.”
In 2023-24, there were 930 different medicines and 5164 brands listed on the PBS, costing the government $17.7 billion. Over the same period the pharmaceutical industry collectively paid back more than $5.3 billion in rebates to the Australian government, nearly 30 per cent of the total cost of the PBS.

Further delays in new drugs being listed on the PBS would place pressure not only on patients waiting for subsidised access to new treatments but also on the Albanese government’s ability to defend the integrity of Australia’s flagship medicines subsidy program amid rising geopolitical and commercial headwinds.

At the National Press Club on Tuesday, Prime Minister Anthony Albanese signalled he would stand firm in the fight over who pays for pharmaceutical innovation – and to defend the PBS from external interference.

Albanese is expected to have his first face-to-face meeting with Trump on the sidelines of the G7 summit next week. Asked whether he would walk away from the meeting if he didn’t like the deal on offer, he replied: “On things like the Pharmaceutical Benefits Scheme, the media bargaining code, our biosecurity in agriculture – they’re not on the table as far as we’re concerned.”

Take one example. Donanemab, a new treatment for early stage Alzheimer’s disease developed by US multinational Eli Lilly, is already approved for use by Australia’s Therapeutic Goods Administration but has not been listed on the PBS.

Health Minister Mark Butler revealed last month that the Pharmaceutical Benefits Advisory Committee, which determines the advice to government about which medicines end up on the PBS, will be considering Donanemab in July.

Before the drug can be listed on the PBS, Eli Lilly’s global head office would have to approve the price offered by the Australian government.

“Lilly believes there needs to be a serious conversation about the medicine reimbursement process in Australia, to ensure the PBS is enabling people to access new medicines,” Tori Brown, general manager Lilly Australia and New Zealand, tells The Saturday Paper. “Australians deserve a medicines evaluation system reflecting 21st century pharmaceutical innovation – which is why Health Minister Butler has instigated a review of the PBS. Despite Australia’s high GDP per capita, our reimbursed medicine prices are amongst the lowest globally. The low pricing of medicines in Australia does not reflect the value of innovative medicines or fairly contribute to research and development costs.”>>

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<<US drug companies have long opposed schemes like the PBS, which delivers some of the lowest medicine prices in the developed world. They argue that the PBS systematically drives down what they can charge, undermining global pricing power and limiting their ability to recoup the high costs of research and development.

On Monday, Albert Bourla, chairman and chief executive of US pharmaceuticals giant Pfizer, told Goldman Sachs’s global healthcare conference that he was hoping Trump’s Most Favored Nation pricing proposal would deliver cheaper medicines for US consumers on the one hand and, conversely, an increase in international drug prices.

Asked whether governments in Europe and the United Kingdom, which employ subsidy programs similar to Australia’s, could pay more for medicines, Bourla was adamant that they could.

“Yes, they can increase prices,” Bourla said. “Are they willing to do it? Of course not. They don’t. They are having, let’s say, free-riding, all these years, and they want to continue that.”

Bonny Parkinson, associate professor at Macquarie University’s Centre for the Health Economy, says it’s no surprise pharmaceutical companies are delaying new listings on the PBS in response to the uncertainty triggered by Trump’s May 12 order.

Each submission to the Pharmaceutical Benefits Advisory Committee requires a substantial investment of time, data and resources, she notes, making companies wary of proceeding while global pricing rules remain in flux.

“Our own research has said, on average, it costs about $830,000 per submission,” Parkinson tells The Saturday Paper. “So yeah, it is a large investment and if there’s going to be uncertainty here, it makes sense that maybe you would want to hold back on putting in and spending that money until the environment is a little bit more known.”

In the end, says Parkinson, the whole PBS process is like one big, protracted negotiation.

“I think the government does have to weigh up how much they’re willing to spend on medicine versus other parts of the healthcare system but also other demands for taxpayer-funded services,” says Parkinson.

“So the reality is that there are trade-offs. There probably is some capacity in the system to pay a little bit more, but if we’re paying more for medicines, it does ultimately mean either we’re taxing people, the Australian population, more or, alternatively, we are forgoing something else such as giving hospitals less money or forgoing preventative healthcare services.”

Still, in the view of Griffith University Professor Paul Scuffham, one of Australia’s leading health economists, the price Australia pays for drugs listed on the PBS is fair.>>

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<<“I think we are paying our way. Big pharma have an international price that they disclose and make explicit, and that’s the price that they want to seek in every country when it comes to negotiations for government reimbursement,” says Scuffham. “But they also have a pricing negotiation agreement that is confidential commercial-in-confidence. So we need to know what [are] the true prices that we are paying, what the government pays for those drugs.”

If the Trump administration adds Australia to its Most Favored Nation pricing basket – using PBS-listed prices to benchmark what the US pays for medicines – there may be little Australia can do to stop it. The US doesn’t need Australia’s consent. It can unilaterally include any country whose prices are public and accessible, and Australia’s PBS is among the most transparent in the world.

That makes Australia an easy target – and a politically convenient one – for a US administration intent on forcing allies to share more of the cost burden for both security and pharmaceutical innovation.

What can Australia do in response?

Not much, says Medicines Australia chair Sue MacLeman. “This is their domestic policy,” she says. “We try not to comment on another country’s internal decisions – but that doesn’t mean they don’t have global consequences.”

MacLeman is focused on other solutions, particularly the urgent need to modernise Australia’s own health technology assessment system.

A major review commissioned by Health Minister Butler as part of the government’s 2022-2027 Strategic Agreement with Medicines Australia delivered 50 recommendations last year, aimed at overhauling Australia’s health technology assessment system.

Chaired by Professor Debora Picone, the review examined how new medicines and health technologies are evaluated for public funding – with a focus on ensuring faster, fairer and more transparent access for Australian patients.

While an implementation group, comprising government officials, industry representatives, clinicians and patient advocates, is now working on the reforms, for MacLeman the case for prioritising those changes is clear.

“They would ensure medicines are more appropriately valued, speed up access and make Australia a more attractive market for new launches,” she says.

Some measures, such as lowering discount rates or introducing a bridging fund for innovative therapies could be implemented quickly without legislation.

Done well, MacLeman believes these reforms could even help “take the heat out of the conversation with the US” and signal to the Trump administration that Australia is willing to evolve – on its own terms.

This article was first published in the print edition of The Saturday Paper on June 14, 2025 as "Exclusive: PBS listings frozen over Trump’s executive order".

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