Health Minister Mark Butler has sought to reassure Australians that there won’t be any changes to the nation’s $18 billion Pharmaceutical Benefits Scheme (PBS) following calls for punitive tariffs on Australian medications imported by the United States.
U.S. pharmaceutical companies, via the Pharmaceutical Research and Manufacturers of America (PhRMA), have expressed concern about Australia’s PBS, which subsidises the cost of medicine so that residents can buy drugs at a lower price.
The PhRMA is hoping to use tariffs as a way to apply pressure to Australian authorities to allow for more U.S. drugs to be added on the PBS list of approved drugs.
In a letter penned to U.S. trade representative Jamieson Greer on March 19, PhRMA claims Australia’s pharmaceuticals trade is unfair and non-reciprocal.
PhRMA, whose members include pharmaceutical giants like Johnson & Johnson and Pfizer, urged the Trump administration to consider the tariffs for two reasons.
The first, that Australia’s preference for cheaper generic products made in China or India was supposedly undercutting the U.S. market, and second, because “unnecessary red tape” was causing delays in adding new products to the PBS list.
The proposed tariffs, if they were to be accepted by U.S. President Donald Trump, would apply to the 8.5 percent of medications sent to the United States by Australia, most of which are highly sought-after blood products.
Some argue the move would likely cause more pain to hip pockets in the U.S. and would be unlikely to bring any real change to Australian medicines.
It’s an assurance the Australian government is standing by.
“The clear message we want to send to everyone, whether it’s to the Americans or to patients here in Australia who might be worried about these reports, is that … we’re not going to negotiate over the PBS,” Butler told the Sunrise program.
“This is one of the cornerstones of, I think, one of the best healthcare systems in the world.
“We’re not interested in an American-style user pays healthcare system in the Labor party.”
Butler said the government was determined to continue both Medicare and the PBS.
“There is no way we will negotiate around the elements of the PBS that has served Australians so well over the last 75 years,” he said.
Letter Claims Australia’s PBS Stifles Innovation
PhRMA doesn’t just take aim at Australia in its 32-page letter to representative Greer, but at every nation it believes holds unfair trade practices around pharmaceuticals.The letter does, however, specifically claim that “Australia’s pharmaceuticals trade is unfair and non-reciprocal.”
Evidently, PhRMA appears to want to ride the current move in the United States towards protecting U.S. products and manufacturing.
“PhRMA welcomes President Trump’s commitment to a ‘robust and reinvigorated trade policy’ that seeks to eliminate these unfair and non-reciprocal practices through trade negotiations, agreements and enforcement actions,” the letter states.
PhRMA’s members called for U.S. policy to prioritise the protection of American innovation abroad, and to “pursue the elimination” of what they call unfair trade practices globally.
“The Australian government employs pricing policies that do not appropriately recognise innovation, such as using the lowest-cost comparator when setting the prices of new medicines as well as statutory price reductions and subsidy caps,” the statement said.
PhRMA goes as far as labelling the Australian Pharmaceutical Benefits Advisory Committee (PBAC), which is in charge of determining which medications should be added to the PBS, as “biased,” saying Australia is choosing low costs over “innovation.”
“In too many cases, comparators are old, off-patent medicines that are subject to generic or biosimilar competition and have undergone several rounds of price reductions,” it states.
The letter also takes aim at “unreasonable” delays in adding new drugs to the PBS, caused largely by administrative hurdles and unnecessary data requirements.”
PhRMA has also condemned Australia for “a range of new and advantageous procurement processes for a local vaccine manufacturer not available to other competitors”—the organisation says homegrown production of vaccines in Australia constitutes an “uneven playing field” for U.S. companies making competing products.
PhRMA also referred to findings from the 2025 U.S. trade representative’s plan for shaping U.S. trade policy, which said a waiver on a global agreement on intellectual property rights set by the World Health Organisation (WHO), had actually hindered access to COVID vaccines.
Delays Acknowledged by Australian Counterpart
Meanwhile, PhRMA’s Australian counterpart, Medicines Australia, issued a statement on March 19 lauding the commitment by both sides of local politics towwards lowering the cost of PBS-listed drugs to just $25 for residents from Jan. 1, 2026—with the rest covered by the taxpayer-funded PBS.Currently, medications come with a standard $31.70 cap for those without low-income concessions.
But CEO of Medicines Australia Liz de Somer has also pointed to administrative delays being a barrier to innovation in PBS medicines.
A Health Technology Assessment (HTA) report from last year noted multiple factors in delays.
In the report, it was noted that pharmaceutical companies would often launch their product in a country with a larger population, which allows for price setting, meaning a product may not be exported for up to a year.
“Delays can also be caused by the time between a product launching and being registered, the time it takes for the TGA to carry out reviews and approvals, and the time it then takes PBAC to make a positive recommendation to the Australian government,” that report said.
“The pharmaceutical company’s global launch strategy determines the time and location for the global first launch of a new medicine.
“These strategies are commercial decisions that consider the return on investment and potential for profit maximisation from the medicine.”
De Somer acknowledged the need for the government to address the issue of timing.
“Medicine access and affordability is essential, the PBS has delivered for Australians since 1945, and it is now time the government did some more work to ensure timely access to the latest innovations is provided to Australians,“ de Somer said, in support of sorting administrative delays,” she said.
Big Pharma Trying to Leverage Current Trends: Researcher
University of Sydney governance expert Rob Nicholls says U.S. pharmaceutical giants are trying to make the most of the current political climate, in the hopes of shoring up its industry.“I think the key issue here is Big Pharma deciding to take advantage of the significant changes that are occurring in the U.S. government,” he told The Epoch Times.
Nicholls said there were two issues at play.
“The first is that the pharmaceutical industry would like shorter times to approval and the second is that they would prefer that the PBS buys branded drugs, even when cheaper generic equivalents are available,” he said.
“Big Pharma in the U.S. sees this as an opportunity to be involved in Trump’s tariff policies, even though there is no underlying trade issue that is problematic between the U.S. and Australia in pharmaceuticals.”
About the PBS
The PBS works by negotiating lower prices for medicines with suppliers, making many helpful and life-saving medications more affordable for all Australians, while also subsidising part of the cost of locals buying drugs.The scheme also focuses on listing the most cost-effective versions of medicines when multiple options are available—given it is a taxpayer-funded program.
In addition to already providing medications at a $31.60 cap, the federal government also recently made an election promise to lower the price of more than 900 PBS-listed medications to no more than $25.
The current flat fee for concession card holders is $7.70.
Pensioners do not have to pay more than $277.20 a year for listed medicines, while for other Australians the safety net is capped at $1,694.
Opposition Leader Peter Dutton sought to blunt the Labor government’s announcement by agreeing to support the move towards $25 scripts, if elected.
Determinations around which medications are subsidised is made by PBAC, who negotiate on prices in order to get the best possible deal.
The government foots the gap left between what the company charges for the medicine and what an Australian pays over the counter.
As a general rule, generic alternatives for medications are only available once the original patent has lapsed.
